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Alcohol sales to plummet over Christmas

Published:  03 December, 2010

Alcohol sales are set to plummet over Christmas, warn analysts - but six out of 10 of those stocking up will buy wine.

The latest research from Mintel shows that since 2000 alcohol sales in the fourth quarter of the year have dropped 10% in real terms compared to 4% for the alcohol market as a whole.

In real terms Q4 (October-December) alcohol spend has declined from £11.5 billion in 2000 to £10.4 billion in 2009, costing the industry over a billion pounds in lost revenue.

Jonny Forsyth, senior drinks analyst at Mintel, said: "Over the past decade, Christmas has become steadily less profitable for the alcohol industry. However, since the economic downturn, sales have plummeted further and Christmas 2010 is likely to see this downward trend continue.

"The VAT increase and above inflation excise duty increase planned for 2011 will also raise the cost of most alcohol drinks by as much as 8%, which will be a hard pill for consumers to swallow as they continue to feel the pinch."

Wine tops the Christmas drinks shopping list, as 65% of people buy it, with 51% going for lager, 33% for Champagne, while 24% plump for vodka and liqueurs.

Because of heavy Christmas discounting on alcohol, three quarters of consumers admit they look for bargains when picking up their seasonal supplies. Forsyth said discounting was "damaging and short-termist when it comes to alcohol brand-building", and also led to "diminishing returns for supermarkets and alcohol producers alike as the population buys less alcohol and at cheaper prices."

Mintel's research also shows that just three in ten (30%) Brits are in a 'good' position to spend on discretionary items over Christmas 2010, while a further three in ten (31%) can only afford to spend 'very cautiously'. Furthermore, as many as four in ten (39%) are in no position whatsoever to spend, due to struggles with debt and/or worry about their worsening financial situation.