With the growth in cider showing no sign of slowing down, and wine and beer continuing to sell strongly, all these categories are vital for the wholesale sector, particularly in the run-up to Christmas.
Wine is a category in which many delivered wholesalers and cash and carries are playing catch-up after years of domination by the supermarkets. The fact that some are making headway is illustrated by figures from Pernod Ricard. Simon Thomas, commercial director of Pernod Ricard UK, says: “Retail clubs are providing a fantastic environment for their members and are contributing immensely to raising retailing standards, driving footfall, increasing basket spend and ultimately countering the erosion of the sector. A retail audit which Pernod Ricard UK conducted last year indicated that even though the independent sector was declining by 3.4%, clubs grew by 3-4%. It is paramount for the industry to recognise the importance of such initiatives and put resources into raising the standard of retail practices across the board. Pernod Ricard UK is already working with wholesalers and currently attributes around 20% of its volume to retail clubs.”
Jacob’s Creek is the company’s main brand in the delivered wholesale and cash and carry sector with 80% distribution in independent convenience stores. Thomas says: “The bulk of our activity focuses on the core range and Jacob’s Creek sparkling. We see a great opportunity to increase our distribution of Montana and Campo Viejo in depots and drive distribution forward in the independent convenience sector. There is a lot of opportunity for Campo Viejo and Montana to do well in the sector, driving sales in the Spanish and New Zealand wine categories.”
Fosters EMEA also highlights the importance of the wholesale sector to its business. Tyler Psarras, brand manager Gabbiano, comments: “This sector remains very important to us, and reflecting this we continue to expand our dedicated sales and marketing team in this channel. All core brands in our portfolio are in growth, in particular Wolf Blass and Lindemans continue to shine in the cash and carry and delivered wholesale areas. We have also released a number of NPD products this year which has been brought into the cash and carry and delivered wholesale sectors, namely Lindemans Chile, Gabbiano (from Italy) and Pink (a sparkling Australian ros eacute;).
The company has been working closely with wholesalers and in the summer ran a bespoke Wolf Blass promotion for the sector. Leveraging its sponsorship of Wolf Blass as the official wine of English cricket, it had a two-tiered strategy offering a prize draw for retailers and also for consumers.
Also in the summer it installed a new fixture in the Parfetts cash and carry depot at Stockport. Psarras says: “It is the first of its kind to be seen in this sector. This piece of equipment has enabled us and Parfetts to further educate the shoppers on the wine and brands available, as well as showcase products in a way that is currently not available in your average cash and carry. The response to this from the depot and shoppers has been terrific and the sales to date reflect this.”
Constellation Europe is advising wholesalers to stock up with the big wine brands, particularly in the run-up to Christmas. Peter Spencer, SVP – UK sales, says: “Big brands are the key performers at Christmas because shoppers are drawn towards them at this time of year, so wholesalers and independent retailers must ensure they stock up with them.
“Some 52% of wine sales value through independent outlets comes from the top 40 brands compared with 43% for the grocery sector as a whole which illustrates how important brands are in this sector. In the wine category, we are talking about big brands such as Hardys, Stowells, Echo Falls and Kumala, which are very much in demand in impulse.
“This is largely because purchases in convenience are not pre-planned and shoppers are going into an outlet and looking for something that satisfies their immediate needs. Brands give them this reassurance.”
Long Alcoholic Drinks (LADs)
As the only brewer in the UK market with major lager, ale and cider brands, Scottish Newcastle is ideally placed to take an overview of the LADs category, and has carried out an 18-month research project matching consumer profiles and occasions with what they were drinking.
The result is a category vision for the drinks aisle that no longer segments by alcoholic strength. Instead it segments by the customer profile and occasion, meaning that lager, ale and cider may all appear side by side in a particular segment, and S N has produced plans for each of the channels including convenience and off licences.
Mark Gerken, S N UK sales managing director (off-trade), says: “Consumers purchase from a range of brands and many find it difficult to find what they are looking for. By offering segmentation in the aisle, which matches both their needs as a consumer and their occasion for purchase, retailers can make the shopping experience easier while also introducing the shopper to other relevant brands.” S N believes use of its category vision could result in pound;300m of additional growth to the category over the next five years.
Over recent years the supermarkets have been a major destabilising force in the beer sector at Christmas, crashing the prices of cases of the major brands to drive footfall into their stores. But most of the major brewers have developed smaller price-marked packs, exclusively for the independent channel to help wholesalers’ customers. They provide a different offer to the retail giants, and are easier for consumers on foot to carry home.
Examples this Christmas include InBev’s 8x500ml Stella cans at pound;7.50, S N’s 8x440ml Foster’s packs at pound;5.75 or two for pound;10, and Anheuser-Busch’s 8x440ml Budweiser at pound;7.99.
Simon Harrison, commercial director – wholesale at InBev UK, says Christmas is a key time for the independent sector, and adds: “Through a combination of depot days and calling directly on independent retailers we are looking to give retailers the opportunities to participate in promotions to drive sales at this key trading period. This reflects our intent to improve the execution of our brands in front of the consumer.
“This activity will be continued and expanded next year as we ensure we drive appropriate activation for the independent and convenience consumer so we can really connect with them at retail level.”
While the overall beer category is flat some areas, such as imported beer, are in growth. Alistair Kemp, UK sales director, Anheuser-Busch Europe, comments: “Anheuser-Busch is capitalising on the demand for genuine imported beer brands with the introduction of Estrella, the best-selling beer from Barcelona; Harbin, China’s oldest beer; and the re-launch of Michelob, which is imported from America. We are now offering the wholesale channel a strong portfolio of beers which cater to different tastes and drinking occasions and will all offer a strong sales return.”
Global brands has developed a World Beers pack that will be stocked exclusively by Makro containing Carib lager, Tsingtao beer, Kombacher Pils and Salitos
Ales is a sector that is struggling, but premium bottled ales (PBAs) are in growth. Kevin Mellor, Marston’s sector controller, take home impulse, says the cash and carry and delivered wholesale sector is very important, especially on the company’s regional brands such as Bank’s and its growing PBA business. He adds: “In depot we concentrate on delivering a complete regional range linked with a competitively priced bottle ale offering, preferably linked to the wholesaler’s national leaflet drop.”
Cider has been the star performer of the alcoholic drinks sector achieving double digit growth over the past couple of years, and with even this year’s appalling summer weather failing to halt its progress.
While Magners’ heavily promoted “over ice” strategy provided the catalyst and spawned imitators, other parts of the cider category, such as pear cider and white cider, have also benefited from the increased consumer interest. But cider producers have been frustrated that while the supermarkets have benefited from the 28% growth in the overall market, independents are only ahead by 2%.
Richard Saunders, customer marketing controller for the impulse channel at S N, says much of the problem lies with wholesalers who are not giving enough space to the growing lines, in contrast to the supermarkets which have stripped back the space for ARTDs and used that for faster selling cider lines.
S N has been working to persuade cash and carries to increase space and in a test at one depot, where it relaid the fixture, sales increased by 15%. Saunders also says wholesalers should be giving their customers more advice about what to stock because retailers trust their advice.
John Mills, managing director of Gaymer Cider, says the leading cider producers are spending a huge amount of money backing their products, and cider should be a hero category in depots, with high visibility for the leading brands in green bottles and multi-pack cans.
Chris Carr of Merrydown says too much space in independent stores is given to white cider. He says: “Consumers who want white cider don’t care about the brand so retailers should only stock one brand and give the extra space to premium ciders which provide a better margin.”
S N, Gaymer and Merrydown all produce price-marked packs for the wholesale channel with S N’s Strongbow 8x440ml at pound;5.50 or two for pound;10, Gaymers Old English and Blackthorn at 8x440ml for pound;5 and Merrydown vintage dry and medium cider at pound;1.89 for a one litre bottle.
Aston Manor has the majority of its business in the wholesale sector, with a stable of products headed by Frosty Jack’s, which has been outperforming the overall white cider market.
Sales director Glenn Asquith is concerned that wholesalers should avoid deep discounts which has happened before at Christmas. He says: “Nobody makes any money, and there is no need when the category is doing so well.” Aston Manor prefers added value promotions with 25% and 50% extra offers on two litre Frosty Jacks and a 25% extra offer on Hereford Orchard.
Pear cider has also been growing strongly with Intercontinental Brands’ St Helier adding to its profile with sponsorship of The Championship show on ITV. The company has now added Apple Cider and Raspberry and Lime Cider to its range, which joint managing director Paul Burton says appeals particularly to a female audience.
Competing with St Helier is Maguire’s Pear Cider, which was launched by Halewood International earlier this year. Last month Halewood announced that it was revamping the packaging and adding a raspberry flavoured version to its range.
=== Buyer’s viewpoint ===
Long term we can expect the beer sector to be in slight decline, but with off trade benefiting from the decline in on trade sales, and we’ll see continued growth in wines. Cider is continuing to grow, with manufacturing techniques becoming more sophisticated over the past couple of years, and heavyweight promotional activity from some of the cider brands driving consumer demand.
In terms of new product development, we’re seeing more focus on lowering ABV in the beer sector. All premium lager brands are particularly challenged at the moment, but brands such as Becks and Stella are successfully starting to meet the new lower ABV targets.
On the wine side, I’m not convinced about packaging innovation. The real development will come through the marketing boards of the wine producing countries creating strong marketing programmes that are clearly focused on targeting specific consumer groups.
With Budgens we’re driving towards category excellence by creating a “shop within a shop” set-up for beers, wines and spirits, which allows for greater focus on the category in store as well as creating a more straightforward shopping experience for customers. With Londis, we’re developing some cross-category marketing to drive our core range in store, such as a current promotion we have partnering Gallo with Walkers Sensations.