A slump in demand for cheap wine has dealt a $450m (£340m) blow to the maker of Blossom Hill.

Melbourne-based Treasury Wine Estates (TWE), whose brands also include Penfolds and Lindemans, has written down the value of its US business due to the poor performance of its low-cost brands, despite higher-end wines continuing to sell well.

The write-down comes amid slowing demand for so-called “corner shop wines”. Sales of wines priced between £4 and £6.49 have fallen by 5pc since 2019 in the UK, according to industry analysts IWSR, even as the sales volume of bottles priced from £17.78 to £33.75 grew by 2pc.

Data firm NIQ similarly found that Hardys Wine, once the highest-grossing wine brand in Britain, lost almost £50m in sales over the year to August.

Bryan Roberts, of retail analyst IGD, said shoppers “seeking to recreate restaurant or bar experiences more affordably” were increasingly willing to spend more on premium wines to drink at home, rather than budget alternatives.

Andrew Ingham, of wholesaler Bibendum Wine, said hospitality venues were similarly opting for higher-end wines, which are easier to preserve, as customers increasingly order by the glass.

A shift in drinking habits

He added: “In situations where a group might once have shared a bottle of wine, it’s increasingly common for one person in that group to abstain entirely, whether for cost, health or lifestyle reasons.”

Just 14pc of UK adults drink four or more times a week, compared with 18pc in 2018, according to a survey by Drinkaware.

Mr Ingham added that households were going out less often, but that “when they do, they want the experience to feel more special than it used to.”

He said: “Someone who used to go out for dinner twice a month might now go out less frequently, but when they do, they expect a better overall experience, including a higher-quality selection of food and wine.”

Mr Ingham said the “premiumisation” of wine “had been a trend for some time”. He added: “Shrinkflation isn’t really possible in wine, and costs continue to rise. For years, it was easy to find bottles at £4, but that era is largely over.”

Only one in five shoppers prioritises a low price when buying wine, according to market analyst Mintel.

Sam Fischer, formerly of drinks company Lion Group, was appointed as TWE’s chief executive in October. Mr Fischer is expected to visit the company’s US operations next week.

The US downturn is disappointing for TWE. The company bet on the market to fuel growth after China imposed punitive tariffs on Australian fine wines in 2020.

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