Own-label wine sales flat

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Despite huge investment in own-label wines by the major retailers, volumes are flat across the trade in the past year.

 

The recent slowdown may be explained by sharper price increases – they’ve gone up by 12.9%, around 52p per bottle, over the average 7.2% hike in the top 30 brands in the past two years – piling pressure onto consumers’ already stretched budgets, according to Nielsen data for the year to September 2012.

 

Sainsbury’s, Tesco, Asda and Morrisons have all recently announced extensions to their own-label wine range, with both Sainsbury’s and Asda beefing-up their mid-tier selection.

 

Overall the top 30 UK wine brands have dropped 1.93% by volume to 55,742 9 litre cases in the last year, but since 2010 volumes have fallen by 3.6%.Own-label volumes have grown by 3.9% in the past two years.

 

While prices across the top 30 brands have increased by 7.2% in the past two years, excise duty has jumped by 19% and VAT 25% in the same period. Another reason for falling volumes and rising prices could be the virtual disappearance of the three for £10 price mechanic, formerly a supermarket favourite. Exchange rates are not helping either: the pound has been devalued by 16% in the past two years against the New World currencies.

 

Steve Barton, joint director of Brand Phoenix, told Harpers the “real term inflationary impact is far higher than the actual per bottle gains”. “This is causing the pressure ball with certain supply and distribution players, such as WaverleyTBS,” he added.

 

Barton said brands were better equipped to absorb some of the increases, since they trade internationally and can decide to invest in consumers. But retailers “have no option but to put prices up”, which in turn causes growth of own-label to stagnate as it becomes more expensive.

 

But some brighter spots have also been identified. Lighter style wines are continuing to grow and New World wines still dominate the top 30, making up 21 of the brands included.

 

For more on this story, see this week's Harpers.

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