The Grapevine

The WSTA's views, distilled.

Gin, wine and whiskies all a key feature of the first market report of 2018

The new market report shows some old themes by now are so expected that it’s like light snow causing train services to be cancelled; you’d be a fool to expect otherwise. For example, we are now so accustomed to seeing growth in gin that the only surprise left how big the growth is. There are worse surprises out there. The price of wine in the last 18 months, for example, has much the same problem as gin growth, but it is far from a good thing. New themes can and do appear also, just to keep us on our toes and it is imported whiskies, as well as flavoured spirits we find something new to talk about and some possible indicators that point towards current consumers trends.

Gin (again!)

This time last year gin was plodding along very nicely; low double-digits, but double digits nonetheless. 12 months later that has all changed having added 9.5m bottles (+23%) sold in 2017 compared to the year before worth an extra £295m (+27%), enough to pay the entire civil service for a month (you’re welcome Sir Jeremy).

The equivalent of over 50m bottles were sold for the first time with a value of £1.4bn, add on 2017’s exports value and it’s £1.925bn, perilously close to £2bn. Three more quarters of similar value growth and gin may well be a £2bn industry based on domestic sales. Two more quarters of similar growth in the on trade and it’ll be worth £1bn to pubs, bars and restaurants alone.

Quarterly value sales over the Christmas period were the real star, with 29% growth in the on trade and an incredible 38% in the off trade, adding an extra £104m to the market overall. Polling conducted late last year also stated that 38% of people would consider giving and 33% would be happy to receive gin as a Christmas gift, surely proof that gin is the tonic for all seasons, not just the summer.

Wine prices: premiumisation or polarisation?

Wine prices continue to be a cause for concern, not just with the dramatic increase since the referendum, currency devaluation and ensuing inflation - all of which means it costs more to supply the market - but it also may have adverse effects on demand. The average yearly price of wine has again risen in the off trade to £5.64, up 8p on last quarter. Since 2014, the average price rose 28p from £5.36, 23p of that occurred from 2016 onwards. It’s an excellent example of inflation starting to bite but it also presents other issues when analysing market data. On the graph below I have overlaid average wine prices and CPI inflation because it shows neatly fits relationship with prices, particularly for imported products.

But it also forces us to recalibrate what we consider when looking at the data and discussing premiumisation. Inflation is disrupting the price points data (p.6) so much that it is increasingly difficult to point to premiumisation, at least as a general trend, rather than simply saying prices are going up which is pushing all products up the price brackets. Last year at the Research and Insights Group a valued member suggested that in fact premiumisation isn’t really happening to any large extent in the wine market, and that it’s more accurate to suggest that polarisation is occurring, where some consumers are opting for more expensive wines and others opting for cheaper ones, which wouldn’t necessarily affect the average price. It could also be suggested that, if CPI is 2.7% (for 2017), then any % increase above that could represent premiumisation. Maybe, but industry specific issues such as increased import costs and duty rates, as well as more industry wide issues such as changes in business models as Brexit looms over the horizon may be more applicable than inflation.

Tell me what’s your flavour

Imported whiskies is a category that is rarely talked about, and unjustly so. It’s the best-selling whisk(e)y in the on trade and is worth nearly £800m to the UK spirit market, about 7.5% market share. But it also represents an opportunity for consumers to do what they currently do best in the UK: experiment. This means new flavours and new experiences with products from offshore and imported whiskies gives them that opportunity as well as a new take on something familiar.

Imported whiskies










% chg




Japanese whiskies have certainly made waves in the UK in the recent past, with volumes having more than doubled in the last 5 years or so. According to the IWSR, global sales of US whiskey increased by about 6% between 2010-15, 5.56% in Europe and in the UK it’s about 6% in the last year alone. All this could change, though, depending on what side of the bed Mr. President gets out of and chooses to continue with his trade war (also, one of the finest headlines you’ll see this year). Back on planet Earth, Irish whiskies are also faring well, backed up by a consistent stream of news about new distilleries opening up across the country. Global sales are up nearly 10% between 2010-15 and are projected to add another 7.16% to 2020. European volume sales of Irish whiskey are smaller at 3.7% and a projected 2.6% to 2020. UK volume sales increased 5.2% between 2014-15.

Other categories also suggest that (new) flavours are on the rise. Flavoured vodkas and flavour/spiced rums are all in growth in both the on and off trade, and CGA have consistently suggested that golden rum is the next big thing in the on trade. Also, the WSTA receive a lot of questions about this from the trade press who, keen to find the next big trend, are featuring ever more interesting flavours of spirits including vodkas and rums, but also flavoured gins. While flavoured gins in the UK currently account for less than 0.5% of the market, it’s likely that start-up distilleries are, rightly, trying to find their USP so any claim to the ‘next big thing’ for any new flavoured gin is probably premature. That said, gin can currently do no wrong, so it would come as no surprise if one of them rocked the boat with a revolutionary new gin flavour.

So a mix of good and bad news, and also food for thought.

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Yearly gin exports reach £500m

There are many (us) in the industry who have been predicting this point will come for some time now. There are also others (us again) who have been predicting gin in the UK will be a £2bn industry by the end of 2018 and, now that exports have reached such a landmark, this seems inevitable. And there are some (everyone, including us) who have seen the rise of UK sales grow and grow waiting for something to occur that will check the industry’s meteoric rise. Until now the UK gin industry has never much resembled a tidal wave crashing onto land but more of lapping shore line as it approaches full tide, with strong but consistent growth rather than an explosion. But with accelerating growth in the UK gin market and now in UK exports, more, not less, speculation will surely occur about the fate of the juniper spirit.

As always, the facts come first, courtesy of HMRC. The UK has achieved £500m in yearly gin exports for the first time - £532.4m to be exact – representing a 12% increase on 2016. Key markets for gin regionally are North America – which passed £200m for the first time - the EU – which grew by 16% and remains by a distance the largest import region – and, though a smaller market but one with lots of potential, Asia and Oceania (see below). This further strengthens our export strategy that this year is targeting Asia and the East Coast of North America in particular (ask Rob for more details on how to get involved).


Value £




% chg





Asia and Oceania




E. Europe




Latin and C. America




Middle East and N Africa




North America




Sub-Saharan Africa




Western Europe exc EC




Stores and Provisions













The USA remains the world’s bigliest importer of UK gin, importing £184m worth in a year to November 2017, up very nearly £12m on last year, #MAGA one G&T at a time. Signs are that gin sales by volume in the US is broadly flat but value sales have increased around 8%, indicating US consumers are enjoying more premium brands, which plays well with exporting UK’s growing number of available gins and the WSTA’s ambitious gin-producing members attending our trade missions. You’re welcome Mr. President.

Another landmark: £100m worth of exports in 12 months to Spain for the first time, up nearly £7m on 2016. Spain is by far UK gin’s top EU market, importing more than the five next biggest markets - Germany, Italy, France, Greece and Belgium - combined (£94.5m). The 7% increase in gin exports to Spain is encouraging and part of a clear trend in there that mirrors the UK domestic sales experience; by value sales have increased by 40% in the last five years, over a third by volume. This indicates that, whilst Spain has been and remains a key market for UK gin, there is still a lot of head room for exports as long as exporting to the EU remains as unhindered as possible after Brexit, something that was brought into question last week but is crucial for gin as well as other goods.

If it were @optawine’s job to predict things, it would say that there are more landmarks ahead (the £2bn mark (domestic sales + exports) is tantalising close at £1.8bn as it stands but next month’s market report will reveal more). Export trends tend to follow domestic ones so, following on from the accelerated growth in the UK market, we might expect faster export growth in the coming years, which makes the idea of gin exports a £1bn industry within the next decade a real possibility. A slowdown in gin sales and exports is inevitable, it seems glib to even suggest that given these export figures, but there are currently no signs of it so we can only expect further and fast growth in exports in the years to come.


So all is well in the gin industry which has casually brushed aside difficult domestic market conditions to continue increasing growth and is fast becoming a key driving force in UK food and drink exports. The tonic and lemon industry can thank us later.

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UK price of alcohol 43% higher than EU average

The ONS released this little nugget last week on the price of alcohol (and other goods). The headline stat: the UK alcohol beverage price level is 42.7% higher than the EU average, which is appalling news for consumers and curious news for public affairs types. A small bit of context; spare a thought for the Finns and Irish who pay more than 70% the EU average.

The data use the purchasing power parity to equalise price difference on a basket of goods, similar to how inflation is measured, in currencies and exchange rates used across the bloc. In other words, through this we can eliminate differences in price levels between countries, which in turn means we can accurately and legitimately compare prices across countries.

This is a good indication of how consumers suffer under regressive tax regimes. For example, the UK has the 4th highest price level for alcohol in the EU behind Finland, Ireland and Sweden. The UK also has the 4th duty level for spirit products, behind Sweden, Finland and Ireland (in that order). The UK has the 3rd highest wine duty rate behind Ireland and Finland (Sweden is 4th) and the third highest rate for beer, again behind Finland and Ireland (and again, Sweden is 4th). Proof if ever there was that the price of alcohol is correlated to duty rates, which is bad for consumers.

At a time when CPI inflation is 3% and RPI inflation at 4.1%, it is little wonder UK features so highly on this list, especially given other EU member states aren’t currently in the throes of such drastic rising prices (for example, current inflation rate in the Eurozone is 1.4%). As of September last year, the latest WSTA market report shows prices of wine and spirit products in the off trade increased by 4% compared to the summer of 2016, showing a direct link of the effect on consumers of a policy, enacted in March’s Budget, that indexes duty increases to RPI inflation, the much maligned measure of inflation that ONS itself has rejected. In fact, only yesterday the Governor of the Bank of England, Mark Carney, ‘called time’ on RPI, suggesting the UK scrap it altogether because it ‘has no merit’. That is why the industry was so glad to see the Chancellor freeze duty rates in November.

The ONS and other commentators expect CPI inflation to decline slowly towards the targeted 2% annual rate over 2018, though many have refrained from saying it will achieve this target this year. Commentators don’t usually comment on RPI and the Bank of England doesn’t set a target for it, but given it is almost always about 1% higher than CPI we can expect it to remain above 2%, which is further bad news for consumers and industry and why the WSTA will continue to press for, as a minimum, no further increases in alcohol duty.

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More than 300 distilleries are now online in the UK.

It’s almost as if these turbulent political times don’t matter to the world of spirit making in the UK, such is the rise in distillery registrations in the UK. 49 new ones opened in 2017 alone, with numbers doubling in the last five years.

Firstly, let’s get the numbers right; 49 is the new number of distilleries registered with HMRC to produce in the UK in 2017. However, 7 operators deregistered so the UK actually boasts 42 additional players to the spirit market for 2017. The number registered in England was 22, which means it tops the list for number of new entrants with 20 opening in Scotland but, with 5 deregistrations in England and 2 in Scotland, the number of new players for each is 17 and 18 respectively. Readers can decide who wins that particular battle. Wales gained 4 new distilleries bringing its total to 17 and Northern Ireland are up to 14, up 3 on 2016. 

In total the UK now has 315 distilleries online (see above), up 172% from 116 since 2010 when the WSTA first started collecting the data, so 199 in just 7 years. The graph above shows very well the acceleration of growth in the last 5 years, where percentage growth hasn’t even threatened to be lower than double digits since 2013 and total growth has been more than double since then (127%) compared to the 21% between 2010 and 2013. Compelling numbers.

149 distilleries are now online in Scotland compared to 90 in 2010, so even the land most famous for distilled products has grown by nearly 2/3s. Northern Ireland had only 2 when Clegg and Cameron were canoodling in the Rose Garden, but has increased its distilleries 6-fold since and Wales has added 16 more from its 1 in 2010. The most curious region of the UK, though, is England who in 2010 has only 23 but as of 2017 now has 135, meaning of the 199 registered since 2010, England alone accounts for 56% of them. To add further context, London alone now has more than the whole of England did in 2010.

It is easy to point to the gin explosion as the reason for this boom in online distilleries and undoubtedly this will be a factor. In 2010 there were estimated to be around 40 UK gin brands in the UK, as of 2016 the best guess is around 75 (though another 20 exist on the UK market) and the majority of these will be UK based brands, though part of this may be also down to improvements over time in data collection. Add to this the wealth of impressive UK sales and export numbers and you have a compelling case. But there is more: the same data states that since 2010 the number of Scotch brands in the UK market has more than doubled to 246 from 119. UK vodka brands went from 20 to 32 in the same time frame. The fact that the overall market for the latter two is fairly flat in recent times suggests that any new entrants are merely eating market share of others but, with gin’s exponential UK sales and exports, new entrants appear be adding to the pie.

While no one should assume that there are many who are out solely to make great gin and lots of it, there are incidents of gin producers making gin but also biding their time until the brown stuff is ready for sale. This means that it can’t be taken for granted that all new distilleries are solely for the purposes of growing the gin category, though it has clearly helped, nor does it mean that as new whisk(e)y brands come on to the market, that growth in gin will slow. But it does imply that more brands in other categories will become available in the not-so-distant future, something that has already been happening in all spirit categories for a number of years. The question then is: will new whisk(e)y eat into existing market share, or will it increase the pie?


All this shows the UK spirits markets is in rude health, the latest HMRC figures show this at grassroots level, and remains an exciting industry to be in. It will be interesting to see how all spirit categories develop over the next few years, as there are some potential market disruptors in barrels,  and signs are all categories will witness some movement in one way or another.

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Briefing: Latest ONS inflation figures released

The ONS have today released new inflation figures which show some good and bad news for wine and spirit consumers and businesses. The wine and spirit industry is a big player in the FMCG sector and as such inflation figures matter greatly. What is more, every year the Budget – now in November – means the industry faces the very real possibility of price changes that are outside of the control of the market in which we operate. Let’s keep this brief, inflation is hardly the West Wing and we’ve only just had a Budget.

CPI inflation was down 0.1% in November to a flat 3% in December 2017, which is good news for consumers. CPI for beer declined 0.6% to 3.8% in that time, spirits declined a massive 2.2% to 1.5% but wine increased 0.3% to 3%. The decline in the overall CPI rate, albeit about as small as it can get, could be the first signs that the effects of the devaluation of the sterling in 2016 are slowly stabilising, but this is little solace to wine and spirit importers whose prices continue to rise, contrary to most other goods.

Conversely, RPI has increased 0.2% to 4.1% in December 2017, the highest rate for the entire year. There are two things to note here: firstly, alcohol duty increases during the Budget are linked to a projected rate of RPI inflation, not CPI, by the OBR who base their projections on previous data. Should RPI continue to increase in to 2018, it will not be welcome news to the industry in November. Secondly, that RPI has increased when CPI has decreased only supports the notion that RPI is an outdated metric, now rarely used in policymaking and something we campaigned on during November’s Budget. How the ONS treats RPI data, which isn’t as detailed as other measures of inflation, is also an indication and they have openly stated they recommend people do not use it. For example, wine and spirits are measured together and register a 0.5% decline to 2.7%. This might represent something of median between CPI’s decline in spirit prices and increase in wine’s, but it is impossible to know for sure.

Having been the case throughout 2017, the UK continues to outpace the EU as a single bloc, who are at 2% (measured by the EU’s Harmonised Index, which measures UK inflation at a slightly higher 3.2%), with Germany at 1.6% and France at 1.2%.


A decline in inflation will likely only happen slowly and it will be important to keep an eye on ONS releases, either through this blog or directly with the ONS, whose excellent dashboard gives a brief overview of the UK’s economy.

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