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Christmas to bring scant cheer for trade under tougher restrictions

Published:  14 October, 2020

The UK drinks trade will have little to toast this Christmas trading period if restrictions on socialising become more onerous, with a fall in off-trade sales compounded by a further dramatic down-turn in the on-trade.

These are the worst case – but increasingly likely – predictions from Wine Intelligence, based on its latest consumer research and modelling, taking into account likely further restrictions on socialising and on-trade lockdown.

The most recent modelling suggests that harsher restrictions will offset off-trade gains earlier this year, with annual like-for-like sales down -2% in 2020, rather than a modest +1% to +3% growth previously predicted.

However, it is the on-trade where the most impact will be felt, according to Wine Intelligence, with the factoring in of the second wave suggesting that on-trade volumes would fall further from a predicted -30% to a -40% drop during 2020.

This figure, however, is based on modelling in increased restrictions, but with no return to a full lockdown, which at the time of writing seems an increasingly likely scenario. At the time of writing, Northern Ireland is shutting its hospitality sector as part of a four week ‘circuit breaker lockdown’, and the Welsh Assembly is in serious discussions about following suit.

Adding to an already grim picture, the assessment for 2021 is also downbeat, drawing attention to the well-established connection between economic downturn and drop in leisure spending.

“During the Great Recession of 2008-10, the UK Institute for Fiscal Studies estimated that leisure spending by UK households fell by 10%,” noted the update’s authors, Richard Halstead and Juan Park.

“GDP for the UK is expected to be around 10% lower in 2020 compared with the previous year, an unprecedented decline in modern history. The reduction and removal of government job support schemes will mean a tough New Year for many wine drinkers – and therefore the wine trade.”