Christmas brings mixed feelings for drinks wholesalers. Although beer, cider and wine sales do see an uplift, some of the logistical and marketing effort is cancelled out by aggressive supermarket competition.
Comfort and joy are not always in great supply, which is why the sector is relying on suppliers to help it come up with prices and promotions that will give independent traders a fighting chance of a profitable festive season.
The off-trade wine market now stands at its highest-ever level. It’s worth over Â£5bn and Nielsen expects it to reach the 100 million case milestone by the end of the year.
Growth has crept back into the wine trade, helped along by duty increases and the continuing rosé boom. But it has not all been good news for the independent sector. Three-for-Â£10 and meal deals in the multiples provide stiff competition for retailers, and there is also the frustration of sales being lost to those buying stock from duty fraudsters.
Nielsen analyst Stewart Blunt says premium wines have seen an off-trade uplift as consumers move away from the on-trade. But at the bottom end of the market, many cash-strapped consumers are being forced to forego their weekly treats and are no longer buying wine.
E amp;J Gallo claims a 15% share of the wholesale wine channel and points out that the USA is the leading country of origin in this market, and still growing by almost 4%.
UK impulse channel controller David Mallory says: “Rosé is continuing to drive growth in impulse and currently holds 13.4% share of wine sold in impulse. This is lead by Gallo Family Vineyards White Grenache, which is the market leading rosé wine.
“Across the wholesale sector E amp;J Gallo will be promoting our Gallo Family Vineyards, Turning Leaf and Barefoot range. All of our range will be competitively priced over the Christmas period to give independent retailers the chance to compete with the supermarkets.”
Constellation Europe’s consumer marketing chief, Clare Griffiths, points out that “the top 10 wine brands make up 37.5% of all convenience wine sales, so it really pays to stock the best sellers such as Hardys, Echo Falls, Stowells and Kumala”.
Hardys will be on TV throughout the 12-week period leading up to Christmas, through the brand’s sponsorship of Channel 4’s show Come Dine With Me. Two hundred Hardys Come Dine With Me shipper units will be issued to independent retail outlets around the UK, and Hardys Christmas displays are available to independent retailers in cash and carry outlets.
Constellation is investing Â£500,000 in promotional activity to support the launch of Gran Tierra. This will include a neck collar promotion to increase awareness and trial at point of purchase, with 10 holidays to Chile and 500 cases of Gran Tierra among the prizes up for grabs.
Foster’s EMEA is hoping to drive sparkling wine sales in independent cash and carries with POS kits implemented in depots including pallet wraps, pull-up banners, posters, shelf barkers and educational literature.
Retailer activity in-depot will include a ‘spin to win’ mechanic on trade days in November and December, where retailers can win an instant prize.Â Retailers will also be able to take away POS kits and information leaflets on the sparkling category and how they should plan their sparkling section in store.
The POS kit also includes a consumer promotion with the chance to win a year’s supply of sparkling wine, or vouchers to spend at Ernest Jones.
Commercial director Neil Barker says the sparkling wine category is growing at 3.7% in the impulse sector. “We believe our sparkling portfolio can cater for all consumers and all occasions with a wide choice across many price points,” he adds.Â “We are seeing good growth in this category, in particular high growth at the higher price brackets.”
Pernod Ricard UK is also focusing on fizz, especially the new premium Jacob’s Creek Blanc de Blancs NV. Wine development director Adrian Atkinson says: “Blanc de Blancs is currently listed in Nisa and Musgraves and will be available in Costco this month.
“Last festive season the Jacob’s Creek Sparkling portfolio enjoyed 9% value growth, despite a 1% sparkling category decline, and was one of only two sparkling wine brands to perform well last Christmas. Still rosé grew by 23% and sparkling rosé grew by 6%.
“Sparkling wine is a key seller in wholesale in December it saw an increase in average price of 4% in independent and wholesale outlets last Christmas and the festive season contributed to 17% of its annual sales.”
Gift packs have been created for Blanc de Blancs NV, which will be available exclusively in the wholesale cash and carry channel at an RRP of Â£9.99, as well as for the tri-varietal range, Jacob’s Creek Three Vines; Sparkling Rosé; Sparkling Chardonnay/Pinot Noir; and Reserve Shiraz and Chardonnay.
Bestway is promising some “good promotional prices” on its own-label Cellar Estate wine range.
Beer sales slumped by a further 4% in the year to September 5, according to Nielsen, though in the off-trade channel which accounts for 43% of volumes value rose by 4%. And for once ale grew faster than lager, with a 7% uplift in value, spurred on by a growing interest in premium bottled beers from regionals and microbrewers.
Robert Midgley, trading manager at James Hall, says: “Overall lager is holding its own but 4% ABV is outperforming 5% ABV. This is certainly evident in bigger pack formats which now make up a sizable proportion of business within convenience. In this area price point is king.
“We continue to see the dominance of the big three standard lagers Carling, Foster’s and Carlsberg but within premium we are seeing a good performance from fashionable drinks such as Peroni and world beers such as Tiger.
“In complete contrast to the bulk pack, headline-grabbing deals, these beers command a higher price point which consumers seem comfortable in paying.
“Premium bottled ales are seeing double-digit growth ever since we introduced a core range of around 12 good quality ales which are permanently on a multi-buy so consumers can have the confidence that they will always be able to buy a good selection of ales at a promotional price.”
Unsurprisingly it’s lager which dominates the promotional activities of brewers this Christmas, amid hopes that the category is not crashed by the multiples with another seasonal price war on multipacks.
InBev UK is driving sales of Stella Artois with the Hedge Fund on-pack promotion which rewards purchase with the promise of a hedge three times the size of the promotional pack. New on-pack advertising for Stella Artois 4% will be available in store from mid November.
Budweiser is driving pre-Christmas sales with the Dream Moment on-pack promotion celebrating its sponsorship of the 2010 FIFA World Cup. It provides regular weekly incentives for shoppers the chance to claim trips to next summer’s tournament in South Africa where Budweiser is official beer.
Simon Harrison, commercial director for independent off-trade at InBev UK, says: “It is likely to be another extremely competitive period because of the impact of the economic downturn. However, Christmas is generally the time of year when consumers want to have a good time and food and drink are always at the heart of the festive occasion.”
Shaun Heyes, head of off-trade customer marketing at Foster’s, Kronenbourg and John Smith’s supplier S amp;N UK, says his business would “continue to invest over the Christmas period to help retailers give their shoppers real value for money, and a very competitive offer on their small packs”.
He adds: “We have found that shoppers’ habits have changed in the current economic climate and people are now more prone to shop more often but buy slightly less. This creates a real opportunity for wholesalers and retailers to take advantage of the ‘top up’ shop opportunity offered by smaller pack sizes. Price-marked packs are also becoming more important as they really communicate to shoppers that they are getting a great deal.
“We are also working with wholesalers on retailer education programmes to promote best practice at the point of purchase in independent retail with advice on range, merchandising and promotions.
“Over time we’ll be able to track how effective this has been for the retailers and measure the uplift in sales that it has delivered. S amp;N UK believes this is a great opportunity across the wholesale sector and we plan to deliver more retailer education programmes with other wholesalers in the near future.”
Two familiar beer brands enter the Christmas period with new reasons for sales optimism. Molson Coors has extended the Grolsch portfolio with the launch of Blond, a Dutch-brewed 4% ABV lager which is being backed by a six-sheet creative campaign within the Â£13 million spend on the Grolsch brand generally from October.
“Off-trade promotions for Blond will include free glassware to promote Continental-style drinking and link-buy promotions with cheese and snacks,” says the brewer.
It hopes the launch will offer some competition to the likes of Stella Artois 4% and Beck’s Vier, part of a sub-category growing at 184%, Molson Coors says.
New packaging for Guinness Draught in a Can is also in the marketplace, backed by a Â£5m Christmas campaign. This includes new POS, nationwide sampling to reach 1.5 million Guinness consumers before Christmas, as well as consumer and trade press advertising informing retailers of the pack changes.
Diageo says: “The new can also carries a three-step message for the perfect serve, guiding consumers on the correct temperature, time and tilt so that they can create a serve ritual at home. In addition, consumers will benefit from the wider mouth to deliver a smoother head and a more convenient pour helping them to recreate the pub experience at home.”
Cider’s growth continues apace it’s up by 17% in the latest Nielsen off-trade stats, and 1% in the on-trade.
Peter Spencer, managing director at Gaymer Cider Company, says: “Cider sells more at Christmas within the off-trade than it does in summer, so it’s key that wholesalers have a suitable offering for retailers.”
Olde English pint cans will be exclusively available to the cash and carry sector for the festive season, with an RRP of Â£13.99. Eight-packs of Blackthorn and Olde English are also available, along with a new multipack launched in November that is exclusive to the wholesale channel.Â The packs will include all of Gaymer’s specialist ranges Addlestones, Gaymer’s County Series and Gaymer’s Orchard Reserve.
“Multipacks are always important in the run up to Christmas because consumers will be looking for drinks to take to parties,” says Spencer.Â “Eight-can multi-packs offer value for money, are price-marked and easy for consumers to carry ideal for impulse purchases and particularly strong for passing trade as a marketing tool.”
Merrydown managing director Chris Carr also says that Christmas is his busiest time, mainly because his brand is more alcoholic than most and suitable for shared occasions. Merrydown’s biggest sellers are litre bottles of Vintage Medium and Vintage Dry.
“I am very happy with the weighted ROS being the highest in impulse sector, but very unhappy that we are losing distribution and are now at on 21% versus Magners and Bulmers at over 70%, and even Jacques and Bulmers Pear at over 50%,” he says.
“I think it just shows the power of S amp;N to get distribution in this sector and more importantly getting the inserts for their promotions into the brochures. Merrydown really should be increasing its distribution, not seeing a decline.”
Carr adds: “Cash and carries and delivered wholesalers are being supported to sell Merrydown out at discounts of up to Â£1.50 per case, allowing retailers to sell out at a price point of Â£1.99 per bottle. In addition to this we have trade day activity running across November and December with numerous customers offering buy two cases, save Â£1 deals, or buy six cases, save Â£4.”
WKD Core is embarking on its first Christmas sales period. Debs Carter, marketing director at Beverage Brands, says the brand has widespread wholesale support.
“WKD Core will be approachingÂ the festive season with the benefit of having a good distribution base built up over the last five to six months, plus a high profile national outdoor advertising and consumer press campaign and strong below-the-line support in the wholesale sector to encourage trade and consumer pull-through.”
Beverage Brands will be running a standard price-marked pack promotion on 12x50cl bottle cases of WKD Core and both retailers and on-trade licensees can obtain free festive point of saleÂ items including posters, wobblers, opening times posters and display gift boxes.
Carter says on-trade licensees account for between 20% and 50% of some cash and carries’ customer base, so it’s important to provide support tailored to this sector.