Festivities only manage an average haul
Nielsen consultant Graham Page looks at christmas drinks trends
As we all know, Christmas is the core sales period of the year for drinks suppliers and retailers. Many categories have a huge reliance on Christmas sales.
So I have taken this opportunity to look at GB off-trade retail Christmas alcoholic drinks trends in 2007 and the relative winners in retail and brands.
Of course, the year of 2007 has not been without incident and many problems for the trade and suppliers. In the summer - or should I say non-summer - the British monsoon arrived, coinciding with the English smoking ban on July 1.
The off -trade market reeled, more so the on-trade market, with the effect of the awful weather.
Whil e the on-trade's woes deepened as the year went on and the smoking ban bit hard, the off-trade did recover to post annual growth of 2 per cent in total alcoholic drinks sales value. Not spectacular when compared with grocers posting near 8 per cent growth in general merchandise value, but perhaps not bad after the summer collapse in all drinks sales versus summer 2006.
Of course we have to see the return of limited GB off-trade retail value drinks growth against a backdrop of falling stock markets, Northern Rock and sub-prime financial problems, highest-ever fuel prices, gradual but significant increases in food prices, increases in house repossessions and more companies going bust. The consumer is choosing to pay back debt, given we are told we are £3 trillion in debt as consumers, plus banking confidence seems in the short term to have been undermined, so borrowing is restricted or non-existent.
By definition, the consumer is reining back on expenditure and across non-crucial retail sales in general and the on-trade is suffering as the off-trade and its keen low drinks prices increasingly grow consumers' household purchasing of drinks.
That said, let us be clear that Christmas 2007 was pretty average for drinks growth compared with previous, headier years. Whichever way you cut Christmas, more often than not it was a little less important.
Total store growth in the crucial 12 weeks to Christmas slowed to 4 per cent, down 1.5 per cent versus the same period in 2006, equating to a sales gap of £427 million .
Tesco remains market leader, but with lower growth ( 4.9 per cent) and Morrison's was a big winner ( 9 per cent), heavily supporting alcoholic drinks and outspending competitors in advertising by some margin . Biggest losers were the multiple specialists, down by 8 per cent in the Christmas period.
GB off-trade now accounts for nearly 40 per cent of beer sales, multiple grocers now account for 24.5 per cent of GB retail beer sales and Tesco alone 7 per cent.
This now makes multiple grocers bigger in volume sold than the biggest pub channel of tenanted/leased pubs, of which there are 30,000 .
Beer had a strong late November/early December surge, but slackened towards Christmas.
Spirits' share of alcohol sales has fallen over the past two years, with Diageo dominating the category with growth of 7 per cent. As Paul Walsh, its chief executive, says: "We are about affordable indulgence."
Vodka has driven spirits growth,
accounting for 50 per cent of the growth.
Wine had a reasonable Christmas, but its mix of sales fell back, as did Champagne and sparkling.
Of course, multiple grocers continue to drive off-trade trends and long-term share growth trends continued at Christmas for cider and still and sparkling wine, while beer and spirits' share decline was less steep.
Deep offers continued into the key Christmas trading period at an unprecedented level of 55 per cent of liquor on promotion as retailers did all they could to get consumers to spend in store.
Morrisons offered the deepest promotions within the Big Four grocers, Asda matched Sainsbury's activity in the last eight weeks of trading and Tesco's spend on offer was higher than previous Christmas es, but lower than the other three in the final eight weeks.
Out of town stores, megastores and superstores grew 5.4 per cent (54 per cent contribution), high street large and small stores grew 2.6 per cent (26 per cent contribution) and convenience grew 2.4 per cent (20 per cent contribution).
Multiple grocers dominated BWS value spends with 74 per cent versus impulse at 26 per cent.
There's strong evidence of seasonality, with huge differences between cider at 17 per cent and creams at 53 per cent, against a non seasonal average of 15 per cent for all drinks.
We have an average Christmas behind us, but with a very tough 2008 to follow. Let's hope there's a summer, European football or not.
There is evidence that some categories have seen value increases and the drinks industry will clearly be looking for more of this in 2008, given considerable raw material and fuel cost increases and the likelihood of above-average duty hikes in March.
Of course, whether retailers will allow this to impact on retail prices in shops, in an even more competitive market for consumers' shrinking disposable income, remains to be seen.
But the political, social and health issues on the pricing , merchandising and promotion of alcohol in the off-trade will not go away, any more than they have for the on-trade, so w atch closely what happens in Scotland, as this may prove a blueprint for England & Wales.
Importance of Christmas period to annual sales in GB offs - eight weeks to Dec 29