The Grapevine

The WSTA's views, distilled.

@optawine – Market Report: The Good (more gin), the Bad (less wine) and the Ugly (the Budget)

Market report time again with a trend that is becoming very common, a trend that is concerning and a trend that is surprising for some but at the same time gives me an opportunity to say ‘I told you so’.

Quarterly gin update (we may as well start calling it what it is)

In yearly sales, gin’s growth added £208m in the off trade and £250m in the on trade, £458m in total representing 38% growth. Gin in the on trade totals £947m in yearly sales, whilst value added in quarterly sales from March to June was £86m. If the same growth appears from June to September (the next market report due out in December), gin in the on trade will be a £1bn industry for the first time. Similarly, yearly sales of gin in the off trade is worth £710m with quarterly growth from March to June was worth £62m. Similar growth each quarter would mean gin would be worth £1bn to the off trade by the end of next year. Finally, the latest trade figures show that, so far this year (January to July), gin exports have reached £334m, an increase of 17% on the same period in 2017, with an average monthly increase of 18%. If this average persists then gin exports will be worth well over £600m in 2018. We predicted gin would be a £2bn industry by the end of this year, is £3bn now on the horizon?

Also, a quick note about gin’s importance to the on trade: gin account for 66% of spirits’ yearly value added in this issue of the market report, and 61% of total alcohol sales growth. Without gin, total alcohol yearly value sales growth would have been an entire 1% lower and spirit’s growth would have been 3.9% lower.


12 months 16 June 2017

12 months 16 June 2018























Without gin…













What’s happening with wine?

It is no secret that the UK wine trade is facing tough trading conditions and has been for some time. Total wine sales (still, sparkling, Champagne and fortified, on and off trade) declined by 2% by yearly volume sales and increased by 1% by value (given inflation as it is currently, can you call +1% genuine growth?). Take out sparkling wines and those numbers change to -3% and -1% respectively.

In particular, still wine has struggled to find growth, save for a few pockets of good news such as New Zealand wine, Malbec and Sauvignon Blanc. For whatever reason, still wine has witnessed long term decline which is not helped by consistently being treated worse than any other alcohol category at Budget time (see below). Add a severe currency devaluation leading to inflation and therefore price increases, it is safe to say the wine category is facing challenges.

This is particularly prevalent in the on trade where this market report posted yearly sales growth of -8% by volume and -5% by value. Since 2012, volumes have decline by 18%, 8% by value. Page 13 of the latest market report shows wine by countries of origin littered with double-digit negative growth, save for New Zealand and Italian wine (much of that growth coming from Prosecco), wine by grape paints a similar picture. Part of this could be down to product substitution – consumers choosing Prosecco or gin instead, always hard to accurately quantify – but what Phil Montgomery has highlighted in his commentary (p.9) must also be relevant: that the number of restaurant outlets has fallen and is perhaps too competitive and geographically concentrated. With its association with food, the restaurant sector’s volatility could also be a key reason for wine’s longer-term decline.

Sparkling wine reaching a peak?

A surprise for many; sparkling wine (ex. Champagne) has posted its first negative growth since 2012, - -4% in off trade quarterly volume sales - in what could be a sign the sparkling wine is reaching peak. Growth in yearly sales remains positive and in the on trade they are still in high double figures, so there is probably still some way to travel before a new equilibrium is reached, but it’s worth noting that growth hasn’t been as high as many have come to expect. Except me, I told you so.

November’s Budget

It’s getting to that time of year again where the WSTA are ramping up activity in calling for a freeze in alcohol duty at the next Budget in November. Last November, the Chancellor listened to our call and froze all alcohol duties, saving the UK wine and spirit industry an estimated £247m in duty liabilities for 2018. Duty is linked to inflation, so with current rates being so high, and with Brexit proper just round the corner, there has rarely been a more important time to get involved and help the WSTA team secure a much needed freeze for wine and spirit duty. If you’d like to get involved, please read Tom’s brilliant quick guide to the Budget and then email [email protected] to find out more.

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Quick Guide To The Autumn Budget

Quick Guide To The Autumn Budget


Following last year’s welcome freeze in alcohol duty, it is once again time for the Budget. This year, as was the case in 2017, the WSTA are calling on the Chancellor to show support for the wine and spirit industry and freeze alcohol duty. Here’s a quick guide on what to look out for during this year’s Budget.


What does the Chancellor currently have planned?

As set out in the Government’s policy paper on alcohol duty, which was released in March 2017:

The public finances assume that all alcohol duty rates rise by RPI each year. This measure aims to support the public finances by implementing the expected indexation of alcohol duty rates for the fiscal year 2017 to 2018.

Unless the Chancellor explicitly says otherwise, the current levels of alcohol duty are slated to rise based on the rate of RPI inflation, set to be around 3% every year up until 2022. You may remember March 2017, when Philip Hammond stated there were to be ‘no changes’ to the Government’s policy on alcohol duty – a rise was planned, nothing changed, and alcohol duty rates actually increased by 3.4%.

So unless you hear the words ‘freeze’ or ‘cut’, assume that the inflationary rise will take place. The WSTA will confirm any changes in our Budget Report, which will be sent out shortly after the Chancellor’s speech ends.


Why is the WSTA calling for a freeze?

The WSTA is calling on the Chancellor to freeze alcohol duty again, as he did last year. We’re pointing out that the latest HMRC data shows that, after the freeze last year, The Treasury raised an extra £270 million in following six months – an increase of 5%.


This month, we received independent analysis from EY, set out in a report we had commissioned, showing that the boost in economic activity if duty were frozen again would leave the wider economy better off, at no cost to the Treasury.


Put simply, a freeze leaves everybody better off – businesses, consumers, and the Treasury itself, and that is the case the WSTA will be making between now and the Budget.


How can we help?


WSTA members will recently have received an email from the WSTA setting out exactly how you can get involved, but to recap:

1. Writing to local MP – We have pulled together a draft template letter, to Members’ local MPs which highlights the impact of duty increases and asks them to champion our cause with the Chancellor. 

2. Sign a letter – We need WSTA members of all sizes and types to lend their names to joint letters we will be coordinating to the Chancellor and other Cabinet members.

3. Let us know the impact on your business – We are always looking for examples about the impact of duty increases on businesses, so that we can develop impactful case studies. For example duty bill as % of your turnover; no. of employees; block on export ambitions and so on. Let us know if you are happy to help with this type of information.

4. Support us on social media – Follow us on Twitter and connect with us on LinkedIn, where we will be posting using the #fairfreezeforall. Please feel free to retweet/share our posts and spread our Budget messaging.


For any further information or to get in touch about how you can get involved, please email the WSTA Budget team at [email protected]

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A win for the industry and a win(dfall) for the Treasury: duty collections increased following duty freeze

Last November’s Budget was in many ways a strange affair. With the prospect of an RPI duty increase in the region of 4% and a need to sure up public finances, I think it’s fair to say we all expected the worst. As it turned out, all that worry was for nothing as the Chancellor stood at the dispatch box and announced a freeze on all alcohol products “recognising the pressure on household budgets. And backing our Great British pubs”. As a result of this decision, the wine and spirit industry is estimated to have saved £247m in tax liabilities and were also saved the burden of price changes at Christmas, a crucial trading period for our members. 

But it turns out the Treasury benefited anyway, as we predicted. The latest duty collection figures from HMRC show that from December 2017 and April 2018, duty collections increased by 2% on the same period last year, in real terms that is £86m. For the WSTA members specifically, the increase was 2% or £67m, meaning that the wine and spirit industry accounted for 78% of the increase. Wine collections have so far increased £33m (+2%) and spirit collections increased £34m (+2%). Overall, wine and spirit duty collections are at record levels, with a projected £7.7bn in revenue for the financial year 2017/18, up £140m from the previous year.

Historically, wine and spirit products tend to account for more than their fair share of increased duty payments, as shown above. That wine and spirit products account for nearly £4 in every £5 of added revenue from alcohol duty collected by HMRC probably points to increased wine and spirit sales for the festive period, particularly sparkling wine and the last market report shows that gin also had an excellent Christmas period, and an excellent first quarter of the 2018 for much of the industry.  

In the slightly longer term, wine and spirit duty collections continue to increase to record levels. The wine industry paid £4.3bn (+6% on 2016) in duty in 2017 whilst the spirit industry paid £3.5bn (+6% on 2016), with total alcohol duty payments totalling £11.6bn, up 6% on 2016. In real terms the increase amounts to £695m extra duty payment on 2016, 75% of this increase came from the wine and spirit industry, showing again that the two categories over-index in terms of shouldering the burden of duty collections.

There is more to consider when combining actual duty collections with the OBR projections (for 2017/18 they were £4.3bn for wine and £3.4bn for spirit drinks). Firstly, and most notably, their consumption projections are, at best, curious: they expect wine consumption in the UK to increase over the next five years which is in direct contradiction with what we have been for years seeing in the market. That said, the duty freeze in November was welcome for consumers, particularly at a time when it looks like wages are just starting to rise consistently for the first time since before the financial crisis in 2007/8.

Secondly, given the uncertainty surrounding Brexit, projections of inflation will likely change between now and the end of the transition period in 2020, so it is likely that the real picture will look very different when it comes to it, should the RPI-linked duty rate increases continue out of kilter with CPI inflation. This is surely no way to plan the public finances or calm an already uncertain business environment, especially one so heavily dependent on cross-border trade.

Finally, Scotland will implement MUP in May. This policy is without precedent and, though the Scottish Government have said duty collections will go down (offset slightly by VAT increases), this means that it is very difficult to know what distortive effects MUP will have on what the OBR will project for inflation, consumption volumes and, ultimately, duty collections for the public purse. What is clear is that MUP has yet to affect the projections, given that volumes continue to rise over the next five years.

In March, we met with the new Exchequer Secretary to the Treasury, Robert Jenrick, mainly by way of introduction but also to highlight the general concerns of the industry as part of the new year-round campaigning effort on the budget. He came across as well-briefed and understanding of the issues facing the industry, asking sensible questions and showing a particular interest in exports, distillery growth and the English wine industry. This is an encouraging start to our relationship with the new minister, one which should be fruitful as we look to educate him further on the prominence of our industry.

You can download and view the latest duty bulletin releases on the HMRC website here.

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@optawine – Market Report: A cracking start to the year thanks to spirits and what’s happening with RTDs?

The second market report of the year brings some surprises in that the first quarter was probably the best 3 month period for some time, a realisation that spirits is carrying increasing weight in the industry, and, something I definitely did not expect this time last year, the return of the RTD. See below for a little more detail to supplement the latest WSTA market report.

A good start to the year

It’s good to start on a positive note for overall sales with the welcome news is that the off trade has had a good start to the year. Particularly given the same period last year was littered with negative growth, rising prices and things generally looking gloomy, it is welcome that there is positive growth in both quarterly volume sales (+2%) and value sales (+5%).Though the volume growth isn’t reflected in the yearly sales (yet), it is also welcome that over a slightly longer term, value sales have also growth, adding more than £700m over the last 12 months to the end of March. Spirits were a key contributor to this, adding 38% of it, or £281m, and no prizes for guessing where much of that came from. More on this below.

But wine also got in on the action: all wines contributed £217m of growth (which would have been had Champagne not been going through a tough time), 30% of value added in the first quarter of 2018, with still wine alone contributing more than £160m. Sadly, volume is still a sore subject for all wines with the exception of sparkling. But there are areas of encouragement, including usual suspects New Zealand and Argentina, but also Spain, Chile and Italy. We may want to keep an eye on these newcomers. With a lot of trade press buzz around Spanish and Chilean imports, and Prosecco still flying high, there is a base on which to hope for stability in wine and maybe even some future growth.

The on trade hasn’t fared as well, particularly in volume terms, but value sales in the first quarter of the year are just about keeping pace with inflation, though this has yet to filter fully into longer term sales. With inflation still somewhere around 3%, it’s difficult to describe this as genuine growth.

Spirits is where it’s at

The spirit category can be pleased as punch (aha) about its work over the last few years. In the year to the end of March, total yearly alcohol sales grew by 3%, or £1.063bn and of that £1bn, £578m came from the spirit category, representing 54% of all growth, and is now worth £10.5bn in yearly sales. The trade in general is becoming increasingly dependent on gin for growth; in the 12 months to the end of March, the gin category across both trades grew by £369m, representing 64% of growth in spirits and, remarkably, 35% of all growth in alcohol sales in both the on and off trade. In the first quarter of this year, gin also grew by more than £100m.

It’s also a very bright spot for the on trade. For the foreseeable future, volume sales in the on trade will be largely dictated by how beer is performing (accounting for nearly 80% of sales) but in terms of value sales, spirits alone account for 25% and adding in all wines and RTDs, that number increases to 43%. In terms of growth, spirits added £297m over the last 12 months, accounting for 89% of all growth in the on trade. With the gin boom, an emphasis on exports in the coming years, growing concerns over the rate of pub closures and rum achieving £1bn a year sales (and by the way, I think there’s more to come from imported whiskies), even more attention needs to be paid to spirits – not just gin - as it becomes increasingly important to the UK alcohol industry and in particular to the on trade.

Return of the RTDs?

Last quarter, my esteemed Comms colleague Lucy rightly pointed out something that I had overlooked; RTDs appear to be enjoying something of a renaissance. In the last market report RTDs recorded very reasonable yearly growth of 3% by volume and 5% by value in off trade sales, recording the 2nd quarter in a row of volume growth and 7th in value. If current trends continue, yearly sales could reach 500,000hls for the first time since 2014 and £250m for the first time ever by the end of the year, particularly if you factor in the growth figures posted in the first quarter of 2018 (+7% for volume and +8% for value). All this leads me to wonder if the success of spirits over the last few years is filtering into RTDs as, for example, single measure spirit mixers in cans become more popular.

Unfortunately, RTDs is another category where the on trade can’t live up to the recent fortunes of the off trade, with declining growth across the board continuing a downward trend where sales in both volume and value are half what they were in 2012. It remains to be seen whether the success of spirits can filter through to RTDs as it may have in the off trade, or whether there are extra barriers (cocktails maybe?) in the on trade for such a knock effect.

Sources: Thanks as always to Nielsen (Scantrack WE 24.03.18) and CGA (WE 24.03.18).

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Celebrating Scotland’s hidden gem

Gin may not be the first spirit you consider when you think about Scotland, but the industry in is undergoing a quiet renaissance that is bringing jobs, investment and exports to the Scottish Economy.

The gin boom across the UK over the past 5 years has been phenomenal, with sales increasing at a rate of around 20% a year, leading to a doubling of the number of distilleries in all countries of the UK. The industry is now worth over £1bn in UK sales (over £150m of which is in Scotland) and a further £530m in exports. Its growth shows no signs of abating.

While gin has always had a special place in the Scottish economy, with around two thirds of UK gin produced there historically, the recent gin craze has given the industry a renewed vigour from the Shetlands to Strathearn. Recent calculations estimate that there are now more than 50 distilleries in Scotland producing gin - that’s over a third of the 149 Scottish Distilleries in total.

To celebrate the innovation, creativity and provenance of Scotland’s gin producers, the WSTA launched “Scotland’s Gin Trail” back in 2015. Such is the extent of the growth that just two years later we published a renewed version of the trail which now features summaries on 20 gin distilleries that hold tours and tastings, and provides details for another 30 or so that we have identified.

The updated Gin Trail was relaunched in the Scottish Parliament in June, where the WSTA hosted a reception and showcase of Scottish Gin producers, both modern and traditional, to Members of the Scottish Parliament and others.

The investment in new gin distilleries in Scotland is helping to provide jobs and skills to the workforce, support local supply chains, increase exports and encourage tourism. Not to mention creating some of the world’s best quality and most iconic gin brands. All of which provides a boost the Scottish economy and, with the right business environment, this is set to continue over the coming years.

While Scotland will always be synonymous with its eponymous spirit, the renaissance and growth in the Scottish gin industry - its hidden gem - is certainly something worth celebrating too.

You can download Scotland’s Gin Trail here:



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