Exchange rates and increases in duty have helped to keep value growing in the wine sector, but volume is currently flat, and there is concern about the decline of the on-trade and the prospect of further duty rises.
American wine has continued to punch above its weight in the convenience channel, extending its lead over Australia over the last year, but Europe has also been making a comeback with France and Italy both leapfrogging South Africa.
One of the strongly growing brands over the last year has been Constellation’s Californian brand Echo Falls. Jo Grainger, customer marketing manager, Constellation Europe, says: “It is a hugely important product in this channel and is going from strength to strength. It is our fastest growing brand in the convenience sector with year-on-year value growth up 37%.
“Last year we launched Echo Falls Spritz, a 4% spritzer with just one unit of alcohol per 250 ml bottle. Watch this space as there will be more exciting developments for Echo Falls this summer.”
She says summer is a key sales period with people enjoying a glass of wine at outdoor parties, picnics and BBQs if the weather is fine. She adds: “Summer is a particularly important time for rosé – where much of the wine category growth is coming from. Light refreshing drinks will also be popular, so we expect Echo Falls Spritz to be a hit again this year.”
With the top 10 best sellers accounting for 38% of sales in convenience, she says wholesalers should focus on stocking a core range of best sellers. She also advises that better signage is needed in depot to alert retailers to the best sellers – as these have such an impact on sales. She adds: “Constellation ran a ‘Stock up on these Best Sellers for Christmas’ campaign last year which drove sales of our brands in the top ten and ensured that despite difficult trading conditions we performed ahead of last year.”
For Pernod Ricard, wholesale channel director Richard Jones sees the recession possibly working to the advantage of independent retailers with a lot of on-trade occasions coming into the off-trade. He says: “We have a number of key brands that perform well in the channel – Jacob’s Creek would be the most familiar to consumers. Montana and Campo Viejo are also important; both of these brands are building up a strong distribution base as consumers gain confidence in trialling new wines. Independent retailers have done well with Neilsen off-trade MAT to 21/1/09 showing volume growth of Montana +53% and Campo Viejo sales up over three times last year at +336%. All of these brands are adding value to the category as they are all Â£5-plus wines.”
In the last six months, Pernod Ricard UK has been working on two new initiatives within wholesale cash and carry. The first is price-marked packs (PMPs), which feature on Jacob’s Creek Chardonnay and Shiraz, Campo Viejo Crianza and Montana Sauvignon Blanc. Jones says: “This helps to provide information to retailers of the suggested RRPs of key best selling lines and also provides consumers with confidence when they shop in the independent retail sector.” The second initiative is focused on delivering a clear wine message in depot. He adds: “By working in partnership with wholesalers, we are able to implement the correct range and layout to maximise sales.”
CWF (Continental Wine amp; Food) is a supplier that is proud of its close trading relationship with the wholesalers, and has products that appeal to price-conscious consumers. Marketing manager Vicky Lee says: “CWF offers key ‘value positioned’ products to this sector ranging from Old Westminster Fortified British Wines in many styles and sizes or Silver Bay Point light wines in 75cl that allow the independent trade to retail at Â£2.99, through to Simply Fresco, our leading brand of semi-sparkling perry that favours in both quality and value terms against the brand leader. We are experiencing single and double digit year-on-year growth in most sectors which we are obviously delighted with.”
South African brand FirstCape is keen to get closer to the wholesale sector. Steve Rosser, director of Brand Phoenix, says FirstCape is the eighth biggest wine brand in grocery and is keen to replicate this success in the independent channel. He says: “We see the wholesale channel as crucialÂ for our continued success, and as such we have partnered with SHS Sales amp; Marketing to help us meet the challenges of this complex trading sector. From this partnership, FirstCape now has access to many more distribution points and this is an exciting phase in our brand’s development.”
He adds: “Working with the specialised channel team at SHS Sales amp; Marketing, we have spent time in depot talking to retailers about FirstCape and why this is a must stock brand. This activity has proved very successful during trade days in Blakemore depots as well as during Batley’s 50th Anniversary celebrations and product launches in Parfetts.” As the official wine sponsor of the British Lions rugby team it will be looking to raise its profile with events in the wholesale and retail channels.
Another South African brand, Arniston Bay, says it is performing particularly strongly in the impulse sector with sales up 46.89% by value and 47% by volume (Nielsen MAT to 29/12/08) compared with a rise of 35.4% by value and 37.1% by volume in grocery.
Felicity Billington, UK amp; Ireland brand and trade marketing manager at The Company of Wine People, says: “We view the impulse channel as vital to the development of the Arniston Bay wine range and the growth in sales we have seen is a testament to this. We have focused on sector specific lines and promotions to drive distribution within the channel.
“The addition of new ranges such as Arniston Bay The Shore – the brand’s entry level offering – Arniston Bay Cape Crossing and Arniston Bay’s sparkling range, as well as sector-specific price-marked packs, have contributed to this overall growth in the impulse sector. She says the launch of the brand’s environmentally friendly pack, the 1.5 litre Arniston Bay pouch, in August 2007, has also contributed to its success.
ZGM sources its wines from a wider geographic spread, and says it is also seeking to increase its involvement in the sector. Its UK managing director Steve Howard says: “The wholesale sector is important to ZGM. We currently trade with two of the seven major players in the channel so there much scope for business development here. ZGM invested Â£4.8m in the UK market in 2008 in order to launch a series of branded wines from across the globe including France, Spain, Chile and California. However, own label and customer brands remain a focus area for this channel.”
Last year ZGM launched Entwine, a range of wine-based fizzes, spritzers and coolers with an ABV of 5.5%.
Richard Jones, managing director Reh Kendemann (UK), says the German wine sector is not growing, but adds: “However, Nielsen MAT value to 27 December 2008 for the German wine sector shows that Reh Kendermann brands continue to grow with Black Tower at +6%, and particularly strong performance being shown by Black Tower Rosé, which is growing at 38%. Our Weight Watchers Wine is the fastest growing brand in the German wine sector, increasing at 15%, followed by Black Tower.”
Another well known German wine, Blue Nun, has just launched a ‘text to win’ competition and cash back offer in cash and carries. Retailers will be invited to claim cash by collecting vouchers from promotionally marked stock – or instantly win from a range of cash prizes up to Â£5,000, by texting the code on a voucher inside the case.
Sales director for Blue Nun brand owner Langguth, Len Granger, said: “We are convinced that investing in category specific marketing activity is the most effective way to grow our business.” In the wider market it is also publicising its lower alcohol content with a “1 glass: 1 unit” campaign.
Blue Nun is distributed by Ehrmanns, which is also claims to be the leading importer of Fairtrade wines to the UK. It plans to launch a mixed case (2 x White, Red and Rosé) from Fairtrade Stellar Organics, and Kim Wilson, national account manager UK, says: “This mixed ‘taster’ case will provide an instant Fairtrade range for retailers looking to capitalise on demand for Fairtrade from consumers.” This launch will be supported with a full POS kit.
Fosters EMEA’s Wolf Blass has just ended a Six Nations promotion in cash and carry depots. It says Chardonnay is still the biggest category so stocking brands such as Lindemans, Wolf Blass and Rosemount is essential in order to provide retailers with key sellers.
== Spirits ==
Spirits are currently out-performing the total beverage alcohol (TBA) market with sales growth of 7% (Nielsen MAT to 24/01/09) compared with 4% overall, although duty rises are helping to drive value growth more than increasing volumes.
Diageo’s Smirnoff continues to be the leading brand and has seen significant new product development in the cash and carry sector.
Last month Diageo began trials of a new 50cl size for Smirnoff No.21 vodka within cash and carry, to complement the existing 35cl and 70cl range. The RRP is Â£9.49, however the initial launch of the bottle will be a Â£8.99 price-marked pack.
In addition, Smirnoff flavoured vodkas, Lime Smirnoff and Green Apple Smirnoff, which have been on trial in Bristol for more than six months, will be available to all off-trade retailers this summer. Diageo says the Bristol testproduced double-digit growth in the vodka category and significantly increasing flavoured vodka’s share of the spirits category.
This month Diageo is also introducing three new variants into its current Premix 250ml can range – Morgan’s Spiced amp; cola, Smirnoff vodka amp; Schweppes tonic and Bulleit Bourbon amp; cola.
Richard Jones at Pernod Ricard says: “In the last year, Pernod Ricard has been working on a number of initiatives to grow sales in wholesale cash and carry. Price-marked Malibu packs have enjoyed significant success, helping retailers achieve attractive price points and providing consumers with confidence when they shop in the independent retail sector. Pernod Ricard is also investing in a number of gift pack solutions. With convenience stores often catering for the distressed purchase occasion, these packs offer retailers opportunities to drive incremental sales.”
Lois Ireson, the regional brand manager for Southern Comfort, UK and South Africa, says: “Both the wholesale and cash and carry channels are hugely important to Southern Comfort and we know that by supporting them across the year, we can receive strong benefits as a result. For example, we have declined much less than our competitive set in the on premise channel and we attribute this to the support of our business partners in both the wholesale and on premise channels.
“In addition, cash and carry outlets selling into the take-home sector provide vital sales for us as a brand and help us record consistent growth in the off-trade.”
“For Southern Comfort, we lead sales in the wholesale channels with our 1.5 litre SKU followed by our 70cl SKU. Our fractionals range – 5cl, 20cl, 35cl and 70cls SKUs – tend to be the lead products in the cash and carry sector.”
During summer 2009, SoCo will also be supporting the wholesale sector with two limited-edition summer added value packs – Southern Comfort Pitcher Pack and a Southern Comfort and Schweppes lemonade pack, where both packs will be communicating how to enjoy refreshing serves at home.
Ireson says: “We will also be producing more than 8,000 kits together with several partners in the Bacardi Brown-Forman Brands portfolio including Jack Daniel’s, Bacardi rum, Martini and Bombay Sapphire.
“These kits will help us communicate a range of simple refreshing summer serves to the audiences in the on-trade, while driving sales of 1.5 litre SKUs. We have produced this cross portfolio kit to help the wholesaler meet the needs of their accounts faster and more efficiently.”
At Whyte amp; Mackay John Bradbury, off trade sales director, says Nielsen, January 2009, showed Whyte amp; Mackay whisky up 32% in last quarter of 2008 versus the same period in 2007. He says Vladivar is recovering lost ground, now that the new pack is available throughout the supply chain, Jura was 21% up in last quarter of 2008 versus the same period in 2007, and Glayva was up 17% over the same period.
He adds: “We carried out a series of depot activity days last year in conjunction with the W amp;M Premier League Darts and we have planned in a similar number of days to tie in with this year’s event which started last month.” In addition it will be staging trade days with special offers on its key lines, there will be new packs exclusive to the cash and carry channel, exclusive retail club activity with major customers, and independent retail drive days.
Carl Middleton, Beam Global UK cash and carry sector manager, say: “During the summer months it is important that retailers focus on communicating the mixability of spirits by showing how brands like Courvoisier, Harveys, Sauza and Makers Mark make fantastic long drinks. Courvoisier served in a tall ice-filled glass topped up with ginger beer and apple juice makes a great summer drink, while Sauza tequila served with a sparkling citrus soft drink is incredibly refreshing. Consumers are increasingly interested in making great-tasting drinks at home so retailers need to cater for those demands.”
Paul Burton, joint managing director of InterContinental Brands (ICB), believes there is room for more innovation and says that prior to the summer trading period ICB will launch two new brands aimed at young adult early adopters who love to socialise.
He says: “As one of the UK’s few genuinely independent innovative drinks companies we consistently invest in new product development and have an enviable track record of not just responding to, but often anticipating, consumer demand. The wholesaler channel has been central to helping us to pioneer new niches in this way.
“It has been very important in the success, for example, of Vodkat Original Classic Schnapps, which has rapidly become one of the top spirits and liqueurs in the country, carving out a unique niche particularly among young adult consumers. Not content to rest on the success of Vodkat Original Classic Schnapps, we introduced 12% ABV Vodkat high juice alcoholic Smoothies (Cassis, Apple amp; Strawberry, Apple amp; Mango, Orange amp; Passionfruit and Cranberry amp; Raspberry), which we positioned as the new over ice sensation and supported with heavyweight TV advertising that targeted half of all the UK’s 18 to 34 year old females with spots around programmes such as Coronation Street, and Big Brother:Live, as well as sponsorship of Secret Diary of a Call Girl.
Although the ARTD market has been contracting with less successful brands being squeezed out it is still worth Â£199m and Beverage Brands WKD is the leading brand with a 41% share of the market in impulse.
Emphasising the importance of the cash and carry and delivered wholesale channel to WKD, Karen Salters, marketing director at Beverage Brands, explains: “We know drinkers of WKD aren’t ones to plan shopping a long way in advance. They are spontaneous in their actions and love a last-minute reason to socialise with friends. For these reasons, WKD drinkers are the types of people to rely heavily on the impulse sector for their purchases, hence the wholesale route to market is extremely important to us.
“The top performing pack format in the channel is WKD Blue 70cl; not only is it the category-leading pack in ARTDs, but consumer demand is now such that it is also the leading PPD (premium packaged drink) SKU in the impulse sector. Volume sales of 70cl WKD are growing and all three flavours (WKD Blue, WKD Red, WKD Iron Brew) are increasing in value terms.
“As ever, to maximise sales opportunities, retailers should follow the FWD Blueprint for ARTDs. Recent case studies have yet again highlighted the sales benefits of following the recommended layouts. For example, Kahn’s Foodstore in Leadgate, near Consett, saw an increase of over 12% in ARTD sales following a remerchandising exercise. Similarly, the Jerusalem Street Stores in Rhymney, South Wales, sold more ARTDs in the eight weeks after the fixture transformation than in the previous six months.”
Global Brands is another company in the ARTD sector for the long-term. Zena Hackney, key account manager, says: “While industry reports have previously focused on the decline of the ARTD market, our flagship range, VK Vodka Kick, has increased its market share by more than 5% in the past 12 months. She says innovating to keep up with changing consumer demand is vital. Recent launches include VK Mojito, the ARTD cocktail, and following on from the success of pear ciders, Global Brands introduced VK Pear.
Hackney says Global Brands makes sure to invest heavily in its ARTD offerings, supporting the range with a Â£10m annual marketing budget to provide advertising, promotional teams and vehicles, and POS and publicity. This is backed by brand support and sponsorship of sporting events, live music and its VKend campaign.
=== Wine in the hospitality sector ===
ViVAS is a joint venture between 3663 and independent wine company Bibendum Wine, set up to supply wine to the bar, pub and restaurant market.
It has a dedicated team of wine experts who can offer a tailored service specific to an establishment and can provide added value services such as staff training, wine list design, merchandising and menu matching advice.
Marketing manager Henry John says: “Because of the difficult trading environment, our customers are, now more than ever, looking to ViVAS for expertise on everything from the ranging and pricing strategy through to our added value services.”
He suggests the key trends for 2009 will be:
l Rosé is no longer just a summer drink. In the past three years the category has seen an increase in sales from one in every 25 bottles sold being a rosé wine, to one in every ten bottles;
l Pinot Grigio is now viewed as a brand in its own right and some customers are looking beyond its traditional Italian roots to alternative styles from countries such as Hungary, Argentina and the US;
l Chardonnay is the UK’s favourite grape variety, however drinkers are moving away from the heavily oaked Australian wines popular in the 1990s, to fresh and lighter styles of Chardonnay;
l With an abundant vintage in New Zealand in 2008, Sauvignon Blanc from this region is expected to be readily available in 2009. This variety always attracts a price premium over any other country, and is a great premium wine to stock;
l Great examples of the Pinot Noir grape, coming from California, New Zealand and Chile, are giving France a run for its money.