UK alcoholic drinks market suffering from tax increases

Press Release   •   Oct 18, 2012 11:55 BST

The UK alcoholic drinks market has been forecast to decline by 6% in real terms over the next five years, due to the regions above-inflation tax hikes.

The market had initially seen strong growth over the past decade, with the overall the value of the UK's alcoholic drinks market increasing by 15.6% between 2000 and 2010 to £37,913 million. This growth was driven by wine, which saw a 53.3% value increase, with the spirits and liqueurs sector also seeing strong growth of 22.8%.

However, it has been predicted that the UK alcoholic drinks market will suffer over the next five years as a result of its reliance on imports which, alongside higher taxes, are driving up prices.

Many consumers will cut back on their spending wherever possible, which will inevitably result in many consumers spending less on alcoholic drinks as they seek to economise. Overall total volume sales are thus unlikely to see any recovery following a sharp 10% decline, with a further 2% decline expected through to 2016.

Manufacturers and retailers will have to work hard to convince consumers to spend dwindling disposable income levels on alcoholic drinks. The London Olympics in 2012 is expected to increase inbound tourism to the UK and hence expenditure on food and alcoholic drinks in the year. However, the Euro debt crisis is subsequently set to hinder growth through 2013.

The leading multinational brewers in the United Kingdom continued to dominate sales of alcoholic drinks in total volume terms at the end of 2011. The top four players were Heineken, Inbev, Molson Coors and Carlsberg, with these players together accounting for close to half of all volume sales.

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