It does seem
we can be
optimistic, even bullish, that the growth factor has returned to the off-trade wine market.
Incredibly, 2006 failed to record any growth at all
- the first time in living memory this has happened. The main influence seems to have been the shocking increase
in the cost of council tax, gas, electricity, water and petrol. Wine sales were affected,
there seems to be a recovery as the more extreme utility costs have been brought down in recent months.
But we must bear in mind that these essentials all still cost a
lot more than they did
12 months ago, so if there is a relationship here, it does imply that the recovery in wine
sales will be restrained. And we do expect petrol to hit £1/litre later in the year.
External influences will have some bearing - Australia is the leading country, but the current uncertainties about supplies will draw off any surplus, and likely lead to more focus on quality
than heavily promoted volume-shifters. There does seem to be a general
move up from the
(under £3 )
so this may be timely
as the upper end of the market will expand - gently, of course.
It could be an effective coincidence as Australia focuses on its regional heritage and provides another hook for the drinker
- to move away from the obvious mass-market brands. And Australia may favour the developing markets nearer home - we are way over the horizon .
The off-trade market is currently 93 million cases, adding 1.5 million over the past 12 months - barely a 2 per cent growth, but growth it is, and a promising start to 2007.
It is fair to say that, in general terms, the
great British public is increasingly
more aware of countries, brands and varietals, though will probably never lose sight of price. A known brand that pretty much matches the shopper's preferences for varietal and country with a promoted or lower price will so often win the sale .
The real cheap end of the market has largely been the province of the Europeans, both own-labels and brands, and some retailers have cut back on the range and space, yet I think it is more a matter of these people being attracted upmarket. There will always be a place for the very cheap,
yet there again must be a growing number of these
people who see
three-for-£10 , and some at just over £3, and are lured on to substitute
and actually move upmarket. The half-price brands abound, and whil e they are
poor sellers at £7.99, they really do shift at £3.99, and buying six can often tweak off another 5 per cent, so those of us
who begrudge going over £3.50 are likewise lured upmarket.
Overall, these are not massive steps up into the headier price levels, but these are the mass-market price ranges,
so gradually the net average price does sit higher at £4.10 for the 75cl size.
Retailers and brand owners will both be delighted to learn that wines under £3 (nett) account for only 21 per cent of volume sales
- a drop of 12 per cent over the
year. The £3-£4 range has expanded (now 42 per cent of sales)
as the excitement of
promotions encourages sales
The premium end
has achieved 14 per cent of 75cl sales, but most
in the £5-£6 arena
and largely due to promotion, be it £2-off
or the more dramatic (but exceptional) "£11.99, now £5.99". Now
that could make for a big trade-up .
Prices do make for excitement in the
and the occasional wine festival seems to add a touch of frenzy
stock piling , though we may just see it manifest later in
At first sight,
own-labels have suffered as the brands get so much attention, but some of the brands are exclusive to a single retailer and are bona fide brands, certainly as far as the shopper is concerned.
Rosé's still on top
What is it with pink? The amazing volume growth is still there at
more than 30 per cent
and shows no signs of abating. Rosé accounts for just over eight out of 100 bottles and is driven by the big US brands.
Twenty-seven per cent of US
wine is rosé
and, while working up from a much lower base (bear in mind that the US
accounts for 53 per cent of pink), virtually all countries have joined the movement and enjoy significant increase in sales. South Africa has
lost sales, but rosé comes shining through. European countries benefit from renewed interest
and, as with the New World, there is a raft of new entries and general expansion of the pink section in most stores.
The average number of pink brands is increasing, with some retailers adding as many as 20, and even own-labels are going against their overall downward trend.
seems to be a marked
difference between the US
other rosé players . Rosés from the States are typically lower in alcohol and
sweeter finish, but the more classic Europeans are well in on the trend.
Without the surge in rosé sales we would likely have a fall in the market
as both red and white are struggling to maintain sales .
Nielsen Household Panel has identified that quite a number of RTD shoppers have added rosé to their repertoire
which suggests that, in general terms, the younger age groups have latched on to the US
versions, and of course one supplier has proposed that pink over ice is another way to enjoy it. It must make the traditionalists cringe, but hey - the consumer moves on.
Time for reappraisal
In a way it indicates new challenges in the market. I think the slowdown of 2006 should encourage re appraisal. Given
that 57 per cent of the market is New World ( it was only 5 per cent in the early 90s),
there is likely to be a goodly proportion of
wine-drinkers who have never, or at least rarely, knowingly drunk European in the UK.
So we cannot expect the classic path of progressing from cheaper to finer wines, as the palate matures, to continue with any certainty. Brands are more powerful than the generic types, yet this does seem to be recognised as the vague branding on so many Europeans is being bolstered by more distinct labels .
Consider that the massive leading brands
are around 4.8 million cases each, and for instance Rh ône, Bordeaux, Burgundy
and Rioja regions are nudging the 2 million mark. So there is a need for generic regional marketing as well as
These particular regions are expanding again too, and not with the bottom-end price
range. Rioja is very much the rising star for Spain, averaging
more than £5, and France has 25 per cent of the
- just to confirm that the traditional part of the market is alive and well, they do pick up
at the all-important Christmas period, and not necessarily with a large price
A big task, then, to engage the drinker's attention
and encourage a more informed choice and broad interest. But as those who know about such things fade out
image-led younger people come in, it is an inevitable challenge in this complex market.