UNITED KINGDOM

GEOGRAPHY

Surface Area : 244820 km²

Geographical position: The UK is situated in Western Europe, it lies between the North Atlantic Ocean and the North Sea, coming within 35 kilometres of the northwest coast of France, from which it is separated by the English Channel. The UK has a temperate climate, with plentiful rainfall all year round. The temperature varies with the seasons but seldom drops below –10°C or rises above 35°C. Although the UK is situated on latitude that would normally make the growing of vines impossible, the warming influence the gulf-stream has on the climate makes conditions ideal for the production of many wines. (Source: Defra) 

DEMOGRAPHY

Population : 60,975,000 (July 2007 estimate)

Capital : London (7,172,091 inhabitants)

Main cities: Birmingham (970,892 inhab.), Glasgow (629,501), Liverpool (469,017)

Demographic structure by ethnic origin: white (92.1%), South Asian (4%), Black (2%),

Mixed (1.2%), Chinese (0.4%), Other (0.4%)

Official languages : three (English, Welsh, Scottish) 

POLITICS

Political Regime : constitutional monarchy

Head of State : Queen Elizabeth II (since 6th February 1952)

Head of government : Prime Minister Gordon Brown (since 27th June 2007)

ECONOMIC STATISTICS

Currency : sterling/British pound £1.00 (GBP) = €1.17 (EUR) (24/06/09)

GNP : £1,445 billion (roughly €1,621.2 billion) in 2008

Principle industries : finance, services (banking, insurance, commerce), energy, agriculture

Wine growing in Britain began in Roman times between the first and third centuries. However, production was of little importance until the second half of the twentieth century. Commercial wine-growers first began production after the Second World War with significant development taking place during the sixties. This was made possible due to modern vinification techniques and the use of hybrid grape varieties. From 1970 onwards new vineyards sprung up using these new techniques resulting in the production of unique and characteristic white wines. In the last twenty years the growth of wine production in Great Britain has led to the creation of more than 380 vineyards.

UK WINE REGIONS

Nearly all of the vineyards are located in southern England and Wales but not in Scotland or Northern Ireland.

(Source : http://www.englishwineproducers.com)

Most vineyards are in the south-facing, chalky hills of the South, stretching from Cornwall and Devon in the West Country, across to Hampshire, Sussex, Surrey and Kent in the South-east and up to Suffolk, Cambridgeshire and Essex in East Anglia. Grapes are grown as far north as Leventhorpe in Leeds, which is the most northerly commercial vineyard. The six most celebrated English vineyards are Camel Valley in Cornwall; Three Choirs in Gloucestershire; Nyetimber in West Sussex; Ridgeview in East Sussex; Denbies in Surrey; and Chapel Down in Kent. Last year 1,500 vines were planted at Forty Hall Organic Farm in Enfield, London. (Source: The Independent,UK)

The majority of UK vineyards are small-scale operations, that is to say, less than two acres in size. Few of the vineyards are greater than ten or twenty hectares, although the biggest is eighty hectares in size (Denbies Wine Estate, based in Boxhill, near Dorking). Modern wine-growing techniques and hybrid grape varieties have allowed the creation today of many wines equal to those found in other parts of the world, especially the sparkling variety. Initially the grape varieties planted in British vineyards were principally from Germany. However, British and German wines are not the same style due to differences in the terroir and climate. (Source : English Wine Producers).

THE GRAPE VARIETIES (Source: English Wine Producers)

Today, as part of the EU, UK vineyards are regulated by the European Commission which specifies which grape varieties may or may not be planted. On average over 90% of wines are white varieties, although there has been a recent increase in red grape varieties due to the identification of black grapes that are feasible in the UK climate. Some vineyards produce rosé wines too.

The EU has recommended six grape varieties for the UK, these grape varieties are listed below as are the hybrids from which they are produced:

Huxelrebe - Chasselas x Courtillier Musqué
Bred in 1927 in Germany. Has a rather ‘muscat’ style and is a good cropper with good sugar levels. It needs careful management and can be used for dessert wines because of its susceptibility to ‘noble rot’. It has a high natural acidity and strong aromas of elderflowers, producing very fruity wines that age well.

Madeleine Angevine (or Madeline x Angevine 7672)
Designed for northern planting, it flowers late is an early, reliable cropper. It is useful for blending since it ages well and its relative low acidity will blend well with higher acid varieties. On its own it produces wines that are light and fruity with a pronounced muscatty bouquet.

Müller-Thurgau (also known as Rivaner)
Bred in 1882. The main grape in Liebfraumilch, and was used in Germany to restore the fortunes of their vineyards after the war but is now seen as bland. This grape was among the first planted in the U.K when grape growing resumed and was the single most widely grown variety for many years. It is now less popular being seen as a producer of unstylish wines. It is popular in central and eastern Europe. A vigorous early ripening variety, but can be a poor cropper.

Reichensteiner – Müller–Thurgau x (Madeline Angevine x Calabreser Fröhlich),
A popular variety in the UK – currently the second most widely grown variety after Seyval Blanc (2002). It ripens early and performs reliably, and is capable of producing large crops of relatively neutral grapes, high in natural sugars. It is reliable but a little bland and is often used for blending in both still and sparkling wines, having good sugar levels.

Schönerburger - Pinot Noir x (Chasselas Rosé x Muscat from Hamburg)
This grape is very successful in the UK, producing white wines with low acidity but high sugar levels and good Muscat tones (some resembling a less powerful version of Gewürztraminer). When fully ripe it has a pink tinge. Its wines are distinctive, full-bodied and delicately flavoured.

Seyval Blanc – Seibel 5656 x Seibel 4986,
Developed in the 1920’s in France. The most widely grown variety in the UK (2002). It crops heavily in this country, even producing good crops in cooler years, and has effective disease resistance. It is a good ‘all rounder’ - often used for blending, and is well suited to oak aging and used for still or sparkling wines. Single varietal wines offer crisp acidity, with quite neutral flavours.


These 6 recommended varieties plus Bacchus, (Silvaner x Riesling) x Müller – Thurgau, account for over 70% of UK vineyard plantings.

UK WINE PRODUCTION

“English wines are now taking more accolades at international competitions than ever before, and against competition from some of the best producers in the world” (Rt Hon Margaret Beckett MP, Secretary of State, January 2006 (Source: DEFRA)

Indeed the UK vineyard area has grown by 45% over the last four years with 1,106 hectares now under vine. The latest production and vineyard figures from the Department for Environment, Food and Rural Affairs, collected after the 2008 harvest, show year on year growth in planting is continuing. Total production in 2007 was 9,948 hectolitres: 7,751 hectolitres of white wine (80% of production) and 2,197 hectolitres of red (20%). However, these figures were much lower than average production figures. In 2006, total production was 25,267 hectolitres, whilst the average for the past five years is 16,071 hectolitres.

In recent years the most successful British wines have been sparkling varieties, generally produced following traditional “champenoise” methods. These make up some 15% of all wine produced in the UK, with this figure expected to rise over the next few years as the popularity of this style continues to increase. Indeed some of these wines (for example Nyetimber, from the West Sussex region) were very well received in blind tastings. In 2003 for example Theale Vineyard Sparkling Chardonnay made it into the world’s Top Ten Sparkling Wines at the world’s only dedicated Sparkling Wine competition in France.(Source: English Wine Producers)


However it is worth noting that overall the UK is only a very minor producer of wine with Welsh and English wines accounting for less than 1% of total wine sold in the UK.(Source: DEFRA)

ENGLISH WINE PRODUCTION STATISTICS

Bottles of Wine Produced 1990-2007
(Source: English Wine Producers)

These figures clearly demonstrate the diverse nature of the British wine industry. In 2005 the figure for the total number of bottles of white wine produced in UK was 1,390,267. This rose by over a million bottles to 2,691,200 in 2006. However in 2007 this figure once again fell, indicating the current difficulties faced by the English and Welsh wine industry owing to the high levels of excise duty and VAT which afflict English wine producers. Last year production average at about 2 million bottles (Source: Independent), less than 1% of the amount produced in France (6.9 billion bottles) and Spain (5.8 billion bottles).

In the graph below the difference between white and red wine production in the UK can clearly be seen, including the significant drop in production in 2007.

(Source : English Wine Producers)

PRINCIPAL ACTORS IN THE FIELD

The administrative council in the British wine industry is the United Kingdom Vineyards Association (UKVA). This is the official organisation that represents the activities of wine-growers and producers at a national and international level. It speaks in Brussels, in discussions concerning the legislation of wine.

The English Wine Producers is an organisation composed of the principle independent wine-makers in the UK, with the objective of promoting their wines to the media, the commercial sector and the consumer.

English Wine Producers,
P.O Box 5729 Market Harborough, LE16 8WX
Tel : +44 (0) 1536 772264 Fax : +44 (0) 1536 772263
Email : info@englishwineproducers.com
Contact: Julia Trustram Eve - Marketing manager
Email: Julia@englishwineproducers.com

The Wine Standards Board is an organisation which, since 01/07/2006 has been assimilated into the Food Standards Agency (FSA). Its mission is the application of EU rulings within the UK.
Wine Standards Branch, Room 315B, Food Standards Agency, Aviation House, 125 Kingsway, London WC2B 6NH
Contact: Alan Curran
Tel: +44 (0) 20 7276 8361 Email : alan.curran@foodstandards.gsi.gov.uk
Contact: John Boodle
Tel: +44 (0) 20 7276 8351 Email : john.boodle@foodstandards.gsi.gov.uk

While by no means definitive this list gives an idea of the spread of UK producer:

(Source: http://www.countrylovers.co.uk/prod/winemkrs.htm)

SUMMARY

Although the UK is one of the smallest wine producers in the EU, it is the largest importer by value in the world. Hence the UK is often considered to be the hub of the international trade in wine and as a result has a thriving industry which is worth between £7-9 billion. (€8-10.4 billion) (Source : Wine Intelligence 2005)

THE BRITISH WINE MARKET

English consumer spending in 2007 on alcoholic drinks was £42.6 billion (€47.7 billion), representing 5.0% of their total spending. £15.4 billion (€17.2 billion) or 36.2% of this sum was spent on wine (Source: WSTA). Indeed in the five years from 2003 to 2007 total UK consumption of still and sparkling wine rose from 127.7 million 9-litre cases to 144.6 million cases. The UK is a nation of wine consumers; among British adults, wine is the most frequently drunk of all drinks. Indeed one in three (34%) Britons who drink alcohol say they prefer wine (Source : WSTA)

The UK has seen a steady increase in wine consumption over the past decade. Figures released by TDA (Trade and Data Analysis) show a 17.42% rise in consumption between 2001 and 2005, rising from 16.16 litres per capita in 2001 to 18.97 litres per capita in 2005.(Source: The Wine Institute) According to the Wine and Spirit Trade Association consumption now stands at 27.9 litres per capita, a 67.9% increase in just 4 years. However this figure is dwarfed by other European countries, including France who consume 59 litres per adult per year, Italy (57 litres) and Switzerland (49 litres).(Source : International Organisation of Vine and Wine).
UK excise duty is £1.46 on a bottle of still wine (75cl), and £1.87 on a bottle of Sparkling wine (75cl). Consequently, the UK alcoholic drinks industry contributes around £14billion to the Exchequer per year. Employment in the UK alcohol and associated industries is estimated at 1.5 million people which is about 5.5% of the UK active population. ( Source: Wine and Spirit Trade Association)

PROFILE OF UK CONSUMERS

The British market is dynamic, and ever diverse, therefore before approaching it it is important to understand the habits of wine consumers in this country. A study carried out by the Office for National Statistics in 2008 interviewed adults to find out which alcoholic drinks they consumed on a weekly basis. The results were as follows:

This data clearly reveals that wine is more important, or more populr among women than with men. Indeed 59% of women said that they consumed wine on a weekly basis. This is over double of the figure for men with only 28% saying they drank wine on a weekly basis.

In addition a report by the research company TNS’s Alco Vision (July 2007), involving a study of around 20,000 British adults has revealed that women under 35 years old drink twice the share of white wine than they do red wine. Nevertheless they are drinking less white and more red than they were in 2004, and are the only group to include the USA and South Africa in their top five countries.

Indeed women under 35 years old drink on average 16 per cent of the white wine consumed in the UK (compared to 18 per cent in 2004); and 8 per cent of red wine (compared to 7 per cent in 2004.) More significantly women over 35 are drinking slightly more red wine than they were three years ago and slightly less white, although they still make up nearly half of the white wine market. Germany used to make the overall women’s top five countries, but since 2004 it has been replaced by Chile. The figures are as follows:

Women over 35 years old drink 49 per cent of all white wine consumed (compared to 50 per cent in 2004); they also drink 37 per cent of red wine (compared to 36 per cent in 2004).

COMPETITIVE ENVIRONMENT

The UK wine market is divided in two: wine sold for home consumption (that is to say, wine which in not consumed on site but sold in shops, supermarkets etc.) and wine which is consumed outside of the home (i.e. in bars, restaurants, hotels, cafes, etc.). The off-trade sector dominates the UK wine market, with volume sales of 83% and 62% in terms of value (Source: NZTE).

One of the major trends of recent years has been the growth of home consumption relative to consumption on licensed premises (Source: IAS). Sixteen per cent of adults drink more than twice a week at home, which has increased the off-trade's volume share of all alcohol consumption from 57% to 62% since 2003 (Source: TNS).

It seems British adults drink wine on special occasions, parties, evenings out with friends or with the family. In 70% of cases, these occasions involve food, therefore, most of the time, wine is drunk with meals: seventy-nine per cent of off-trade consumption is drunk with food - 60 per cent with an informal meal, 9 per cent at a formal meal or dinner party and 10 per cent with a light snack. Indeed the top six occassions for drinking wine were cited as follows :

1. Just having a drink (30 per cent)
2. Regular evening or lunchtime drink (28 per cent)
3. A sociable night in (13 per cent)
4. Rounding off the evening (9 per cent)
5. Having friends round or going to friends' (5 per cent)
6. Big night in /celebration (4 per cent)
(Source : TNS AlcoVision )

The following statistics represent the growth in household consumption of alcoholic drinks from 2001-2006:

As can be seen from these figures household consumption of wine in the UK has increased steadily during the period from 2001-2006 with British adults consuming in the home on average 255ml per week in 2006 compared to 236ml per week in 2001. This trend towards increasing home consumption continues into 2007 and 2008. Indeed according to figures released by The Wine and Spirit Trade Association (WSTA) the amount of wine released for home consumption in 2007 was on average 1,117.1 hectolitres, a figure which rose slightly to 1,123.8 hectolitres in 2008. An increase of over 70 hectolitres since 2006 when the figure stood at 1,051.9 hectolitres.

The graph above clearly shows this steady if not erratic increase in the amount of wine released for home consumption in the years from 2006- 2007.

The other sector (the on-trade market) represents just 17% of volume sales and in addition, is a very difficult sector to penetrate due to its fragmented nature.

Wine is especially popular in restaurants (59.5%), pubs or either as a drink in a bar or cafés.Wines that are sold in such establishments tend to be more traditional, generally European wines. In contrast, wines sold for home-consumption (and therefore purchased in a supermarket), tend to be new world wines. The table below shows the consumption of wine outside the home from 2001-2006:

In 2006 just 23ml per week per person of wine was consumed by the average British adult, signifying that just 9.01% of the all the wine consumed is consumed outside the home.

Nevertheless, consumption outside of the home strongly influences the behaviour of home consumers as buying wine in other premises provides an opportunity to taste new wines before buying a whole bottle. Therefore, consumption outside of the home is an advert for consumption in the home. (Source: Inside-Export, 2002)

TYPES OF WINES CONSUMED

Concerning the colour of the wines consumed, white wine is still the most popular in the UK with rosé wine rising fast and red wine falling back. According to Wine Intelligence’s Vinitrac® survey (2008) (source: http://www.wineintelligence.com) which questions regular wine drinkers about their drinking habits –rosé wine accounted for 10% of the off-trade in the UK compared to in 2004 when it represented just 5% of the market (Source: USDA Foreign Agricultural Service). Rosé wine consumption in the UK increased by 64% between 2003 and 2007, compared to a 13% rise for red and a 5% rise for white, according to figures released by Vinexpo in January. Moreover there is generally a female bias amongst rosé drinkers which is most pronounced in the UK where 62% of rosé drinkers are women (Source : Wine Intelligence 2008).


The general trend towards increasing wine sales is set to continue with figures showing that in 2008 we were estimated to have drunk more than 764 million bottles of white wine in Britain; that number is forecast to rise to 823 million over the next five years. In the same period, consumption of rosé wine is forecast to rise more than 47% from 150 million bottles to 220 million bottles. Consumption of red wine is forecast to fall from 720 million bottles last year to 687 million in 2012.

Indeed when asked to name what they drink over half (54%) of UK consumers say they drink white wine, 47% saying red wine and just over a third (35%) saying they drink rosé wine (Source: WSTA).

ORIGINS AND TYPES OF WINE IMPORTED TO THE UK

According to a world wide study complied using IWSR statistics, released by VINEXPO in January 2009, the UK is set to be the world’s biggest wine importer by 2012. The UK is currently the world’s biggest wine importer by value, in 2004 we imported about 13.5 million hectolitres, the equivalent of 1.8 billion bottles. However wine imports to the UK are set to grow by 6% between 2008 and 2012, enough to see the country overtake Germany to claim number one spot in the world wine import league.

France and Australia are the two principal importers of wine to the UK. France was previously always the premier exporter, but in recent years the Australian share of the market has rapidly grown. Concerning volume, French wines have always had the bigger share of the British market. However in 2004, for the first time, Australian wines surpassed French wines in volume and in value on the British market. In the same year, six out of ten of the best selling wines in the UK were Australian whilst French and Italian wines did not even appear in the top ten.

According to the agricultural service in the US, there are several reasons for this growth of Australian wines. Firstly the marketing of Australian wines is better suited to British market demands; Australian wine sales are represented by a small number of big-selling wines such as “Hardys”. High sales of these wines have led to success in British supermarkets which prefer to buy in bulk, in turn allowing low prices.



Despite this decline in European sales during the period from 1999 to 2005, as can be seen in the graph above, this is not to suggest that the French share of the British market is dead. This is especially the case in sales of sparkling wines which in 2005 represented just 15.4% of French wine exports in volume, but 38.4% in total value. It is a paradox that the most popular French wines in the UK are Champagne and Vin de Pays. In general, despite a decline in import figures in terms of volume, the figures in terms of value are not as worrying (Source: HM Revenue and Customs).

In fact, following 2004, the total value of French imports in 2005 was £475,783,341, greater than the Australian figures of £464,772,116. Consequently, the UK market is not necessarily about quantity, but quality. Indeed this trend can be seen to continue, if not becoming more pronounced, when taking into account the figures released by HM Revenue and Customs for imports of still wine for 2007-2009(first quarter).

In 2007 the value of still wine imports to the UK from France was £567 084 thousand whilst the Australian figure was significantly lower at £487 694 thousand. This pattern is repeated again in 2008 with the figures showing a widening between the value of French still wine imports and those of Australia with France importing £731 164 thousand worth of wine and Australia only £457 556 thousand. The figures for 2009, although provisional, show this trend continuing.

Indeed the value of still wine imported to the UK in 2008 from France (731 164 thousand) represents 28.9% of the overall market, an actual increase of around 5% on the 2005 figure (24.2%).In contrast the overall value of Australian wine has actually seen a decrease since 2005 when it represented 23.7% of the market. In 2008 Australian wine imports made up just 18.0% of the market, a decrease of over 5%.

Other than a continuing trend towards quality rather than quality in the UK market, there are several other reasons for this position of French wines in the British market:
- An agreement by the French government in 2005 to increase the marketing budgets for wine producers by 40%.
- A change in French marketing strategies towards Anglo-Saxon techniques, for example, advertising tactics have often become less pretentious but also more aggressive.
- Better cooperation between French wine-makers.

Despite these moves to increase the volume of French wine sales in the UK, France remains in second position when taking into account the overall volume of wine imported to the UK. In the recently published Vinexpo report (January 2009), the top five suppliers in order were: Australia, France, the United States, Italy and Spain. The US saw the biggest rise in the amount sold to the UK, with a jump of 34.5 per cent between 2003 and 2007, and France was the only country in the top five that saw a drop, Vinexpo said.


This reveals the current trend in the UK to choose new world wines over those from more traditional sources. Along with Australia, these include wines from Argentina, Chile, California, South Africa and New Zealand. Wines sales from these countries have increased at the expense of those wines from Europe, particularly Germany and Italy. The wines, made with unique and classic grape varieties such as Cabernet Sauvignon, Chardonnay, Merlot and Sauvignon Blanc are in the process of becoming labels themselves. They are produced in the southern hemisphere and sell at less than £5 a bottle. In this way Australian wines push the prices lower, maintaining their top place in value in the British market.

Studies have shown the Australian and French wines, for example, are not preferred by the same segment of the market, rather the opposite in fact. Australian wines tend to be drunk by the general public, where the market is modern and growing. Whereas French wines are preferred by more traditional or specialised segments of the market. For the English, wine is a sophisticated drink and difficult to understand, reserved for the more affluent or more cultured in society.

However, these preconceptions have started to change thanks to a broadening market appeal that wine is starting to enjoy. Australian wines are notably benefiting from these changing perceptions. Through using new packaging and new tastes, they are in the process of making wine more accessible, less pretentious and more contemporary to the majority of consumers. They thus render wine less complicated, and reassure the consumers by clearly indicating the label. Studies have also shown that there is a difference between the perception of wines from the new world and those from Europe.

New world wines are associated with values such as honesty, freshness, energy and youth. For the general public, they are the incarnation of “me” and are more in tune with a more relaxed and modern life. For this reason they are the prefered wine out of three of the four age groups in the study carried out by TNS’s Alcovision, women under and over 35 years of age and and men over 35 years old. Meanwhile, for the connoisseurs they can be seen as vulgar and crass.

For the general public, European wines are judged to be a little snobby, arrogant, lacking flexibility and expensive. However, for the connoisseurs they represent true wine.

THE PRICIPAL BRANDS

The off-trade brands most popular in 2008, released by the trade newspaper Off License News as part of its annual overview of the UK wine industry, were as follows:

 The figures in brackets are last year's position. Five of the top 10 come from the giant Constellation Brands and two come from Fosters, so seven of the top 10 are made by just two companies. (Source: http://www.wine-pages.com)

Interestingly for the third year running the top 10 is entirely dominated by New World brands. This clearly demonstrates the success of new world labels in the UK. A recent survey of 1000 UK consumers carried out by McGuigan Wines revealed that 73% of people lack confidence when purchasing wine and 84% admit to having little knowledge of the wine they drink (Source: justdrinks.com). It is possible that these figures explain in part the success of labels in the UK, especially for the companies from Australia, South Africa, Chile, New Zealand and the United States, which are now familiar brands in the UK.

The price of wine is also important because it gives an indication as to the level of quality of the wine. British consumers don't trust prices which are too low. However, the acceptable price for the buyer depends on the occasion or event and therefore varies a lot. The prices of wines are higher in specialist shops (i.e. wine shops) than in supermarkets. Promotions are a good opportunity to try wines which are normally more expensive for the general public.

Opportunities to develop the potential of the market in the United Kingdom
Research carried out by the “Waverly Group” and “Nielsen” identifies the following opportunities to develop the potential of the market in the UK:
- Work on consumer knowledge.
- Concentrate on sales for consumption in licensed premises in order to improve knowledge and appreciation.
- Create and use the labels. This study also identified the next platforms for developing the market:
- The clear link between consumption of wine and food.
- Association with the idea of relaxing, pleasure.
- Association with parties, social occasions, conviviality etc., especially targeting the young and females.
Obstacles to consumption:
- The younger market.
- The male market.
- The lack of knowledge among consumers.
- Poorly targeted actions.
- Excessive promotions.
The study also allowed insight into the following threats:
- Alternative fashions
- The consumer zapper
- Labels and their popularity peak.


AN UNSTABLE MARKET

According to the data compiled for VINEXPO 2009, the worlds biggest wine and spirit exhibition, UK wine consumption is forecast to rise despite the economic downturn.

The research reveals a detailed picture of wine drinking in Britain which grew more than 12% in the five years from 2003 to 2007 and is forecast to continue growing over the next five years, albeit at a much slower rate of just over 4% (Source : just drinks.com). There will be higher growth for certain categories however, such as rosé wine and also more expensive wines and sparkling wines which have seen volume sales soar by 44% since 2002 with 42 million litres sold in 2007.

The world wide study, compiled using IWSR statistics, offers a ray of optimism to UK wine merchants and retailers currently struggling to absorb 2008’s duty tax rises and steer through the deepening recession. (Source : just-drinks.com editorial team)

Despite this a report released by Mintel in June 2009 shows a fall in wine sales in the UK for the first time in over a decade and only the second time in 20 years. It suggests that UK wine drinkers consumed 1.16 billion litres of wine last year which is a fall of 2% on the previous year. It seems as though a mixture of health issues, the recession and the ever increasing rate of tax on alcohol has finally taken its toll.

The report by Mintel also reveals that on average each household in the UK consumes just over one bottle of wine a week and while significantly up on the average consumption figure of just half a bottle 20 years ago there are concerns about the short –term future. It also appears that the availability of cheap alcohol in general has seen more people drinking at home and less people drinking wine.

These figures clearly demonstrate the impact which the recession has already had on the market and raise concerns about the UK’s the future of wine sales in the UK.

Particularly hit by the downturn in the UK wine market are French wine producers. The French wine industry has been in decline for years, however the recession and the added strength of the euro will only add to its problems. Indeed Steve Lewis, chief executive of Majestic, said yesterday that restaurants and gastro pubs across the UK were increasingly switching from French wines to New World varieties as they fall out of favour and become more expensive. Mr Lewis believes that Britain is home to what he dubs a “Jacob's Creek generation” of younger drinkers who have never even tried a French wine, an issue that he believes poses a real threat to French producers. They have slashed their prices, but this might not be enough.

Exports of French wine fell by 12 per cent last year and are likely to decline further in 2009, according to Marlous Kuiper, an analyst at Euromonitor International, as they struggle to compete with flashier brands from Australia, California and Argentina. She believes that the strength of the euro and the recession will make things worse.

PRICING

In England, price is a very important subject due to excise tax and Value Added Tax (VAT). In the UK a bottle of wine costs more than in other EU countries due to excise tax of £1.61 per bottle (2008), a 17% increase on the previous year and also £0.55 of VAT which is added to the final price of each 75cl bottle of still wine.



Example of a 75cl bottle of still wine not exceeding 15% abv, imported from the European Union (Source : WSTA).

In the UK, 80% of wine bottles are sold at under £5. The average price of a bottle of wine in the UK has steadily increased over the past 3 years according to statistics released by Nielsen. In 2005 the average price was £3.85, this rose to £3.93 in 2006 and in 2007 this reached £4.01.
The average price for a new world bottle of wine is £4.46, whilst the average in Europe is just £3.36 per bottle. Indeed Nielsen data reveals that on average a bottle of wine from New Zealand in 2008 was £6, whilst in 2008 Australia’s average bottle price in the UK rose from £4.27 to £4.42. The average bottle price of Chilean wine in the UK is £3.98 (Source : www. Wineanorak.com), cheaper than the average new world wine. The price of South African wine has an average retail price of £4-6 according to statistics released by the Company of Wine People.
This is in comparison to the price of French wine which in 2008 rose from £4.17 to just £4.29. The price of Spanish wine is also lower than that of new world wines, in 2008 the average price was £4.13 according to Nielsen figures.