Bargain price war on wine is a red herring - Wine sold for less than £3 has halved over last three years

A recent article suggested that a bargain price war had started between supermarkets and discounters. WSTA’s Market Report showed a doubling of the amount of wine being sold for below £3 in shops and supermarkets.

However, while this appeared to show a trend, further research shows that this is a red herring.

Looking back from previous Market Reports, volume sales of wine below £3 a bottle were as high as 600,000htlr in 2010 and had halved to around 300,000hltr the following year.

They then fell dramatically to just 70,000hltr by 2014 before rising back up to around 150,000 in the latest report.

So while in the short term it appears to be doubling, the medium term trend shows that sales at this level have actually HALVED in just 3 years and is just one quarter of what it was in 2010. 

The most likely explanation for this sudden drop is that in 2013 the Government announced that it would be banning sales of alcohol below the level of duty plus VAT and by 2014 this policy was implemented.

In order to ensure compliance, retailers had to review and reshape their company policies in relation to sales prices of alcohol to ensure that no sale dropped below that level, which is £2.46 for a bottle of wine. 

It is likely that this price review had an impact as retailers were more cautious about their product lines and pricing during the implementation period.

Given the duty plus VAT level is a minimum of £2.46 per bottle of wine, this along with inflation, means we won't be seeing wine churned out at the bargain £3 mark for long.

In fact, the three price points above this (£3-£4, £4-£5 and £5-£6) are showing large declines. Meaning that wine is generally getting more expensive. 

What was clear from our market report is that people were becoming more discerning when it came to their choice of drink. The current trend shows consumers paying more for their alcohol but drinking less.

Wines of £6 and above are seeing increases in volume sales and those between £3-£6 seeing declines as you would normally expect with inflation and evidence of increasing average prices.

So the evidence suggests that this is an anomaly rather than a long term trend. We expect to see sales of wine at below £3 a bottle to continue on a long term decline.

Want to know more? Ask Jessica Norman
Jessica Norman

Jessica Norman - Head of Membership & Events

Jessica is responsible for all internal and external WSTA events and the day-to-day operations of the WSTA. Her role includes liaising and coordinating suppliers, inhouse design, inventory, and IT.

Email: [email protected]
Telephone: 020 7089 3884

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