Wine price pushed up to all-time high

The average cost of a bottle of wine has risen to its highest-ever figure of £5.11 on the back of escalating taxation – but there are signs consumers are still prepared to trade up, according to new Nielsen data.

Latest figures, reflecting sales since wine broke through the £5 price barrier last June, show the category is now worth £5.4 billion – up a modest 1% on volumes of 89 million cases (52 weeks to April 27, 2013).

Helen Stares, Nielsen’s client business partner, said that, although the combined impact of duty and VAT had pushed up the average price of wine, some consumers were buying into higher bands.

Continuing a trend that emerged last year, sales of premium wines are increasing, with those over £7.01 growing 16% by volume.

She added: “People are buying less, but we’re seeing that, when consumers do buy, they’re purchasing at a better quality – so higher prices.

“There is, of course, an element of taxation driving up prices, but we’re seeing premium products grow in other areas too – vodka, gin, world beer – and this trend can also be seen outside BWS, such as in coffee.

“Where we’re seeing the really strong growth is in more expensive wines – £7 and above – so to some extent bypassing the lower end of the market.

“With the £5 price threshold being crossed, we would expect to see volume fall, but whether or not it’s a doomsday scenario very much differs by retailer and wine producer. They may be selling less, but if it’s at a more profitable price then this is surely good news.”

She added that, despite the tough conditions and a fresh round of duty increases in last month’s Budget, consumers were still buying wine, albeit it with greater caution.

Stares said: “We haven’t really seen a decline in the number of households buying wine over the start of the year – no more so than we would expect coming out of the Christmas period.

“We believe that just as many consumers are purchasing wine, but they are buying less of it, and again this is similar to what we would expect in the early part of any year.”

In terms of the top countries exporting to the UK, Australia has extended its lead ahead of second-placed Italy, having clawed back some of the ground it lost in recent years.

Although Australia’s value growth was flat, sales hit the £1 billion mark against Italy’s £830 million following a 5% drop on last year.

France and the US remained in third and fourth place with respective sales of £765 million and £686 million. Spain led the charge with the strongest value surge of all the top 10 countries – up 17% to £538 million.

Stares said: “The smallest gap between Australia and Italy was 1.2 million cases back in June last year, but the gap has widened as Italy has declined and Australia recovered.

“Spain has been in steady growth over the past two years, and it’s accelerated over 2013 as it’s been the latest popular country of origin for retailer exclusives. Spanish wine has shown a moderate pull back on promotions – 55% this year, compared with 57% in 2012. However, its average price has fallen by 1%.”

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