The UK economy slipped into a technical recession at the end of 2023, according to the Office for National Statistics (ONS), yet premium alcoholic drinks continue to outperform lower-end products.
The ONS reported that the UK's gross domestic product shrank by 0.3% in the final quarter of the year, marking the second consecutive quarterly decline.
London-based research firm Mintel has analyzed the impact of the technical recession on consumer spending. Despite the national economic downturn in the latter half of 2023, Mintel's research revealed that 28% of consumers consider their finances healthy, while 44% believe they are at least doing okay.
Toby Clark, director of EMEA research at Mintel, commented, "In the real world, a 0.3% decline isn’t going to feel any different than a 0.3% increase. What really matters is how much money you’ve got left in your bank account at the end of the month."
Food and drink are prime candidates for behavioral changes, as consumers can quickly adjust their shopping habits in response to high inflation. Rising prices have forced consumers to increase their total spending, but they are attempting to mitigate the impact by cutting back on luxuries and switching to private label or lower-cost retailers.
Economic pressures have influenced spending behaviors significantly. In response to rising prices, 34% of consumers are shopping more at low-cost retailers, 32% are shifting to private labels, and 43% are being more cautious about spending on luxuries. Despite this, people still want to treat themselves, and alcohol remains a major category where spending on luxury items continues.
Mintel's research indicates that half (49%) of adults purchased premium alcoholic drinks in the 12 months leading up to October 2023, including 42% of those who describe their finances as tight or struggling.
Kiti Soininen, category director for food and drink at Mintel, noted, "This continues to create opportunities for premium products. Recent examples include premium brands like Charlie Bigham’s and Wasabi outperforming the chilled ready meals segment in 2022/23, while higher-end mass-market brands like San Miguel and Corona were star performers in the lager category."
Moreover, Brits are also choosing quality when they go out to drink, according to CGA data.
Source: The Drinks Business