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Champagne and Sparkling Wine - UK - July 2012

“Champagne now faces the very real risk of losing its strongest USP and association, with improvements in quality and the favourable price comparison of sparkling wine posing additional problems for Champagne brands.”

– Chris Wisson, Senior Drinks Analyst

Some questions answered in this report include:

  • Can sparkling wine boost its associations with celebrations further to drive growth?
  • Does English sparkling wine need to forge a unique identity?
  • How can Champagne fight back?
  • Are discount Champagnes a longer term threat to the market…?
  • …and should sparkling wines follow this discounting template?

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Table of contents

  1. Introduction

      • Definition
        • Abbreviations
        • Executive Summary

            • The market
              • Figure 1: UK GDP growth, Q1 2008-Q1 2012 against value sales of Champagne and sparkling wine 2008-Q1 2012
            • Forecast
              • Figure 2: Forecast of UK value sales of Champagne and sparkling wine, 2007-17
            • Market factors
              • Pressures on manufacturers on the rise
                • In-home alcohol usage thrives while the on-trade flounders
                  • Figure 3: Types of alcoholic drink used, May 2012
                • Luxury lifestyles fall from favour
                  • Low consumer confidence harms the Champagne market
                    • Population changes provide threats and opportunities
                      • Companies, brands and innovation
                        • Figure 4: value market shares of top-selling Champagne and sparkling wine brands in the off-trade, 2011
                      • Moët & Chandon and Freixenet dominate their respective markets
                        • Innovation driven by seasonality and special occasions
                          • Above-the-line adspend relatively low
                            • The consumer
                              • Sparkling wines such as Cava reassert their popularity
                                • Figure 5: Types of Champagne and sparkling wine bought, May 2012
                              • Associations with special occasions are the main deterrent to usage
                                • Figure 6: Attitudes relating to barriers of usage of Champagne and sparkling wine, May 2012
                              • Champagne falls behind sparkling wine for versatility
                                • Figure 7: Occasions for drinking Champagne and sparkling wine within the last year, May 2012
                              • Users become less willing to treat themselves to more expensive Champagne
                                • Figure 8: Average spend per bottle for use at home, May 2012
                              • Sparkling wine viewed favourably as a credible and cost-effective option
                                • Figure 9: Buyers’ attitudes towards Champagne and sparkling wine, May 2012
                              • What we think
                              • Issues in the Market

                                  • Can sparkling wine boost its associations with celebrations further to drive growth?
                                    • Does English sparkling wine need to forge a unique identity?
                                      • How can Champagne fight back?
                                        • Are discount Champagnes a longer term threat to the market…?
                                          • …and should sparkling wines follow this discounting template?
                                          • Future Opportunities

                                              • Premiumisation and Indulgence
                                                • Secret Secret
                                                  • 2015: East Meets West
                                                  • Internal Market Environment

                                                    • Key points
                                                      • Increasing pressure on the UK’s alcoholic drinks market
                                                          • Figure 10: Annual price index (RPI) of beer and wine & spirits, in the off-trade and on-trade, 2006-11
                                                          • Figure 11: Trends in excise duty rates for Champagne/sparkling wine, April 2000-12
                                                          • Figure 12: Value sales for total alcoholic drinks market, 2007-17
                                                        • Two in five adults who drink do so at least two times a week
                                                          • Figure 13: Frequency of drinking alcohol, May 2012
                                                        • 46% of drinkers visit pub/bars monthly
                                                          • Figure 14: Frequency of drinking in pubs/bars, May 2012
                                                        • Luxury lifestyles at risk from the economic downturn
                                                          • Figure 15: Agreement with lifestyle statements relating to luxury and wealth, 2007-11
                                                        • Loyalty suffers as pressures on budgets squeeze shoppers harder
                                                          • Figure 16: Agreement with lifestyle statements relating to cost and brand loyalty, 2007-11
                                                        • Consumers becoming less willing to pay for good quality wine
                                                          • Figure 17: Agreement with lifestyle statements relating to drink, 2011
                                                        • The UK is the largest importer of Champagne but imports are declining
                                                          • Figure 18: Largest global export markets for Champagne, 2011
                                                      • Broader Market Environment

                                                        • Key points
                                                          • Consumer confidence continues to struggle
                                                            • Figure 19: Consumer Confidence Index, monthly, January 2007-June 2012
                                                            • Figure 20: UK GDP growth, Q1 2008-Q1 2012 against value retail sales of Champagne and sparkling wine 2008-Q1 2012
                                                          • Demographic changes create opportunities and threats
                                                            • Figure 21: Projected trends in the age structure of the UK population, 2012-17
                                                          • ABs represent the key group for growth
                                                            • Figure 22: Changes in the adult socio-economic structure of the UK population, 2012-17
                                                          • Rising grape prices add further pressure to operators…
                                                            • … with climate change adding further uncertainty
                                                            • Competitive Context

                                                              • Key points
                                                                • Usage of most types of alcoholic drinks takes a turn for the worse
                                                                  • Figure 23: Alcoholic drink types drunk in past year, 2007-11
                                                                • In-home performance stronger than out-of-home
                                                                  • Figure 24: Types of alcoholic drink used, May 2012
                                                              • Strengths and Weaknesses

                                                                • Strengths
                                                                  • Weaknesses
                                                                  • Who’s Innovating?

                                                                    • Key points
                                                                      • Tapping into the Jubilee spirit
                                                                        • Selected innovation in Champagne from the UK and other countries
                                                                          • Selected innovation in sparkling wine from the UK and other countries
                                                                            • Is the time right for Moscato to make inroads in the UK?
                                                                            • Market Size and Forecast

                                                                              • Key points
                                                                                • Contrasting fortunes for Champagne and sparkling wine in recent years
                                                                                  • Figure 25: UK value sales of Champagne and sparkling wine in the on- and off-trade, at current prices, 2006-12
                                                                                  • Figure 26: UK value and volume sales of Champagne and sparkling wine, at current and constant prices, 2007-17
                                                                                  • Figure 27: Forecast of UK value sales of Champagne and sparkling wine, 2007-17
                                                                                  • Figure 28: Forecast of UK volume sales of Champagne and sparkling wine, 2007-17
                                                                                • Champagne sales on the slide
                                                                                  • Figure 29: UK value and volume sales of Champagne, at current and constant prices, 2007-17
                                                                                • Forecast
                                                                                  • Figure 30: Forecast of UK value sales of Champagne, 2007-17
                                                                                • Sparkling wine sales surpass Champagne for the first time
                                                                                  • Figure 31: UK value and volume sales of sparkling wine, at current and constant prices, 2007-17
                                                                                • Forecast
                                                                                  • Figure 32: Forecast of UK value sales of sparkling wine, 2007-17
                                                                              • Segment Performance

                                                                                • Key points
                                                                                  • Poor on-trade performance drags down the Champagne market
                                                                                    • Figure 33: UK value and volume retail sales of Champagne in the off-trade, at current and constant prices, 2007-12
                                                                                    • Figure 34: UK value and volume sales of Champagne in the on-trade, at current and constant prices, 2006-12
                                                                                  • Sparkling wine benefits from Champagne’s woes
                                                                                    • Figure 35: UK value and volume retail sales of sparkling wine in the off-trade, at current and constant prices, 2007-12
                                                                                    • Figure 36: UK value and volume sales of sparkling wine in the on-trade, at current and constant prices, 2007-12
                                                                                  • English sparkling wine well placed to contribute to growth in the segment
                                                                                  • Market Share

                                                                                    • Key points
                                                                                      • Leading Champagne brands under pressure from cheaper alternatives
                                                                                        • Figure 37: Value market shares of top-selling Champagne brands in the off-trade, 2009-11
                                                                                      • The Freixenet success story continues
                                                                                        • Figure 38: Value market shares of top-selling sparkling wine brands in the off-trade, 2009-11
                                                                                    • Companies and Products

                                                                                      • Freixenet
                                                                                        • Lanson-BCC
                                                                                          • Laurent-Perrier
                                                                                            • Mentzendorff
                                                                                              • Moët Hennessy
                                                                                                • Pernod Ricard
                                                                                                  • Société Européenne de Participations Industrielles (EPI)
                                                                                                    • Vranken Pommery Monopole
                                                                                                    • Brand Communication and Promotion

                                                                                                      • Key points
                                                                                                        • Champagne adspend bounces back
                                                                                                          • Figure 39: Total UK advertising spend, for Champagne and sparkling wine, 2008-11
                                                                                                        • Moët Hennessy sees growing competition from the multiple grocers in adspend
                                                                                                          • Figure 40: Above-the-line advertising spend on Champagne, by company, 2008-12*
                                                                                                        • Waitrose also imposes itself on sparkling wine advertising
                                                                                                          • Figure 41: Above-the-line advertising spend on sparkling wine, by company, 2008-12*
                                                                                                        • Duval Leroy tops the list of brands advertising in 2011
                                                                                                          • Figure 42: Adspend by advertiser and brand, in the Champagne and sparkling wine market, 15 highest spending campaigns of 2011, 2008-11 (sorted by 2011 adspend)
                                                                                                      • Channels to Market

                                                                                                        • Key points
                                                                                                          • Champagne becomes increasingly reliant on the off-trade…
                                                                                                            • Figure 43: UK value sales of Champagne in the on- and off-trade, 2007-12 (£m)
                                                                                                          • … while sparkling wine shows strong on- and off-trade growth
                                                                                                            • Figure 44: UK value sales of sparkling wine in the on- and off-trade, 2007-12 (£m)
                                                                                                          • Grocery multiples gain share on the back of discounting
                                                                                                            • Figure 45: UK retail value sales of Champagne and sparkling wine in the off-trade, by outlet type, 2009-11
                                                                                                        • Consumer – Trends in Usage

                                                                                                          • Key points
                                                                                                            • Champagne usage drops to just a quarter of UK adults
                                                                                                              • Figure 46: Usage of Champagne, 2007-11
                                                                                                            • Just one in five users drink Champagne on a monthly basis
                                                                                                              • Figure 47: Frequency of drinking Champagne among users, 2011
                                                                                                            • In-home and out-of-home use both fall by 4 percentage points since 2008
                                                                                                              • Figure 48: In-home vs out-of-home consumption of Champagne, 2011
                                                                                                            • Bottled wine usage sees a significant decline
                                                                                                              • Figure 49: Usage of bottled wine, 2007-11
                                                                                                            • The bias towards light usage poses a challenge to the market
                                                                                                              • Figure 50: Frequency of drinking bottled wine among users, 2011
                                                                                                            • In-home usage most popular for wine
                                                                                                              • Figure 51: In-home vs out-of-home consumption of bottled wine, 2011
                                                                                                          • Consumer – Purchasing Trends

                                                                                                            • Key points
                                                                                                              • Sparkling wine grows at Champagne’s expense
                                                                                                                  • Figure 52: Types of Champagne and sparkling wine bought, May 2012
                                                                                                                  • Figure 53: Purchase of any Champagne and any sparkling wine, by household income, May 2012
                                                                                                                • Cava leads the way in terms of usage
                                                                                                                  • Branded Champagne drunk by one in five adults
                                                                                                                    • Cocktails provide a small area of opportunity
                                                                                                                      • Appealing to the non-users
                                                                                                                        • Low repertoires prevail in the market
                                                                                                                          • Figure 54: Repertoire of types of Champagne and sparkling wine bought, May 2012
                                                                                                                      • Consumer – Barriers to Usage

                                                                                                                        • Key points
                                                                                                                          • Over a third of adults limit their usage to one-off special occasions
                                                                                                                            • Figure 55: Attitudes relating to barriers to usage of Champagne and sparkling wine, May 2012
                                                                                                                          • Cost also plays a role
                                                                                                                            • Is there potential to tie in with still wines?
                                                                                                                              • Education and marketing may help to boost usage
                                                                                                                              • Consumer – Usage of Champagne and Sparkling Wine by Occasion

                                                                                                                                • Key points
                                                                                                                                  • Champagne remains the drink of choice for special occasions
                                                                                                                                      • Figure 56: Occasions for drinking Champagne and sparkling wine within the last year, May 2012
                                                                                                                                    • Sparkling wine fares better on seasonal occasions
                                                                                                                                      • Champagne has less versatility for other occasions
                                                                                                                                      • Consumer – Spending for Home Usage

                                                                                                                                        • Key points
                                                                                                                                          • Two thirds of users spend less than £20 on a bottle of Champagne…
                                                                                                                                              • Figure 57: Average spend per bottle for use at home, May 2012
                                                                                                                                            • … while just one in ten sparkling wine users pay over £15 per bottle
                                                                                                                                            • Consumer – Attitudes Towards Champagne and Sparkling Wine

                                                                                                                                              • Key points
                                                                                                                                                • Sparkling wine enjoys a favourable image for being cost-effective and improving in quality
                                                                                                                                                  • Figure 58: Buyers’ attitudes towards Champagne and sparkling wine, May 2012
                                                                                                                                                • Champagne struggles on price and value for money perceptions
                                                                                                                                                  • Figure 59: Buyers’ price-related attitudes towards Champagne and sparkling wine, May 2012
                                                                                                                                                • Two thirds of buyers see sparkling wine as an increasingly credible option
                                                                                                                                                  • Figure 60: Buyers’ changing perceptions towards Champagne and sparkling wine, May 2012
                                                                                                                                                • Champagne enjoys greater trust but is losing its unique appeal
                                                                                                                                                  • Figure 61: Buyers’ attitudes towards comparisons between Champagne and sparkling wine, May 2012
                                                                                                                                                • Sparkling wine gaining in credibility for gifting and use when celebrating
                                                                                                                                                  • Figure 62: Buyers’ attitudes towards gifting and celebrating for Champagne and sparkling wine, May 2012
                                                                                                                                              • Consumer – Target Groups

                                                                                                                                                • Key points
                                                                                                                                                  • Four target groups
                                                                                                                                                    • Figure 63: Target groups for Champagne and sparkling wine, May 2012
                                                                                                                                                  • Price-driven (33%)
                                                                                                                                                    • Sparkling sceptics (27%)
                                                                                                                                                      • Enthusiasts (24%)
                                                                                                                                                        • Uneducated (16%)
                                                                                                                                                        • Appendix – Issues in the Market

                                                                                                                                                          • Appendix – Internal Market Environment

                                                                                                                                                              • Figure 64: Drinking alcohol amongst the UK population, by detailed demographics, 2011
                                                                                                                                                              • Figure 65: Agreement with selected lifestyle statements, by demographics, 2011
                                                                                                                                                              • Figure 66: Agreement with selected lifestyle statements, by demographics, 2011 (continued)
                                                                                                                                                              • Figure 67: Agreement with selected lifestyle statements, by demographics, 2011 (continued)
                                                                                                                                                              • Figure 68: Spend per bottle on bottled wine, 2011
                                                                                                                                                          • Appendix – Market Size and Forecast

                                                                                                                                                              • Figure 69: Best- and worst-case forecasts for the total Champagne and sparkling wine market, by value, 2012-17
                                                                                                                                                              • Figure 70: Best- and worst-case forecasts for the total Champagne and sparkling wine market, by volume, 2012-17
                                                                                                                                                              • Figure 71: Best- and worst-case forecasts for the Champagne market, by value, 2012-17
                                                                                                                                                              • Figure 72: Best- and worst-case forecasts for the Champagne market, by volume, 2012-17
                                                                                                                                                              • Figure 73: Forecast of UK volume sales of Champagne, 2007-17
                                                                                                                                                              • Figure 74: Best- and worst-case forecasts for the sparkling wine market, by value, 2012-17
                                                                                                                                                              • Figure 75: Best- and worst-case forecasts for the sparkling wine market, by volume, 2012-17
                                                                                                                                                              • Figure 76: Forecast of UK volume sales of sparkling wine, 2007-17
                                                                                                                                                          • Appendix – Consumer – Trends in Usage

                                                                                                                                                              • Figure 77: Usage of Champagne, by demographics, 2011
                                                                                                                                                              • Figure 78: Frequency of drinking Champagne, by demographics, 2011
                                                                                                                                                              • Figure 79: Frequency of drinking Champagne in home, 2007-11
                                                                                                                                                              • Figure 80: Frequency of drinking Champagne in home, by demographics, 2011
                                                                                                                                                              • Figure 81: Frequency of drinking Champagne out of home, 2007-11
                                                                                                                                                              • Figure 82: Frequency of drinking Champagne out of home, by demographics, 2011
                                                                                                                                                              • Figure 83: Usage of bottled wine, by demographics, 2011
                                                                                                                                                              • Figure 84: Frequency of drinking bottled wine within the last month, by demographics, 2011
                                                                                                                                                              • Figure 85: Frequency of drinking bottled wine in home, 2007-11
                                                                                                                                                              • Figure 86: Frequency of drinking bottled wine in home, by demographics, 2011
                                                                                                                                                              • Figure 87: Frequency of drinking bottled wine out of home, 2007-11
                                                                                                                                                              • Figure 88: Frequency of drinking bottled wine out of home, by demographics, 2011
                                                                                                                                                          • Appendix – Consumer – Purchasing Trends

                                                                                                                                                              • Figure 89: Types of Champagne and sparkling wine bought, by demographics, May 2012
                                                                                                                                                              • Figure 90: Types of Champagne and sparkling wine bought, by demographics, May 2012 (continued)
                                                                                                                                                              • Figure 91: Types of Champagne and sparkling wine bought, by repertoire of types of Champagne and sparkling wine bought, May 2012
                                                                                                                                                              • Figure 92: Repertoire of types of Champagne and sparkling wine bought, by demographics, May 2012
                                                                                                                                                          • Appendix – Consumer – Barriers to Usage

                                                                                                                                                              • Figure 93: Attitudes relating to barriers to usage of Champagne and sparkling wine, by demographics, May 2012
                                                                                                                                                              • Figure 94: Attitudes relating to barriers to usage of Champagne and sparkling wine, by demographics, May 2012 (continued)
                                                                                                                                                              • Figure 95: Attitudes relating to barriers to usage of Champagne and sparkling wine, by types of Champagne and sparkling wine bought, by demographics, May 2012
                                                                                                                                                              • Figure 96: Attitudes relating to barriers to usage of Champagne and sparkling wine, by types of Champagne and sparkling wine used, by demographics, May 2012 (continued)
                                                                                                                                                          • Appendix – Consumer – Usage of Champagne and Sparkling Wine by Occasion

                                                                                                                                                              • Figure 97: Occasions for drinking Champagne within the last year, May 2012
                                                                                                                                                              • Figure 98: Occasions for drinking Champagne within the last year, by demographics, May 2012
                                                                                                                                                              • Figure 99: Occasions for drinking sparkling wine within the last year, May 2012
                                                                                                                                                              • Figure 100: Occasions for drinking sparkling wine within the last year, by demographics, May 2012
                                                                                                                                                              • Figure 101: Occasions for drinking sparkling wine within the last year, by demographics, May 2012 (continued)
                                                                                                                                                              • Figure 102: Occasions for drinking Champagne within the last year, by average spend per bottle for use at home, May 2012
                                                                                                                                                              • Figure 103: Occasions for drinking sparkling wine within the last year, by average spend per bottle for use at home, May 2012
                                                                                                                                                          • Appendix – Consumer – Spending on Champagne and Sparkling Wine for Home Usage

                                                                                                                                                              • Figure 104: Average spend per bottle for use at home, May 2012
                                                                                                                                                              • Figure 105: Average spend per bottle of Champagne for use at home, by demographics, May 2012
                                                                                                                                                              • Figure 106: Average spend per bottle of sparkling wine for use at home, by demographics, May 2012
                                                                                                                                                          • Appendix – Consumer – Attitudes Towards Champagne and Sparkling Wine

                                                                                                                                                              • Figure 107: Buyers’ attitudes towards Champagne and sparkling wine, May 2012
                                                                                                                                                              • Figure 108: Agreement with the statements ‘I am only prepared to buy Champagne when it is on promotion’ and ‘I am more open to trying English sparkling wine than in the past’, by demographics, May 2012
                                                                                                                                                              • Figure 109: Agreement with the statements ‘Buying sparkling wine (eg Prosecco, Cava) instead of Champagne is a good way to save money’ and ‘There is little difference between Champagne and sparkling wine’, by demographics, May 2012
                                                                                                                                                              • Figure 110: Agreement with the statements ‘Buying sparkling wine (eg Prosecco, Cava) instead of Champagne is a good way to save money’ and ‘There is little difference between Champagne and sparkling wine’, by demographics, May 2012
                                                                                                                                                              • Figure 111: Agreement with the statements ‘There is little difference between the taste of own-label and branded Champagne/sparkling wine’ and ‘I would not buy sparkling wine as a gift’, by demographics, May 2012
                                                                                                                                                              • Figure 112: Agreement with the statements ‘The appearance of sparkling wine bottles is less appealing than Champagne’ and ‘I would not consider drinking sparkling instead of Champagne wine when celebrating or on a special occasion’, by demographics, May 2012
                                                                                                                                                              • Figure 113: Agreement with the statements ‘Buying Champagne is worth the price’ and ‘Buying sparkling wine is worth the price’, by demographics, May 2012
                                                                                                                                                              • Figure 114: Attitudes towards Champagne and sparkling wine, by types of Champagne and sparkling wine used, May 2012
                                                                                                                                                          • Appendix – Consumer – Target Groups

                                                                                                                                                              • Figure 115: Target groups, by demographics, May 2012
                                                                                                                                                              • Figure 116: Types of Champagne and sparkling wine used, by target groups, May 2012
                                                                                                                                                              • Figure 117: Occasions for drinking Champagne within the last year, by target groups, May 2012
                                                                                                                                                              • Figure 118: Occasions for drinking sparkling wine within the last year, by target groups, May 2012
                                                                                                                                                              • Figure 119: Average spend on Champagne per bottle for use at home, by target groups, May 2012
                                                                                                                                                              • Figure 120: Average spend on sparkling wine per bottle for use at home, by target groups, May 2012
                                                                                                                                                              • Figure 121: Attitudes towards Champagne and sparkling wine, by target groups, May 2012
                                                                                                                                                              • Figure 122: Attitudes relating to barriers to usage of Champagne and sparkling wine, by target groups, May 2012

                                                                                                                                                          Companies Covered

                                                                                                                                                          • Bacardi-Martini Ltd
                                                                                                                                                          • Brancott Estate
                                                                                                                                                          • Champagne Taittinger
                                                                                                                                                          • Diageo UK
                                                                                                                                                          • Fortnum & Mason Plc
                                                                                                                                                          • Freixenet (DWS) Ltd
                                                                                                                                                          • Harvey Nichols UK
                                                                                                                                                          • Laurent-Perrier (UK) Ltd
                                                                                                                                                          • LVMH Moët Hennessy Louis Vuitton SA
                                                                                                                                                          • Oddbins Ltd
                                                                                                                                                          • Pernod Ricard
                                                                                                                                                          • Rémy Cointreau
                                                                                                                                                          • Seagram
                                                                                                                                                          • Veuve Clicquot
                                                                                                                                                          • Vranken Pommery Monopole
                                                                                                                                                          • VRANKEN-POMMERY MONOPOLE

                                                                                                                                                          Champagne and Sparkling Wine - UK - July 2012

                                                                                                                                                          US $2,672.70 (Excl.Tax)