Retail woes in the UK
Food and drink was the strongest performing retail sector on the UK high street last month, despite overall retail sales experiencing a record low. Retail sales were down 3.3% on the same period last year, the poorest December since the British Retail Consortium’s survey began.
Even though food and drink outperformed other categories, it also experienced a tough year, having posted its weakest growth since March.
The research reported that struggling high street sales performed slightly better in the second half of December, mainly due to heavy discounting and last minute Christmas shopping.
Helen Dickinson, head of retail at KPMG, described the bind on shops at the moment as a “double whammy of falling sales and falling margins”. However, more people chose to order online this year, as non-food, non-store sales saw a 30% increase on a year ago. Tesco.com and Tesco Direct both saw an 18% sales increase on this time last year.
While the strength of the food and drink category in comparison to other retail areas has helped supermarkets’ performance, not everyone has fared well. Marks and Spencers’ like-for-like food sales were down 5.2%.
In comparison, last week Sainsbury’s announced sales figures that showed a like-for-like increase of 4.5% in the UK (for the 13 weeks to 3 January 2009, excluding petrol) with its Basic Range showing a 40% increase in sales over the year.
Asda and Waitrose also released positive Christmas figures. The two stores, despite their different customer profiles, both claimed that 23 December was their busiest day ever.
Tesco’s like-for-like sales increase was only 2.5% (for the seven weeks up to 10 January, excluding petrol). The retail giant has referred to the current trading conditions as “challenging” despite its strong online figures.
Dickinson added that December’s performance reflects “the severity of the shift in the mentality of the consumer.”
Daniel Macadam, 14.01.09
Bright future forecasted for wine industry
World wine consumption is forecasted to increase in volume and value between 2008 and 2012. A report by Vinexpo and the IWSR predicts that wine consumption will increase 6% in volume to 2.81 billion cases, and 8.92% in value to US$166.177 bn.
The UK will continue to be the biggest importer of still light wine, but its overall consumption will slow down. Volume is predicted to increase 5.96% compared to 12.42% between 2003 and 2007.
Within this, rosé (+47.64%) and white wine (+7.71%) consumption is predicted to grow more than red wine, which will decrease 4.57%.
Elsewhere, the US is predicted to become the highest still light wine consuming country in the world, overtaking both Italy and France. It is suggested that 314 million cases will be consumed by the US in 2012.
Chief executive of Vinexpo, Robert Beynat, said: “The world is drinking more, and the world is drinking better”, and added that the forecasts show this will continue.
These forecasts were made in September and October last year by looking at long term trends and speaking to trade figures in 130 countries. Alistair Smith from IWSR said: “At that point no-one had a clear idea of what was going to happen,” and believes that they are perhaps a “little bit too optimistic.”
This does not bode well for the spirits industry. Total world spirits consumption is forecasted to rise a modest 0.36% between 2008 and 2012, although this will be higher at 5.86% in the UK. While vodka is set to extend its dominance in the UK spirits market with a 21.01% increase in consumption, whiskey (- 6.93%) and rum (- 4.89%) are predicted to fall further behind the market leader.
Daniel Macadam, 16.01.09
Speaking to the drinks business, Harlow confirmed that the company will undergo “general restructuring, making the business more streamlined and more cost-effective, like all good businesses do.”
WaverleyTBS is one of the largest on-trade distributors, and employs 1500 people. Last year the total volume of on-trade sales fell 8% to 3.3 billion litres, while value fell 3% to £20.9 billion (Nielsen year to July 2008).
Waverley TBS’ cuts will apparently be “modest”. Exact figures were not given, because consultations are ongoing.
Harlow also maintained that these redundancies had “nothing” to do with Carlsberg and Heineken’s takeover last year of Scottish and Newcastle plc, of which WaverleyTBS is a subsidiary.
Job cuts at Californian winery, E. & J. Gallo, were also announced this morning. 50 people from its UK arm are being made redundant.
Daniel Macadam, 23.01.09