Market and Trade Data
U.S. Wines Poised To
Improve Market Position
in the United Kingdom
FAS Report UK7001
United Kingdom is the world’s largest wine importer. Its
purchases grew 25 percent from 2001 through 2005, when
they topped $9 billion. Sales have been boosted by
consumers drinking greater quantities, slightly higher
quaffing of more expensive varieties, and negligible
domestic production. U.K. (United Kingdom) market
expansion slowed in 2006, when sales value grew by 1.8
percent and volume by just 0.2 percent.
United Kingdom enjoys a wide variety of wine imports
from around the globe. Australia is the No. 1 supplier
to the U.K. market, with France second.
for wine sales by large U.S. producers in the U.K.
market can be difficult to discern, because so much
production is transshipped to the United Kingdom through
mainland Europe. According to U.K. customs data, the
country imported almost $3.6 billion of still light
wines in 2005 — 10 percent of it from the United States.
ACNielsen data, drawn from sales in supermarkets and
other retail outlets, show that U.S. wine sales in the
U.K. market grew by 8.7 percent in volume, and 10.4
percent in value, from October 2005 to October 2006.
this is good news for U.S. vintners, and the outlook for
U.S. wines in the U.K. market is extremely bright.
Market observers expect that the United States will
continue to make substantial market gains for the
– and Perhaps Connoisseurs — Key to Swelling Sales
Wine is consumed by almost two thirds of the U.K.
population. The average wine consumer now drinks 32
bottles every year. Consumption is steadily rising due
to increasing personal disposable income and lifestyle
influences from continental Europe.
persons over 35 years of age constitute the largest wine
consumer group. They also account for the increase in
wine sales, as opposed to younger consumers being
attracted to wines. Slightly more women than men drink
wines: 68.5 percent compared to 62 percent.
wines are driving the U.K. market, providing many
consumers with comfort because they lack the experience
to choose by grape and region (since few have knowledge
of European appellations). Some consumers are brand
dependent; they will trust a name and pay for security.
there is a small but growing group of U.K. consumers who
are wine connoisseurs. They have an interest in wines,
and are capable of making choices by grape variety,
regional characteristic, and individual production
method. These experimental enthusiasts will respond to
more detailed messages on provenance.
Color Wine Preferences
U.K. consumers prefer white wines over reds (48 percent
versus. 44 percent). Fashion trends heavily influence
the relative popularity of wine varietals in the market.
U.K. consumers currently favor lighter, cleaner, unoaked
whites, such as Sauvignon Blanc, and, in particular,
Pinot Grigio – it showed an enormous leap in sales in
2006 of 74 percent. Chardonnay remains the number one
white variety sold.
blush wines (made from red grapes with the skins removed
after being in contact with the juice for a short
period, resulting in a taste more similar to white
wines) are currently in vogue. Rosé sales jumped by
almost 32 percent between October 2005 and October 2006,
and they constitute 8 percent of the total
market. The increase is predominantly driven by young
female consumers purchasing easy-drinking wines such as
most popular red wines are Cabernet Sauvignon, Merlot,
and Shiraz/Syrah. Pinot Noir has recently become
fashionable, growing 18 percent in retail sales between
October 2005 and October 2006.
contrast with still wines, sparkling wines contain
significant levels of carbon dioxide. Champagne is the
classic example of a sparkling wine, and laws in most
countries reserve the name Champagne for a specific type
produced in the Champagne region of France. However,
many other countries also produce sparkling wines,
including Italy, Spain, Germany, Australia, New Zealand,
and the United States.
wines generally have a younger audience than still
wines; 20- to 24-year-olds are more likely to choose any
sparkling wine, while 25- to 44-year-olds are more
likely to choose Champagne. Consumers increasingly
perceive sparkling wines as informal and suitable for
popular style of wine consumed in the U.K. is relatively
young and ready to drink. Most wine is purchased in
75-centiliter bottles. However, bag-in-box wines now
account for 10 percent of the United Kingdom’s still
wine retail market, and there is a growing market for
250-milliliter bottles. Following years of debate, U.K.
consumers have ultimately shown little resistance to the
introduction of screw caps on their wine bottles.
generally do not consider alcoholic content specifically
when choosing wines. High-alcohol content is apparently
not a barrier to sales, since many New World reds have
relatively high alcoholic content, and their sales are
of Fortune in Wine Retail and Food Service Sectors
The retail sector accounted for 79 percent of the volume
of U.K. wine sales, and 54 percent of the value in 2005,
driven predominantly by promotions and discounting.
Competition in the supermarket segment has led to a
systematic decrease in the average price of a
75-centiliter bottle, despite consistent excise tax
increases from the U.K. government. Supermarkets are not
concerned about the amount of discount wines sold, since
wine suppliers bear the costs of sales promotions. Many
U.K. consumers appear content with the variety offered
by their local supermarket, and pick up a bottle of
whatever wine is on sale.
smaller wine producers are finding it difficult to
compete in this environment, and the wine trade is
concerned that it may decrease wine choices of wine for
the U.K. consumer over time. Specialist wine chains have
seen some of their market share eroded by supermarket
chains but, with growing consumer interest in wines,
they are experiencing something of turnaround in
fortune. Volume share for the specialist wine trade is
expected to have risen slightly in 2006 over the
previous year, and sales of premium wines continue.
the food service sector accounted for 21 percent of
total wine volume sold, but 46 percent of total value.
Restaurants and hotels have experienced tougher trading
conditions than pubs and bars. The practice by
restaurants and hotels of adding a staggering 300-400
percent markup on wine discourages many consumers from
choosing better wines at these outlets.
bars, on the other hand, have become a good value
alternative, and many display their wine lists
prominently. Pubs and bars are also more likely to sell
wines the glass in, encouraging people to experiment
with higher-value wines.
and the New – Assessing Market Dynamics
Since 2003, total sales of New World wines, mainly from
Australia, the United States, South Africa, Chile, and
New Zealand, have surpassed those of traditional Old
World suppliers such as France, Italy, Spain, and
French wines continue to lose ground in the U.K. market.
In response to market conditions, French producers, in
liaison with U.K. importers, are launching innovative
branded wines with grape varieties on the labels. France
has strong brands such as Bordeaux and Burgundy that
enjoy a loyal following among those U.K. consumers who
are very knowledgeable about wines. On the basis of
these points, French wine sales may recover, but it may
take many years. France’s best performing wines in the
U.K. market are (paradoxically) Champagne and Vins de
Pays. Champagne sales are linked to brand awareness. The
mass market Vins de Pays delivers quality, fruit-driven
wines at a competitive price, and importantly can label
by grape variety rather than geographic region.
Just over one bottle out of every 10 sold in U.K.
supermarkets is Italian, making Italy the fourth-largest
supplier to U.K. supermarkets. Italian exports continue
to grow, albeit more slowly than those of Australia and
the United States. Chianti, Frascati, and Pinot Grigio
enjoy healthy sales, with Pinot Grigio the new
Chardonnay of the U.K. market. Italy’s diversity of
wines is said to be its greatest strength, but also its
greatest weakness as U.K. consumers struggle to
understand the relative merits of its different regions.
Volume and value sales for Spanish wines stagnated
somewhat through October 2006, and Spain is in danger of
being overtaken by Chile on both accounts. Aside from
Rioja and Cava, U.K. consumers find it hard to identify
with Spanish wines. Rioja comprises around one-third of
all Spanish wine sales. Sales are dampened by the trend
toward Shiraz/Syrah, Malbec, and Pinot Noir. Spain has a
reputation for cheap red wines, with many selling for
under £3 ($5.86 according to the February 2007 exchange
rate). Spanish still white wines are less well known.
Some Spanish wine brands are beginning to emerge,
particularly from Ribera del Duero.
Whining About the
U.S.-EU Wine Accord
|In March 2006, the United States and the EU (European
Union) signed the first phase of the U.S.-EU Wine
Agreement. The accord represents an important step
forward because it gives U.S. vintners more certainty in
meeting the import regulations and therefore in
supplying the U.K./EU market.
the agreement is expected to facilitate trade by mutual
acceptance of winemaking practices, and to provide
consensus on labeling, certification rules, semi-generic
names, and origin. In addition, the removal of the
requirement that still wines should contain less than 15
percent alcohol by volume has opened the door for some
boutique wines previously excluded from the market and
for sweet and dessert wines. Further information on the
U.S.-EU Wine Agreement can be found at:
Although still in first place, the growth of Australian
wine exports to the United Kingdom slowed through
October 2006. Large brands play a crucial role in
Australia’s success, and it has five of the top 10
brands by value. As the focus of the U.K. supermarket
chains is firmly on profit per square meter, they turn
to big brands to fill their key promotional slots.
Consequently, an estimated two-thirds of Australian
wines are sold below recommended retail price.
Oversupply of Australia wines has largely made
U.S. wine sales in the United Kingdom are largely driven
by the Blossom Hill and E&J Gallo brands. Blossom Hill
alone may account for one-third of U.S. sales. In recent
years, trade sources have described a polarity in the
supply of wine by the U.S. to the U.K. market: plentiful
supply of lower end wine and ample supply of
boutique-priced wine. The Wine Institute of California
is continuing its high-profile campaign to demonstrate
to the trade that the United States can supply adequate
wines for the U.K. market’s needs in the mid-price
South African exports to the United Kingdom dropped by
10 percent in volume and in value through October 2006.
Industry sources attribute part of the decline to the
purchase of the Kumala brand, which has recently
accounted for 22 percent of South Africa’s exports to
this market, by Constellation, the world’s largest wine
company, causing interruptions in Kumala’s distribution
and marketing strategy.
Wilson is an agricultural marketing specialist with the
FAS Office of Agricultural Affairs at the U.S. Embassy
in London, United Kingdom. E-mail: