Tight consumer spending has caused on-trade sales of wine to drop 6% for the year to 24 December, with spirits down 2%, according to the latest market report by the Wine and Spirit Trade Association (WSTA).
The off-trade also suffered, with wine sales down 2% in the year to 4 February, while shop sales of spirits were down 1%.
Meanwhile, the volume of sales of Champagne were down 12% for the year in the on-trade and down by 6% in the off-trade, although off-trade sales of sparkling wine rose 7%.
The WSTA Market Report draws on data and analysis from Nielsen, CGA Strategy and the Wilson Drinks Report.
Despite the overall drop in volumes for the year, the value of sales across all alcohol categories was up 5%, driven by VAT and excise duty increases.
However, there were some bright spots. On-trade malt whisky has fared particularly well, with volumes up 31% over the year and value up 48%. Meanwhile, gin and vodka stood out as the best off-trade performers over the year, with volume sales up 2% and 3% respectively.
Nielsen data also showed that while off-trade sales of wine at lower price points have continued to fall, consumers are being drawn to other categories including cider (up 4% by volume for the year and 13% by value) and British wine (up 51% by volume). British wine is made from imported concentrated grape juice and bottled in the UK. It is not the same as English wine from grapes grown in English vineyards.
Commenting on the latest sales figures, WSTA interim chief executive Gavin Partington said: "It's clear that many consumers continue to feel the pinch yet the duty escalator on alcohol continues to push prices up and sadly the Budget later this month threatens more of the same.
"If Budget tax increases go through as scheduled, tax on wine and spirits will have increased by 45% and 40% respectively since 2008. It's a tax take that hurts consumers and undermines our industry's efforts to support economic growth."
By Neil Gerrard
E-mail your comments to Neil Gerrard here.
Looking for a new job? Find your next job here with Catererandhotelkeeper.com jobs
Blogs on Catererandhotelkeeper.com
Catch up with more news and gossip on all Caterer's blogs
For the latest hospitality news, sign up for our E-newsletters