?The last hurrah?

26 November, 2010

With all the messages of economic doom and gloom that have surrounded us for the past couple of years, it’s tempting to imagine that Christmas – traditionally a season of celebration – has become a season for austerity instead. The truth, however, is that many in the wine trade reported exceptional festive sales in 2009.

“Last November was the biggest we’ve had in 20 years of trading, and December wasn’t that far off,” says James Simpson MW, sales director at Pol Roger Portfolio. “It’s a good thing, because it was all looking rather depressing up until then.”?“Last Christmas was one of our best ever,” confirms the Wine Society’s PR manager Ewan Murray. “And while we can’t predict how people will react to the recent economic news and the associated belt-tightening, we still expect our members to eat, drink and be merry this year.”?It seems there’s reason to be optimistic that the off-trade may be well positioned to ride out the bumpy economic road over the course of Christmas 2010.

“Our experience in past recessions has shown that what tends to happen is people stop going out so much,” explains Tanya Kelly, director of insight and marketing at Direct Wines. “But while the off-trade isn’t recession-proof, it has more resilience because people will indulge in treats in the domestic sphere.”?So will this year live up to the expectations created by Christmas 2009??“I’ve got a feeling people might take the view that this is a last hurrah before they batten down the hatches, especially as VAT is going up to 20% in the new year,” says Alun Griffiths MW, wine director at Berry Bros & Rudd. “We’ve set ourselves some quite aggressive targets for Christmas, but in order to achieve that we’ve had to do a lot of work in terms of promotion.”?For the wine trade, Christmas isn’t just a time for gift giving, it’s also a time when seasonal sales can account for a large proportion of their annual income. At Direct Wines, for instance, sales in November and December account for a little over 25% of the annual turnover. And, with uncertainty over the economic prospects for 2011, no wonder retailers and suppliers alike are keen to ensure the cash registers ring out over the course of the next month or two.

“There’s big pressure on retailers to sell volume in advance of the VAT rise and the notice we’ve had of cuts to come,” confirms Andrew Hawes, managing director of Mentzendorff. “Retailers have always looked for something Christmassy to drive footfall, and for the past decade it’s been possible to get some really attractive price points around port at this time of year. However, the effects of duty increases and currency changes have been that the bottom of the market for port has risen, making it less attractive as a footfall driver.”?Champagne is another category widely used to drive the Christmas trade, but it’s doubtful as to whether or not we’re going to see the same swingeing discounts on fizz this year as we did last. “Last year was exceptional,” says Hawes. “When the world fell off a cliff in 2008, Champagne shipping stopped dead. Christmas 2008 was the real austerity Christmas. Retailers didn’t want to be associated with Champ­agne, and what that did was put pressure on the Champagne houses in 2009 as there were a lot of people who needed to move volume. This year many will be taking a more conservative approach to Christmas promotions.”?So what will consumers be buying at Christmas? “Our experience is that it is a time when people like to stick to tradition,” says Kelly, “but it’s also a time that they’re prepared to trade up and spend a bit more.

“Our best sales tend to be things like Châteauneuf-du-Pape and Chablis, as well as Champagne and Rioja.”?“Christmas is a traditional time of year,” explains Murray. “You’ll always have people who’ll take risks, but most people want to stick to their traditional choices, although they’ll trade up to something bigger and richer. If they generally spend £7 or £8 on a bottle, at Christmas they spend £10 or £15.”?“France still dominates the over-£10 segment of the UK,” says Hawes, “and this is the time they really kick in as people tend to default to them as the safe option. Christmas isn’t a time when people are looking to experiment, it’s a time when they want the reassurance of the familiar.”

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