Ros eacute; tinted glasses

After years of growth, wine sales disappointed last year, remaining almost static. Wines sales through the impulse sector rose by just 0.1%, according to ACNielsen MAT volume sales to the end of January, 2007. The overall wine market, bolstered by a solid Christmas performance, recovered composure to finish just 0.5% ahead, a weak performance reflecting a slowdown in growth from both Australia and California and a poor performance from South Africa.

The impulse category projects a very different sales picture compared to the overall market with New World wines up 1.5% at 61.1%, against a market share of 56.9%.

California dominates impulse with 22.4% of sales (up from 20.9%), driven by Blossom Hill (up 7.8%), Echo Falls (up 40.8%), and a solid performance from the Gallo Family range (up 1.7%). Exclusive label has also contributed to California’s success with Booker’s River Wild and Landmark’s Vintners Collection wines among the best sellers.

The impulse sector was hit again by declining French sales (down 7.8%) in contrast to the overall market (down 1.4%) and Spain (down 3.1%), but Italy (up 7.4%) and New Zealand (up 24.7%) made good these deficiencies.

Market share through the independent channel is greatly influenced by promotional activity. Volume sales are driven by a pound;3.99 price ticket and ‘three for a tenner’ deals, and it would be foolish to believe the brand leader tables actually reflect consumer tastes. The over-promotion of New World brands is at the expense of the highly fragmented European market which lacks brands and financial investment to match the deep cut promotions from Australia and California.

The popularity of ros eacute; wines continues, particularly from California, with sales up by nearly 33% and ros eacute; now accounting for more than nine bottles in every 100 consumed.

WINENATION

Constellation Europe has published its WineNation report, the most comprehensive study of UK wine drinkers ever. Valuing the market at pound;4.3bn, with 31.5 million wine drinkers, over 12 million of whom drink wine frequently, WineNation suggests there is still a huge untapped potential and that the best way to unlock it is through a better understanding of what makes wine drinkers tick.

The three-stage research programme was undertaken by Wine Intelligence during 2006 and found seven clearly identifiable consumer profiles based on purchasing habit and attitudes. Constellation Europe’s UK trading director Peter Spencer says that if the wine industry and retailers do more to engage and educate wine consumers and make wine relevant to them and their lifestyles, the more confident and involved they become in the category and the more they will be prepared to spend. Wholesalers and distributors would do well to study this research in detail and share it with their retail and on trade customers.

FRENCH AIM AT RECOVERY

Winemakers in Languedoc have been among the worst hit by France’s ‘wine crisis’, which has seen prices tumble and producer debts mount in the wake of falling domestic consumption and a declining share of world markets. Many vineyards are being scrubbed but recent changes in French wine law could result in development of new brands for world markets

But it is not all gloom and doom for French wines. Piat D’Or is the top selling French wine brand in the UK impulse sector and its recent revamp is being supported by extensive promotional activity. Percy Fox brand manager Victoria Olivier comments: “With new packaging, quality improvements and a new winemaker on board, we hope to grow the range further and maintain its position as an approachable, quality and value for money, wine brand.”

JP Chenet French wines are also growing share within the independent sector. Producers Les Grand Chais (LGC) aim to improve distribution of their ros eacute; style and the recent introduction of a sparkling ‘cuvee close’ wine will ensure the brand retains its status. LGC now owns the Calvet Bordeaux brand and aims to put it back on the wine map with a limited release Sauvignon Blanc and Claret.

Languedoc’s Domaine de la Baume wines are already well established though multiples and specialists. La Baume’s striking packaging and excellent varietal qualities provide a further opportunity to develop the French wine category. UK director Tim North says LGC is giving independents the same level of activity as the multiples, enabling retailers to promote JP Chenet at two for pound;7 and meet a pound;3.99 price point on other wines.

GERMANY MAKES A COME BACK

While not of significant value, German wine suppliers are responding to the loss of sales at the lower end of the market by offering dry Rieslings and innovative blends of Pinot Grigio and Chardonnay. Red and ros eacute; production now represent over 37% of German vineyard acreage, including Pinot Noir, Dornfelder and Portugieser plantings. Leading multiples are already stocking these wines.

FAIRTRADE WINES

Ehrmanns is the leading importer for Fairtrade wines, a market now worth over pound;7m. Marketing manager Felicity Billington says: “The majority of growth has been driven by the multiples as they capitalise on increased consumer awareness and extensive media coverage. However, the independent and impulse sectors have failed to benefit from growth in the Fairtrade market. Smaller retailers are clearly missing sales by not offering these wines to their customers.”

Ehrmanns is introducing the organic Banda Verde from classic Rioja producer Paternina and a range of organic wines from contemporary Argentinean producer Elementos. Sales director Alan McDermott says: “The wholesale channel is very important to us and Blue Nun, Arniston Bay and Misiones are showing significant growth in this sector. We believe there is need for a more proactive way of communicating with retail stockists, possibly through wholesaler retail clubs.”

FOSTERS EMEA TARGETS THE INDEPENDENT SECTOR

The wholesale sector is of huge importance to Foster’s EMEA in providing the window to nearly 52,000 convenience/independent outlets across the UK. Rob Page, business sector controller, impulse, says: “Retailers and wholesalers are seeking education and value added activity and we have strengthened resource in category management and trade marketing to provide advice on core range and merchandising excellence and implement programs to drive value and volume.”

Foster’s brands enjoy an average retail price point of pound;4.86, a 23% premium on the overall average price of just pound;3.94.

NPD remains a core focus of Foster’s business. Rosemount has recently been re-launched in a unique proprietary diamond shaped bottle with refreshed outer packaging for cash and carry to create greater shelf stand out. Another new product is its Yellowstone sparkling ros eacute;, branded as ‘Pink’, which has sold more than 175,000 bottles in its first four months in the market.

THE OPPORTUNITY FOR PREMIUM PRICED WINES

Despite the growth of higher priced wine brands like New Zealand’s Oyster Bay, Montana and Villa Maria, and the strength of Wolf Blass and Rosemount premium Australian wines selling at over pound;5 a bottle, the average market price is below still pound;4 and the premium market is eluding many wholesale operators.

“Most wholesalers are doing an excellent job by stocking a wide selection of premium wines, but restaurants and independently owned hotels and pubs appear reluctant to stock wines that have even a small retail presence,” says Patrick McGrath, managing director of wine agency Hatch Mansfield, whose brands include Errazuriz, Villa Maria, Louis Jadot and Tattinger.

McGrath believes that diners need the reassurance of recognisable brands on a wine list – if only to avoid the embarrassment of making a wrong decision, since advice is rarely offered. “These wines, not usually over-exposed or victims of destructive supermarket bogofs, add quality to any wine list, not distract from it,” he says.

Sparkling wines are enjoying considerable success with champagne sales up by 12% and new world sparklers up 6%. Cava is performing well yet many independents have yet to find shelf space for the brand leader Frexinet. Hatch Mansfield recommends retailers offer a selection of champagne across various price points, a house brand, Moet and Lanson, a ros eacute; and, of course, Tattinger.

THE IMPORTANCE OF OWN BRAND

“With 22% of our wine business and a major contributor to overall profit, the Spar brand represents a point of difference between us and our peer group,” says senior trading controller Liz Aked. Spar wines have shown a significant 12% growth year on year in a relatively static market through aggressive and regular promotional tactics.

The range is segmented into entry level (cheap and cheerful), country families, premium and discoveries. Aked is particularly pleased with the six discovery lines which represent the best quality value ratio available for the popular grape varieties. Spar has now re-launched its entire new world portfolio, retailing at pound;3.99, with margins in excess of 32% to share. The wines are sourced from leading producers Canepa, Pettivale, Delicato and Bonnievale and are bottled in France to ensure integral flavours and balance are sensitively handled.

Booker Wholesale’s ‘Malt House Vintners’ wine selection consistently excels at the annual International Wine Challenge, receiving 61 medals and commendations last year including a Gold medal for Henri la Fontaine Fleurie and a Silver for Friuli Grave Pinot Grigio. Its range is well balanced between the old world and the new and includes Scenic Ridge (Australia), San Andres (Chile), River Wild (California), Rouwke’s Drift (South Africa), and Henri la Fontaine and Marcel Hubert (France). To exploit the boom in ros eacute; wines Booker has introduced new ros eacute; wines from California, South Africa, France and Bulgaria.

Landmark Wholesale launched its exclusive wine range under the ‘Vintners Collection’ brand in May 2004. Trading controller Steve Mayes says the brand is doing extremely well and is a valuable asset within the Landmark portfolio. To keep the Vintners Collection range fresh and up-to-date Landmark is currently refining its German, French and Italian selections and expanding the New World range with new single and dual varietals. The introduction last year of a Vintners Collection Spanish range has been extremely successful. As ever, Landmark has invested heavily in merchandising programmes for retailers with attractive point of sale material and other important sales development ideas and a significant campaign is planned for the introduction of the new Vintners Collection wines.

Within its Cellars International range, Today’s has re-launched its Burgundy selection – Beaujolais, Chablis, Macon Villages and Macon Rouge under the Pont Neuf label. It will also be re-launching its Domani Italian range and its Tirneva Bulgarian brand shortly. The excellent Jean St Honore French regional selection is maintaining good growth and new Californian and South African ranges are planned for later this year.

Bestway launched its all new ‘Cellar Estates’ range last spring, turning a year-on-year decline of 27% into growth of 36%. New World dual varietals are a successful new addition and a range of 25cl single serve wines will be available soon.

Wholesaler Barrel Booze specialises in supplying alcoholic brands exclusively for the independent sector. Director of sales and marketing Imran Younus says they have made dramatic inroads into the exclusive wine market with a selection of attractively presented brands, including Auction House (Australia), Pacific Heights (California), Gordons Bay (South Africa). Recent additions include seven Pacific Heights three litre ‘bag in box’ styles, California Rose, Ruby Cabernet, Cabernet Sauvignon, White Zinfandel and Colombard Chardonnay.

the fwd blueprint for wine

The FWD Wine Blueprint has widened its services and initiatives by introducing selective in-store wine tasting to encourage consumers to try something different.

“In store wine tasting has been an overwhelming success, encouraging people to leave their comfort zone and try something new,” says Ross Shelley, scheme director for Wine Blueprint initiatives.

Daljit Singh is owner of Today’s Express in Bircoats, Doncaster. He contacted Blueprint after reading about the tasting initiative and was given range recommendations and a merchandising plan to align his range to the Blueprint. He was also encouraged to place a core range of white and ros eacute; wines in the chiller.

“The results of the makeover speak for themselves,” says Dal. “Prior to the Blueprint, my wine sales were pound;2,000 a week. Now they are approaching pound;4,000.”

Dal hosted his first in-store wine tasting at Christmas offering a selection of wines from across the Blueprint range. The event was a real success and Dal was amazed by the number of people who came from outside the area to sample wines, many of whom have become regular customers.

“It’s had a huge influence on my wine sales,” says Dal. “Thanks to the tasting, customers have become more adventurous with their wine choices. Previously, typical spend on wine was pound;3.99, now many are spending up to pound;6 a bottle.”

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=== SALES OF LIGHT WINE IN IMPULSE ===

TOP TEN COUNTRIES BY VOLUME MAT end Jan 2007

1. USA 22.4% (+7.6%)

2. AUSTRALIA 19.6% (-1.3%)

3. FRANCE 14.7% (-7.8%)

4. ITALY 10.0% (+7.4%)

5. SOUTH AFRICA 9.5% (-2.0%)

6. SPAIN 7.5% (-3.1%)

7. CHILE 5.4% (+0.6%)

8. GERMANY 4.2% (-13.8%)

9. NEW ZEALAND 2.3% (+24.7%)

10. ARGENTINA 1.8% (-2.7%)

Source: ACNielsen

TOP TEN BRANDS IN IMPULSE (MAT to Jan 2007)

1. BLOSSOM HILL 7.7% (+7.8%)

2. GALLO SIERRA VALLEY 6.2% +1.7%)

3. JACOBS CREEK 3.8% (-8.0%)

4. TOTAL HARDYS 3.7% (-0.2%)

5. STOWELLS 3.6% (+1.2%)

6. ECHO FALLS 2.0% (+40.8%)

7. LINDEMANS 1.8% (+14.2%)

8. KUMALA 1.6% (-22.3%)

9. PIAT D’OR 1.3% (-14.7%)

10. WOLF BLASS 1.3% (-4.4%)

Source: ACNielsen

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=== Buyer’s viewpoint ===

Although the market is experiencing a decline and at best a period of stagnation, ros eacute; wines continue to grow at the expense of reds. There is a wider appreciation of Sauvignon Blanc, not just from New Zealand, and I anticipate the resurgence for Soave and Valpolicella, especially chilled in summer. Over the next two to three years India will emerge as a serious producer of quality wines.

Suppliers are taking a fresh look at the channel with more emphasis on the convenience sector but only time will tell if this is merely lip service. While deep discounting on promotion is practised in the multiples there will remain a suspicion that suppliers are unable to channel their efforts to benefit smaller operators.

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=== Buyer’s viewpoint ===

Last year saw a massive drive from Bestway towards independent caterers in both food and drink. Our Cellar Estates premium range, Chateauneuf du Pape, Chablis Premier Cru, Chianti Classico, Sancerre, Pouilly Fume and Pouilly Fuisse, was launched with the catering sector in mind and is currently showing the greatest percentage growth.

Current trends suggest signs of consolidation in the market place. With the exception of a few leading brands the major players are only just holding on to or very slightly losing market share. No single brand, country of origin or wine style is leaping out at present. Any strong growth appears to be as a direct result of heavily discounting within multiple supermarkets. The wholesale sector seems to be ‘the poor relation’ and an afterthought in terms of investment and innovation.

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=== Buyer’s viewpoint ===

Our on trade business is evolving satisfactorily with the 25cl format performing well. California and Australia are growing dynamically but the anticipated improvement from South Africa has not materialised. Chilean wines, given their high quality and consistency, continue to increase market share.

Errant pricing is the most important and concerning issue facing the wine market. Product is reaching the market at prices that just do not stack up. It looks likely that these stocks are subject to duty and/or VAT evasion. There is something significantly awry and yet no-one seems to be doing much about it. It’s time responsible operators took control over these matters.

Suppliers need to take a long-term view on how to grow the market and consider carefully who they’re supplying and under what terms they are supplying them. A greater focus on innovation and added value is crucial to any market that has become absorbed with price alone. That is our challenge.

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