Festive deals mean 'bloodbath' for drinks trade

Published: 02 December, 2011

Consumers are seeking out cut-price drinks deals this Christmas as the on-trade is flooded with vouchers and supermarkets continue to offer deep discounts.

Australian Vintage's UK general manager Paul Schaafsma said the festive season was likely to be a "bloodbath" in the off-trade, with prices slashed in supermarkets.

James Lousada, UK & Europe general commercial manager at Accolade Wines, said: "Christmas will come late - historically [in a downturn] people go hell for leather at the last minute. We'll see a strong Christmas; my concern is for the six months after - I don't see the economy getting any stronger."

Nielsen analyst Gavin Humphreys agreed: "Christmas will be late as shoppers are under pressure and will be making critical judgements around where to spend their money.

"We have recently seen some key deals on spirits litres at £13, which gives very little margin, if any, when duty and VAT are factored in, and beer deals are also beginning to break."

But he said the "Christmas spirit will kick in" as shoppers try to escape the doom and gloom.

In the past two years, the final 13 weeks of the year have accounted for at least one-third of volumes across the spirits category in the off-trade. For Champagne it has been around 50%, port is more than 55% and cream liqueurs sell more than 60% of their volumes during this period, said Nielsen.

Mark Newton, from on-trade analysts CGA Strategy, said weather and the continued success of the voucher culture had the potential "to make or break the festive period".
Newton said restaurant and hotel sectors benefit from an uplift in value from vouchers, created by people 'trading up' on wines.

"This has been prevalent throughout 2011 and is likely to continue over Christmas. It will also encourage more on-trade visits from people looking for bargains."

Morrisons' new head of BWS Steve Mosey said he's pleased with the category's performance, but warned: "Customers will want a good Christmas, but it's naïve to think the squeeze won't affect them," he added.

"There are some ridiculous deals out there - they just show how desperate some retailers are for customers to spend the cash [in BWS]."

Mark Reynolds, co-owner of six-strong London pub group, Renaissance Pubs, said sales of mulled wine and cider "have only just taken off in the past week due to the unusually warm weather".

"Last year we had snow in late November so it was a very different sales mix. White wine has been stronger later on in the year for the same reason, with Rioja and Argentinian Malbec only just starting to show good volumes."

In the online arena, things are progressing "ahead of forecasts". Jeremy Howard, chief executive of Slurp, reported Q3 revenues up 78% year on year. He said there was "a major and permanent shift in buying patterns in the UK as more and more people embrace online ordering".

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