Discovering gold in the New World

The wine market is booming with ACNielsen’s light wine GB off trade figures showing a 4.3% volume increase in 2005, driven principally by the multiples, while independents, included in the GB impulse volume data, grew by 2.7%. Australian wine has the largest share overall, with 21 out of every 100 bottles consumed, but independents continue to over perform on Californian wines with sales leapfrogging both Australia and France last year to a record 20.9% share of business.

In impulse, the increased focus on New World is having a detrimental effect on most Old World sales, other than Spain and Italy. Nearly 60% of all impulse sector sales are New World. Sales of French wines are down by 8.2% in impulse against an overall market decline of only 4.8%. Wholesalers are unlikely to be concerned by these developments since most are reporting substantial sales increases – with leading wholesalers announcing double digit growth last year.

Brands tend to dominate across the independent sector, with brand growth outstripping the market as a whole, but this can result in less choice for the ever growing numbers of more adventurous wine drinkers. Wholesaler differentials must therefore be built around choice. Wider ranges and a selection of premium brands are needed, and a strong own brand proposition is vital, not only to improve wholesale and retail profitability, but to service a strong catering sector where brands are traditionally not welcome due to high mark-ups.

Booker showed the way with Malt House Vintners, Landmark’s Vintners Collection launch broke new ground and now Bestway is moving in on the act with its new Cellar Estates range. Retailers, caterers and consumers benefit from these developments which help to keep the price of a good bottle of wine down and profitability up. But exclusive label wines only complement the brands, they do not replace them.

Brands dominate growth in sector

Wine remains a highly fragmented market, with the top 15 wine brands in the impulse sector accounting for around 37% of sales. The sector’s remarkable Californian top two, with Blossom Hill and Sierra Valley, is at odds with the overall market where Hardys, driven by the Stamp and Crest labels, is the top brand with a 5.3% market share, having recorded 13.6% growth last year.

Volume increases are being enjoyed by all major suppliers to the sector. Constellation Europe holds an 11.4% share (with volume up 5.9%), Percy Fox 9.2% (+14.3%), Gallo 7.6% (+40.8%), Pernod Ricard 5.1% (+11.9%) and FGL Wine Estates (Fosters) 4.1% (+5.9%).

New Echo Falls wines

Californian wine sales are buoyant (+11% to January 2006) and Echo Falls, Constellation’s fastest selling US brand, grew 43% and has become a top 10 UK wine brand with sales of nearly one million cases.

Tom Wallis, VP sales at Constellation Europe, is hoping new developments for Echo Falls will build on those figures. “Echo Falls pinot grigio and rosé will be launched in the spring,” he says, “and with rosé wines growing at 34% and pinot grigio currently the fastest growing white grape variety, we are catering for the most in-demand styles and varieties. Packaging is undergoing a full redesign to enhance branding and deliver greater on shelf standout for consumers.”

Constellation is also adding three new wines from California to its Stowells Taste the World range in May; a merlot, white zinfandel and chardonnay, boosting its presence in this market. In addition it has introduced Banrock Station, Echo Falls and Stowells in a new two-litre bag-in-box with a suggested selling price below pound;10, ideal for the convenience market where three-litre boxes have failed to make their mark.

Wallis says even more developments are imminent. “Our brand teams in Australia are presently working hard on one of the most exciting and innovative new product launches ever to hit the wine market.”

New Look for South Africa’s Number One

South African sales have fallen slightly in 2005. While quality is excellent, the 2005 crop was down by 11% resulting in a shortage of white wine. This will not be fully replenished by the 2006 harvest but supplies of red wines are considered adequate.

South Africa’s branded wine growth is being driven by Kumala which accounts for 28% of all South African wine consumed in the UK, and it is hoping to capitalise on that with new packaging across the range from this month.

“The wine shelf is the most important communication point,” says Fiona Riches, Kumala brand manager at Western Wines. “The new look will enhance the brand. Kumala is the UK’s best selling South African wine and number four best selling wine in both the total UK off trade market and impulse market.”

Kumala has also repackaged its Intulo range of entry-level wines, which is exclusive to the cash and carry sector, using striking colours for ease of recognition.

Blossom Hill Growth surges

As the number one Californian wine brand, Blossom Hill has driven the US category growth to nearly double in the last year. It’s the top selling range in the independent sector and the fastest growing wine brand in the total UK on-trade market. This summer will see significant investment in strengthening Blossom Hill’s position in the on-trade through advertising, promotions at point of sale and PR activity. A major advertising campaign in June with a media spend of pound;700,000 includes TV and radio advertising. Launching later this year are colombard chardonnay and ruby cabernet shiraz blends, new 2005 vintage chardonnay, sauvignon blanc and white zinfandel and new 2004 vintage reserve cabernet sauvignon and reserve chardonnay.

Jacob’s creek relaunch

Pernod Ricard UK has launched a pound;2m marketing campaign as part of a relaunch for Jacob’s Creek. National TV advertising uses the slogan “welcome to our place” and focuses on the location of Jacob’s Creek in Australia, after which the wine is named.

On-line advertising will support this in May with a website designed to bring people in closer contact to Jacob’s Creek in Australia.

Patrick Venning, head of marketing for wines at Pernod Ricard UK, says: “This is providing the brand with a distinct position in the market place and reinforcing the reputation of Jacob’s Creek as an innovator and leader in this sector.”

Bestway launches own label

Bestway Cash and Carry group last month introduced a new own label brand called Cellar Estates and plans to grow it to 85 wines sourced from nine countries within six months. Bestway’s new approach to wine follows the appointment of wine adviser Andrea Hargrave, a Master of Wine and industry expert. She has 15 years’ experience of the cash and carry and independent wholesale sector, latterly with Booker where she developed the Malt House Vintners range, and she has led Bestway’s buying team in selecting wines for the new label.

She says: “All Cellar Estates wines have been selected for their quality and appeal to UK consumer tastes while retaining distinctive regional characteristics. Such is our belief in Cellar Estates, all wines are offered on a sale or return basis as they launch.”

The Rosé Revolution

Last year there was a substantial rise in popularity for rosé wines which now have a 7% share of wine sales, having grown 41.5%. Consumers are realising that there are many different styles of rosé from serious, dry more robust styles and medium to sweeter styles. The category is going to become very crowded soon with many brands going down the rosé route. Echo Falls and Mondavi launches are imminent.

Fair Trade Wines

Fairtrade wine is still a relative newcomer, but Ehrmanns has been at the forefront of Fairtrade wine development, working with the Stellar Winery in South Africa and Vinos los Robles in Chile.

Ehrmanns’ flying winemaker Peter Bright visits the vineyards and works closely with the wineries to develop wines for the UK and world markets. Three Stellar wines, chenin/sauvignon blanc, shiraz and shiraz rosé and two exclusive Los Robles Chilean wines, sauvignon blanc and carmenère, are available to the wholesale channel (RSP pound;4.99).

The company has also developed Ehrmanns Independent Selection (EIS), a range of wines offered exclusively to the independent retailer, wine specialist, wholesaler and on-trade. EIS has evolved into a list of more than 100 wines including Palandri from Western Australia and Paternina Rioja in addition to the Fairtrade wines.

Next month Ehrmanns will be launching BlueRidge wines from leading Bulgarian winery, Boyar Estates into the cash and carry sector. They are BlueRidge merlot, cabernet sauvignon and chardonnay, (RSP pound;3.99) and BlueRidge XR, a barrel aged chardonnay, and merlot (RSP pound;4.99) and all have Stelvin closures.

Premium quality wines

There has been a 15% rise in sales of wines priced pound;6 or over in the UK market over the past two years, confirming consumer willingness to trade up to more expensive wines. Wholesalers must be prepared to invest in an attractive selection if they are to be taken seriously, and there is plenty of help on hand.

Hatch Mansfield has a reputation for establishing and developing wine estates from around the world. Its portfolio includes Champagne Taittinger, Maison Louis Jadot, Viña Errazuriz, Caliterra and Villa Maria and the company can provide a one stop shop for wholesalers from a very extensive range of quality wines.

Cellar Door, the premium wine division of Constellation Europe, also has a large portfolio of New World wines with retail values of pound;6 and over, embracing 19 wineries including Robert Mondavi, Ravenswood, Houghton, Leasingham and Barosa Valley Estates. In August it will be launching Tintara, a premium Australian brand from the McLaren Vale.

South America promises great wines

Chilean wines grew by over 6% in independents last year with market leader Concha y Toro, Chile’s largest wine producer, enjoying an 11.2% boost in sales. Consumers are becoming aware of higher qualities with Errazuriz, the leading premium brand, winning Red Wine of the Year in the 2005 International Wine Challenge for its Errazuriz Estate merlot.

Argentina suffered a major setback in the independent sector in 2005 losing nearly a quarter of sales and its wines have failed to make the breakthrough in sales or wine consciousness that other New World wines have achieved.

It lacks a strong branding presence although quality is improving dramatically through Santa Julia, Argento and Etcharts. Concha y Toro is also producing some delightful fresh young varietal wines, demonstrated by the success of its Trivento brand.

New zealand commands highest price New Zealand was the fastest growing country in impulse last year with volume 47.6% ahead of 2004, although this was from a low base, and now accounts for 1.9% of sales.

Limitations to future growth are largely down to wine availability but producers are hoping for a good 2006 vintage to maintain performance.

New Zealand wines still manage to command the highest average retail prices in the market and Villa Maria, the number one premium wine brand, had its best year in the UK in 2005.


=== Buyer’s viewpoint ===

Promotional investment from the big five wine suppliers is massive, resulting in over performance of New World wines within the independent sector. Smaller suppliers, especially those with traditional Old World links, are finding it increasingly difficult to work in this market so we are building a strong European selection via our own brand programme to ensure that good quality wines from France, Germany, Italy and Spain do not completely disappear from the business.

Independent retailers must be more creative and make their stores more interesting places to buy wine – by developing wider ranges and offering choice rather than duplication. We dare to be different with the Cellar Estates brand, as illustrated by our Californian Merlot Rosé. Today’s successes may be tomorrow’s failures. Tastes are changing, and so are we.


=== Buyer’s viewpoint ===

We start the new financial year in buoyant mood against a backdrop of ‘like for like’ overall sales growth which outstrips the market in every BWS category.

This year will be about maximising our assets in the off trade – doing what we do, just much better. The ingress of the multiples into the convenience sector has challenged all retailers to look at their offering, to become more professional and gain more control over their businesses. The BWS focus for Spar is seeing where growth will come from and devising ways to exploit every potential, examining store location, category and range.

We will continue our three-weekly promotions and ‘3 wines for a tenner’ despite the Chancellor’s attention, and expect a continuation of growth in wines from California and the south of France – and more rosé sales.


=== Buyer’s viewpoint ===

Blakemore Wholesale wine sales are buoyant with a year-to-date performance showing us up 6.3% on the previous 12-month period.

We have recently reviewed our entire wine range adding lines from developing regions and remerchandising our fixtures to accommodate these. In some cash and carry depots we have also allocated more fixture space to the wine category.

Widespread availability of grey product is a major cause for concern. Top selling lines available at pound;3 or more below the best prices we can buy direct from suppliers are damaging not only for the brands but for our future category development.

We work closely with Constellation Wines, which supplies our Landmark exclusive Vintners Collection range, and are supportive of category development and promotional activity.


=== top ten countries in Impulse by volume sales of Light Wine 2005 vs 2004 ===

1. US 20.9% (+17.6%)

2. Australia 19.8% (+6.0%)

3. France 15.9% (-8.2%)

4. South Africa 9.6% (-3.3%)

5. Italy 9.4% (+5.6%)

6. Spain 7.8% (+7.5%)

7. Chile 5.7% (+6.6%)

8. Germany 4.9% (-12%)

9. New Zealand 1.9% (+47.6%)

10. Argentina 1.6% (-26.6%)

source: AcNielsen


=== GB Impulse Top 15 brands by % volume share 2005 ===

1. Blossom Hill (California) 7.1 (+17%)

2. Sierra Valley (California) 6.0 (+43.9%)

3. Jacob’s Creek (Australia) 4.2 (+8.4%)

4. All Hardys (Australia) 4.2 (+8.4%)

5. Stowells (WorldWide) 3.4 (+23%)

6. Kumala (South Africa) 2.0 (+4.7%)

7. Piat D’Or (France) 1.6 (+/-0%)

8. Lindemans (Australia) 1.6 (+7.3%)

9. Echo Falls (California) 1.5 (+22.6%)

10. Hardys Stamp (Australia) 1.3 (+3.4%)

11. Paul Masson (California) 1.1 (-0.6%)

12. Banrock Station (Australia) 1.0 (+34.5%)

13. Wolf Blass (Australia) 1.0 (+29.4%)

14. Hardys Voyage (Australia) 0.9 (+116%)

15. Concha y Toro (Chile) 0.9 (+11.2%)

source: AcNielsen


=== WINE FACTS ===

Share of market in 2005 and light wine average retail price per 75cl bottle during 2005

White Wines 51% pound;3.74

Red Wines 42% pound;3.98

Rosé Wines 7% pound;3.88

Total Light wine average pound;3.85

l 64% of wine purchases are made by women

l More Champagne was sold in the UK in 2005 than in the millennium

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