Sector Insight: Wine - Not so easy drinkingJane Bainbridge
Despite being slammed as poor value, branded wines are increasingly popular with UK drinkers.THE BACKGROUND
The wine market poses an odd combination of challenges to marketers. Volume sales are growing and the market is highly fragmented, with the world's five-biggest wine producers accounting for less than 8% of international sales. Meanwhile, supermarket pricing pressures are making it more difficult than ever for brands to increase their profitability.
There should be scope for building wine brands, but those that have done it successfully took a battering earlier this month when a panel of Which? experts said they believed branded wines offered poor value for money.
The UK drinking public has certainly developed a taste for wine.
If current consumption rates continue it will become the country's favourite tipple - ahead of beer - within the next 10 years. Sales grew by 31% between 1999 and 2004, making the sector worth £7.6bn, last year according to Mintel.
Off-trade sales account for about 80% of volumes, although prices are being forced down by discounting in the multiples. Discounting is so widespread that the real market value is not matching volume growth. Mintel says the price of the cheapest bottle of wine has risen by just 50p over the past 25 years and the average price of a bottle off-trade was £3.89 in 2003-2004.
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