2018 Predictions in the BWS market

By Toby Magill

2018 Predictions in the BWS market

We are still seeing lots of opportunities for the BWS sector to grow next year as consumers shop more frequently across different formats and trade up when shopping for booze.

Younger shoppers in particular are becoming more sophisticated in their alcohol choices and demanding more in the way of authenticity from brands, happy to spend more when they buy. Beer and cider companies will need to emphasise their products’ crafty credentials, provenance and quality to lure shoppers in. However as manufacturers rush to cash in on this trend, 2018 may also be the year we finally see if “craft” is truly driven by quality or provenance, or it is simply a marketing exercise.

The focus recently has been on rationalisation, with all eyes on retailers who have removed household names from their shelves to see the effects. Despite initial concerns, it seems that large numbers of brands, especially in the beers and ciders category, are interchangeable and consumers don’t mind as much as we thought. This is particularly true for the Mainstream and Premium sectors in these markets, where products and pricing are actually pretty similar and the definitions are more an exercise in marketing rather than product quality. In a bid to save money and simplify their ranges, we will see more retailers cutting items, with a focus on ‘less is more’, especially in wines, where there continues to be a far more complex choice for consumers than in other sectors.

Looking ahead to next year, my top predictions are:

  • More convenient – this idea of trading up fits nicely with convenience top-up shopping, and as a result, we will see the influence of the convenience channel continue to grow next year. While BWS is doing well overall - outperforming the market, up 2.5% to £16 billion for the total market - the convenience sector is well ahead of this, with a growth rate of 3.3%. £1 in every £5 spent on alcohol in the off-trade is via the convenience sector. This is where we will see shoppers treat themselves for an affordable price point.
  • Threat from the discounters – while the major multiples are simplifying their ranges, they still have a long way to go to match the discounters. Up to now, the supermarkets have always had an advantage because they stock major brands, but we are seeing sales of own label alcohol increasing (by 5.4% this year). We will see the discounters become more of a threat as consumers buy alcohol in discount stores along with their regular grocery shop.
  • Win(e)dow of opportunity – the wine category has had a good year, driven by strong sales of sparkling wine, white wine and low/no alcohol wines, while we have seen a drop in sales of Champagne, red wine and rose. Our love affair with Prosecco shows no signs of diminishing and sales of sparkling wine will continue to grow next year.

Finally when it comes to loyalty, brands need to consider how loyal their shoppers really are. Looking at the range changes in beer, for example, have shown that shoppers are fine with not finding major brands as long as they can get something similar that is in their repertoire. This being the case, a lot of marketing departments need to take a reality check on how special their brands are and understand that they could be replaced. Brands need to be strong on articulating what they bring to the category and the retailer.

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