They may make their living out of one of life's greatest pleasures, but the wine trade, from those who harvest the vines to those who market the wines, have recently become an unexpectedly gloomy bunch. If they all ran
c-stores, however, they might be a bit more cheerful.

The reason for their long faces is an unprecedented set of circumstances which suppliers see as the 'perfect storm' for the UK wine industry.

Consumption has fallen for the first time in 13 years, with figures from retail analyst Mintel showing a fall of 2% in the volume of wine sales in 2008, taking the total down by 24 million litres to 1,162 million. In value terms, sales fell by 1% last year, the first drop to be seen since the 1970s. "The effects of concern over binge drinking, a trend towards healthy lifestyles and heavy government taxation have all had an impact on the market," says Mintel.

It's the latter which has really hurt the trade. From last spring's 9% increase in excise duty, through a further 8% hike when VAT was reduced, to this year's announcement of a four-year tax escalator at 2% above inflation annually, the tax on wine now makes up more than half of what the customer pays for the average bottle of wine.

Add in rising production and packaging costs and the strength of the Euro against the Pound, and the result is that international wine suppliers now see the UK as a difficult arena in which to grow and they are considering withdrawing resources to concentrate on more attractive national markets.

So there's the storm. But here's the ray of sunshine.

Ian Minichiello, Pernod Ricard channel director for convenience and multiple stores, says that the tough times elsewhere need not worry convenience retailers. "With at-home drinking increasing significantly, there's a great opportunity for the sector. We're seeing a cultural shift towards entertaining in the home, and the switched-on c-store operator is perfectly placed to take advantage of that."

Branded wines continue to grow in value sales, he says. "Among Pernod Ricard's brands, Jacob's Creek is up 2% MAT, even though Australian wines in general are declining. Montana's showing rapid growth at 7-8%; New Zealand lines are increasingly popular; and Campo Viejo is growing at 6-7% MAT."

Neil Barker, commercial director at Fosters EMEA, is equally buoyant. "Wine is the biggest opportunity for independents over the next three years," he says. "Convenience is king in wine, but growth won't come naturally - we'll all have to work for it."

Similarly, Will Bartholomew, wine consultant to Bestway, agrees that the doom and gloom should not extend to independent retailers. "What we're seeing is that independent specialists are still doing comparatively well in a declining market, and there's absolutely no reason why c-stores can't join them in bucking the trend," he says.

Recession simply means that people are spending less, he says, and that means they'll either drop from perhaps five bottles a week to three, or else they'll buy a cheaper wine then they're used to. "The crunch has hit the lowest earners hardest, so those who would have bought at the £3-£4 mark have now switched to beer. The sub £5 category isn't what it was."

There's growth, however, in £5-£8 wines - up some £9.5m last year, according to Nielsen, although the three for £10 offer which consumers see in the supermarkets seems to be the benchmark by which they judge value. But this reliable standby may have had its day, says Foster's Barker. "Three for 10 is not the only game in town any more," he says. "It's not profitable and it's not sustainable for anyone in the supply chain."

Bartholomew says that in his experience convenience retailers don't do enough to draw attention to the category. "They just don't shout enough," he says. "Some very simple pos, with only the name of the wine and the price, can work wonders. You should also merchandise elsewhere around the store, multiple face the whites in the chiller, and maybe add neck tags to the bottles. Wholesalers like Bestway, he adds, will provide materials for promoted wines.

"If all you do is change the price, it will be part of the blur," he warns. "Choose two or three lines and pick them out for promotion with a simple message repeated around the store - just the name of the wine and the price."

Pernod Ricard's Minichiello also advises the uncluttered approach, but his suggestion is to keep the choice down to the most recognisable labels. "My message to c-stores is to lead with the brands - give them as much space as you can. It varies form store to store, of course, but as a general rule less is more - don't get sidetracked into the cheap and cheerful."

People gravitate to the big brands because they stand for quality and value for money, he adds. "Most of us don't have the wine knowledge to choose a great wine every time so the brands act as a signpost to wines we know will deliver."

Nevertheless, Bartholomew believes there's always room for a few top-end bottles. "It's true that most consumers look for the reassurance of a well-known label, but there are a lot who would be happy to spend more once in a while if you give them the choice. It's a question of balance. Don't stock your shelves by brand; try ranging by country, with the cheaper choices at the bottom, and room for a few higher-quality bottles on the higher shelves."

Stocking by country is the norm - the multiples do it, so customers expect it - but make an exception for sparkling and rosé. Rosé is flying off the shelves, increasing its market value from £110m in 2004 to £527m in 2008 and forecast by Mintel to continue that growth over the next five years, reaching £742m by 2014.

Minichiello says: "With Champagne facing a challenging time, sparkling wines are taking its place. Jacob's Creek sparkling is the number one in the market. Give sparkling a section to itself - and make sure there's room in the chiller for sparkling, whites and rosés."

Foster's Barker concludes that success lies in the simple things. "You've got to do the basics brilliantly," he says. "Learn from the multiples; look at their ticketing, shelf-edge labels, availability, pricing, and how they re-merchandise a deal that works."
Merchandising advice
Get to know your customers and be sure to stock a range that is going to appeal to them in terms of what they like to drink and how much they're willing to spend

Brands are a powerful draw, but their appeal will be reduced if the bottles are not displayed well on-shelf and in the right part of the store

If possible, locate the wine department next to the food section to benefit from impulse as well as wine shoppers. Getting wine into the shopping basket is worth on average an extra £7.58 to the retailer

Displaying clear signs at the start of each category will make it easier for customers to find their way around the selection

Keep more expensive wines at the top, the least expensive at the bottom and the mid-price, popular ranges most visible at eye level

The majority of wine bought from convenience stores is consumed within a few hours, so if it is not chilled, people are far less likely to buy

Try to stock a selection of sparkling wines to encourage last-minute-celebration purchases

Encourage customers to trade up by offering in-store tastings, or by running promotions to introduce people to brands which they might not normally consider

Keep up-to-date with trends in wine consumption by reading titles such as Convenience Store.

Source: Constellation Europe
retailer's view
"Until recently we didn't really know what to do with the wines category, but then we got advice from the FWD's Take Home Blueprint team and they've helped revolutionise the fixture. We re-ranged completely, introduced lines we would never have thought of such as Wolf Blass Yellow label, and added more chilled space to accommodate wines. We never had the confidence to recommend wines, but now we have the Blueprint wine wheel which pairs wine with food.

"We've also introduced some more expensive lines. The £8 bottles sell very well, which we never would have expected on our estate. They've brought in new customers with a bit more to spend, and that has a knock-on effect on the rest of their purchases.

"With help from Blueprint and Booker (we're a Premier store) we held a wine tasting with tons of samples and bacon butties for the customers. We sold 40 cases on the day - a fantastic result and well worth the effort.

"Big sellers for us are Blossom Hill and Echo Falls, as well as Booker's own-label Valencia and any premium lines on promotion."

Darren Norman, Provincial Street Stores, Barrow-in-Furness
top tips
1 Make it easy for me to find the wine

2 Help me choose - I'm NOT AN EXPERT

3 Stock a simple range of best-sellers

4 I want CHILLED WINE to drink NOW

5 Give me consistent value at all price points

6 Price bottles CLEARLY

7 Keep the fixture stocked and attractively presented

Source: Fosters EMEA
ones to watch...

Dining out on TV

Constellation Europe is sponsoring Channel 4's hit reality show Come Dine With Me from this month, with its three flagship wine brands Echo Falls, Kumala and Hardys sharing the spotlight. All three are in the top 15 UK wine brands.

The seven-month campaign will also include in-store activity. Come Dine With Me attracts 3.5m viewers and was the most-viewed C4 series watched online in January.

tel: 01483 690000

Ace marketing

No. 1 UK wine brand Blossom Hill kicked off its summer marketing campaign as the Official Wine of the Wimbledon Championship. A £750,000 marketing initiative aims to drive growth of its rosé varietals throughout the summer. A limited-edition label design, featuring a tennis ball, also ties in with the sponsorship and is available on White Zinfandel and White Grenache single varietals (rrp £5.49).

tel: 0208 8978 6000

Party time

Gallo Family Vineyards is the official wine partner of this year's National BBQ Gastro Alfresco campaign and will be showcasing its top-selling rosé, white grenache and cabernet sauvignon as the perfect accompaniment for BBQs and outdoor meals.

The Alfresco Experience RoadShow will offer more than a million consumers a chance to sample the wines. It supports the current 'Gallo Gatherings' promotional activity.

tel: 01895 813555

Pretty in pink

Halewood International has added a rosé-styled product to its Lambrini range. Although not a wine, the new slightly sparkling drink is made from blended Italian grape juice and has an ABV of just 5.5%, making it ideal for those looking for a lighter drink, says Halewood.

Developed to capitalise on the fast-growing rosé category, the product is targeted mainly at women aged 18-30.

rrp: £2.99

tel: 0151 480 8800

Medal winners

Bestway's own wine label Cellar Estates made an impressive showing in this year's International Wine Challenge, with more then half of the wines entered wining awards.

It picked up three silver medals, two more than last year, for the Cellar Estates Sancerre, Lelac Champagne and Rossini Bianco.

The wines are judged by some of the wine trade's most influential journalists, winemakers and buyers.

tel: local depot