Branded wine is an area where convenience is, once again, bucking the trend of the recession, as long as retailers set their sights on premium lines
So first the bad news. Less wine is being drunk in the UK as consumers continue to keep an eye on their spending patterns. Volume sales of wine in the off-trade were down 2% in the year to February 4, according to the Wine and Spirit Trade Association, with Champagne volume sales down 6%.
“The challenging economic environment affecting all trading categories has been exasperated by foreign exchange issues (ie weak Sterling) and the onslaught of duty hikes,” says First Cape Wine spokeswoman Hayley Bromley.
On to the good news, then. Sales of wine priced above £5 have grown significantly in the past year, according to Nielsen, and the move out of restaurants into home entertainment looks set to continue for a while yet, providing plenty of potential for extra sales.
Bromley also notes that c-stores have benefited from consumers making more frequent visits to their doors as they avoid the temptation of a ‘big shop’ at the multiple and keep travel costs down in response to the increased fuel costs.
“Independent and impulse retailers have also seen a dramatic increase in demand for convenience packs,” she adds. “This essentially means smaller pack formats which befit the convenience shopping occasion, as well as hitting more affordable price points. Within wine, the biggest format growth has been the 50cl offering - a size which is affordable, easy to carry and perfect to accompany an evening meal for two.
Suppliers have been supporting independents in order to help them tap into growth in the premium segment of the wine market.
In March, Pernod Ricard launched an initiative designed to drive sales in this area, under the strapline ‘Building Premium Wine Brands’. The initiative includes practical support as well as merchandising advice and a range of portfolio activity.
Deputy managing director Simon Thomas says: “One of the strongest opportunities lies in accelerating the existing trends of premium wine - we know that consumers are ready and willing to trade up.”
The producer also aims to further grow Spanish wine by raising awareness of the fine wines the Tempranillo grape produces in the Rioja region. The company has introduced a 100% Tempranillo blend, Campo Viejo Tempranillo 2010 (rrp £8.55).
While premium wine has been the big winner in the wine category, CWF marketing and trading controller Vicky Lee also points out that consumers have increasingly been attracted to purchasing drinks on promotion, including money off or multi-buy deals.
The old and new
Old world wine-producing nations such as Italy and Spain performed well last year.
“2011 was the year the Old World fought back,” says Brown Brothers brand manager (UK & Ireland) Rachel Herrig. “Italy is up 14.1% and Spain is up 10.8%, while Australia is down by 8.7% and South Africa by 19.1%.”
“We chill all our white and rosé wine now and don’t have any ambient offerings, except for reds.
“In 2009 there was a dramatic increase in the number of people wanting to buy wine with their ready meals, and this led to lots of big brands running cross-category promotions. Now we are seeing a high proportion of customers buying two or three cases and stocking up. People are keen on premium promotions as well as ‘by the case’ deals. It amazes me - we saw a big shift pre-Christmas where the category shot up 15% on the previous year. There has, however, been a steep decline in Champagne sales.
“We have found it difficult to explain to customers about chilled red wine - I don’t think they really understand it.
“We have local wines from Bolney vineyard in the chiller and these have done well. We get a lot of information about these wines and send it to customers on our mailing lists.”
David Knight, Budgens, Hassocks, West Sussex
Challenging foreign exchange conditions affected the Australian trade, but this was less evident in the convenience sector. In fact, as Herrig points out, sales of Australian wine were up by 4.2% in convenience. It’s also worth remembering that Australian wine still accounts for the majority value share in the off-trade at 20%.
CWF’s Lee confirms, though, that some Old World nations are doing well. “Italian wine sales continue to thrive, and research indicates consumers will be happy to pay over £5 per bottle for the quality Italy has to offer,” she says.
CWF has an Italian Prosecco - Casa Gheller - which has been selling well.
A lot of the growth in Italian wine has been driven by Pinot Grigio wine, which is now the second most popular varietal in the convenience channel, after Sauvignon Blanc. Chardonnay is third, followed by a red varietal, Merlot. Rosé also remains a popular option, particularly New World options such as the Californian Zinfandel Rosé and Shiraz Rosé from Australia.
Accolade Wines European marketing director Clare Griffiths says that rosé now represents about 13% of wine value and is the fastest growing colour year on year.
Semillon Blanc has been McGuigan’s big success story, according to Paul Schaafsma, general manager UK & Europe, Australian Vintage. “The McGuigan Semillon Blanc is a response to consumers looking for new styles of lighter, more aromatic wines from Australia.”
The lighter side
Red wine served chilled is still something to keep an eye on, although many convenience retailers say they haven’t yet seen much growth in this area. But, says CWF’s Lee, demand for these wines - which are often lighter-style reds such as the company’s Silver Bay Point soft and fruity red at 8% abv - can be high during the summer months.
Some producers say they have already seen strong sales for their chilled red offerings. “Brown Brothers Tarrango, one of our chilled red wines, continues to be one of our best sellers in the UK,” says Rachel Herrig. “We also have a lower alcohol (5% abv) chilled red wine called Cienna, which is a fruity style.”
Other producers point to lower alcohol wines as a continued growth area for the future.
Bromley notes that First Cape’s development of ‘lighter styles’ over the past 18 months has “proved a phenomenal success with a new tier (First Cape’s Café Collection) launching now”.
Griffiths at Accolade agrees that the lower alcohol category is showing “fantastic growth”, and as consumers are buying into the concept lighter-style wines such as the producer’s Banrock Station Light are growing in popularity.
“Banrock Station Light white and rosé are both 5.5% abv, containing just one unit of alcohol per 125ml serving and only 60 calories,” she says.
Meanwhile, many producers continue to invest in Moscato, which has been popular due to its naturally low alcohol levels.
Jacob’s Creek, for example, has a range of white and rosé Moscato wines retailing at £7.59 and these will soon be joined by a new Moscato sparkling wine in August this year, retailing at £9.99.
Bill Roberts, E&J Gallo vice-president EMEA, says that Gallo brands have played a big part in introducing US consumers to Moscato and the category has “exploded” there with growth of 73% year on year. “It’s now the third largest white variety in America,” he says.
The company will be investing heavily in the Gallo Family Vineyards Moscato launch in the UK, he says. “We feel there is a similar opportunity here for a Moscato explosion, like in the US.”
The investment in Moscato this year will be supported by a print, online and outdoor campaign as well as sampling activity.
The producer will also be launching Barefoot Moscato under the Barefoot Wine brand, says Roberts.
Barefoot Wine has enlisted adventurer Ben Fogle to front the brand’s annual Beach Rescue Project to keep Britain’s beaches ‘barefoot friendly’ in 2012.
The national campaign builds on the success of the 2011 series of events, which saw 1,100 volunteers remove 2.5 tonnes of litter from UK beaches.
It isn’t alone in investing in raising its profile ahead of the summer. Last month South African wine brand Kumala launched a campaign giving consumers a chance to ‘make time for themselves’ and win ‘an extra pair of hands’ for a year. Twenty-five prize winners will have a chance to win a year’s worth of help around the house by visiting the Kumala website. Runners-up prizes include Kindles and Amazon gift vouchers.
A summer campaign will be launched for Blossom Hill. Its £1.2m ‘Get things started with the taste of summer’ campaign will be supported by in-store activity such as shelf barkers with food matching ideas and an on-pack promotion.
“We hope that this campaign demonstrates our rosé category insight as well as our ambition and commitment to grow the category for the long-term by reinforcing Blossom Hill’s sociable, warm and approachable personality,” says brand manager Joanne Morgan.
CWF says it will be investing more than £1.5m in marketing and promotional support for its Silver Bay Point brand, while First Cape’s Bromley notes that the producer’s brand association with Alesha Dixon and ‘Queen of Chat’ campaign has provided a great platform to trigger trial of its Café Collection.
Treasury Wine Estates notes that its ‘Win a Kindle’ campaign last year for Lindeman’s was its most successful neck collar promotion ever, and so it has repeated it with 1,000 Kindles to give away until this September.
“We’re also running a Wolf Blass ‘Win an i-Pad neck-collar promotion this year so I would advise convenience retailers to stock up during these promotional periods and capitalise on the increased sales,” says UK & Ireland general manager Dan Townsend.
And Pernod Ricard says the Brancott Estate brand will be launching an on-pack promotion in conjunction with Lonely Planet, while Jacob’s Creek will amplify its role as the Official Wine of Wimbledon by offering consumers the opportunity to win Wimbledon tickets this summer.
Tips for golden summer
The summer’s packed line-up of events provides consumers with plenty of opportunities to get together and socialise - and wine is certainly going to play a part in the celebrations.
“The Olympics and Jubilee have to be the most fabulous opportunities for convenience retail,” says McGuigan’s Paul Schaafsma. “My advice would be to get the wines up front, make sure you’ve got plenty of whites and rosés in the chiller cabinet and enter into the spirit of it with some fun theming.”
Treasury Wine Estates’ Dan Townsend adds: “The Olympics is clearly a massive occasion for the country and for retailers as spending increases over the summer months and people get into the party spirit. Consumers will be looking for Olympic cues, so what better way than a display of medal-winning wines?”
Brown Brothers’ Rachel Herrig says retailers should be making it as easy as possible for shoppers. “Merchandising wine in an accessible way and providing useful information at the point of sale is a great way to make the decision-making process less intimidating.”
First Cape’s Hayley Bromley believes price will be key. “Having a very affordable sparkling offering (such as Café Collection Sparkling Rosé, rrp £5.99) is key as people will want to celebrate without breaking the bank,” she says. “Remember, there will be lots of outside events so offering PET bottles in a smaller format will cater for this demand.”
Read all about it
The Lindeman’s Win a Kindle promotion is back, following its success last year. This year Treasury Wine Estates is hoping to repeat the winning formula which saw a 14% increase in sales across the Lindeman’s portfolio last year. Bottles of Bin 65b Chardonnay, Bin 50 Shiraz, Bin 85 Pinot Grigio and Winemaker’s Discovery South Africa will feature special collars offering the chance to win one of 1,000 Kindles. There will also be 2,500 runners-up prizes of £10 Amazon vouchers.
tel: 020 8843 8400
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tel: 01484 557111
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tel: 020 8538 4484