The UK drinks a staggering £9.5bn worth of wine a year. But according to a new report, the wholesale channel is in danger of missing out on growth potential. Kevin Whitlock investigates
Here’s an incredible fact with which to start your year: the UK drinks market (on and off trade) is worth a staggering £37.6bn a year. That’s more than the entire GDP of the world’s 65th largest economy, Croatia.
Even more amazingly, the wine trade (again, this is UK only) accounts for £9.4bn, which is equivalent to the GDP of Jamaica. And according to the latest Wine Nation report – the UK’s most comprehensive study of wine drinkers – growth prospects for 2013 look good: sales in the off trade (£5.3bn) over the past 12 months have risen 2.4% (or £124m) in value terms, offsetting declines in the on-trade.
Unfortunately, the impulse or convenience channel is in danger of letting the multiple grocers harvest the best and most profitable parts of the trade, according Ian Anderson, category development director at leading producer Accolade Wines.
“The multiple grocers have long done very well out of wine drinkers,” he told Wholesale News. “However, with grocery shoppers buying less, but more often and more locally, they have started to move back into smaller high-street units [Sainsbury alone has opened 65 Local c-stores in the past 12 months].”
The result of this, he said, was that the multiples were punching above their weight in the convenience sector, which is the fastest-growing channel for wine sales. “Convenience stores operated by multiple grocers are the fastest-growing sector in the off-trade, with annual sales of £341 according to our report.”
Research had showed that the less consumers knew or were told about wine (white wine especially) the less likely they were to buy, said Anderson. “Wine Nation shows that shoppers with confidence and knowledge – the groups we call ‘Routiners’ and ‘Confident Enthusiasts’ – are happy to shop in c-stores, but less experienced shoppers, and the young – ‘Newbies’, ‘Occasionals’ and ‘Economisers’ – are more likely to go where they feel they’ll get some guidance.
“In wine, consumers are thirsty for knowledge,” he continued. “Educating them is key. The multiple grocers and specialists do a very decent job, but the convenience and impulse channels could do a lot more – there’s a considerable opportunity for retailers here with merchandising, display and PoS. And wholesalers, in conjunction with their trading partners, have an absolutely pivotal role to play in educating retailers. With wine, consumers’ involvement is driven by knowledge. As their involvement increases, so does their spend. A 10% increase in knowledge for a ‘Newbie’ leads to a £1 increased spend per bottle.”
- Wine Nation is issued annually by Accolade Wines, the UK’s biggest wine producer with leading brands such as Hardy’s in its portfolio and annual UK sales of more than £940m . The report is compiled using data from CGA, Kantar and Nielsen, as well as a bespoke panel of 50,000 wine drinkers
MARKET SNAPHOT: WINE
- The UK wine market (on and off trades) is worth £9.4bn per annum, or 36.2% of the £37bn drinks market;
- Fewer than 1% of consumers in the off-trade spend more than £10 on a bottle of wine;
- The average price of a bottle of wine in the off-trade is £4.95;
- Almost a third – 29% – of all wine purchases are for someone else;
- Lighter wines/lighter styles are the fastest-growing segment (and these are the products that bring the key 18 – 25 age group into the market). Sales last year were £38m, up 27% in value and 20% in volume, but the multiple grocers account for 92% of this sector, meaning there is a real opportunity for the wholesale channel;
- Other key growth areas for 2013 are: sparkling wines (up 10% in the off-trade, 3% in the on), with cava leading the charge; British wine (growth is driven by low price points and brands such as Silver Bay Point); and ready-to-serve (canned and bottled spritzers, bucks fizz and bellinis).
- The biggest brand is Hardy’s (worth £314m, equivalent to the entire mineral water category);
- Branded wines (Echo Falls, Hardys, Black Tower, Wolf Blass etc) have a market share of 42%, double that of own-label. The other 36% is accounted for by vineyard-sourced wines;
- Australia is the top country of origin, accounting just under 20% of UK wine sales – however American wines remain the favourite of convenience shoppers.
- A convenience store shopping basket that contains a bottle of wine is on average three times larger than one without wine.
(Sources: Accolade Wines/ Nielsen/CGA/Kantar)