The last quarter is undoubtedly the most important three months of the year for drinks retailers, and taking a look at the story in the market so far in 2023 will give a good idea of what to expect as Christmas nears.

Total FMCG sales grew by 8% to £144 billion in the first nine months of 2023, though most of this extra value came from rising prices rather than genuine increased consumer spending. Shoppers are keeping tighter control of budgets, cutting out non-essential products and becoming more careful about alcohol purchases. 

STAGNATING VALUE 

Off-trade BWS sales saw value stagnate at around £15 billion in the same period, with a 6% decline in volume as average prices rose by the same amount. The new alcohol duty rates that came into effect in August inflated prices even more than they would have been.

Nearly 70% of total BWS turnover came from multiple grocers and 10% from discounters, with value in both channels flat compared to the same period last year. Value in the impulse channel, responsible for 22% of total BWS turnover, declined slightly.

Increasing prices of beer, cider and wine meant they were able to grow in value by a slim 1%, but spirits lost 2.4% of their revenue compared to the first nine months of 2022.

Gin was the biggest loser in spirits, with more than a tenth of its value gone from a year ago, despite average prices in the category increasing by 5%. The flavoured gin segment is particularly turbulent.

Vodka is still the biggest spirit with sales of £1 billion in the first nine months of 2023, but even it had a 1% decline in value and 5% fall in volume.

Despite the general gloom, there are success stories. Stout grew value by 15% and volume by 7%, even as prices increased by 8%. Tequila and mezcal grew volumes by 5%, though they remain a relatively small segment, with sales of just £25 million in the first nine months of the year. Pre-mixed RTDs and single-serve wine are among the growing segments as shoppers look to treat themselves on a budget by buying packs with smaller unit prices.

Christmas 2023 will certainly present challenges. Given the considerable negative market shifts, offering attractive deals should yield favourable results this year and be crucial to staying competitive.