The UK wine industry has been described as the most important and dynamic wine market in the world; a fast-moving field competing for a promotion-hungry public used to buying wine on deal. And then last year, for the first time in over a decade, the market dipped briefly, with white and red wine showing a decline (AC Nielsen GB Off Trade Scan Track eight-week period to 22 April 2006). Taking a broader view of events over a 52-week period the tale wasn't so bleak but rather showed a static market. The only wine bucking this trend was rosé, with 35% annual sales growth.
Driven by the USA but now represented by wines from several countries, rosé accounts for around seven bottles sold in every 100. Traditionally seen as a summer drink it is now becoming less seasonal. Says E&J Gallo impulse channel controller Ian Thomas: "It is massive in the summer but we're seeing it sell throughout the year."
Reh Kendermann managing director Richard Jones sees no sign of its popularity abating: "I think rosé has an awful lot of legs. I suspect very many white wine drinkers have diversified into rosé."
Thomas agrees, saying: "For the past four or five years, rosé sales have been phenomenal and I see no reason why that shouldn't continue."
Constellation senior vice president UK sales Peter Spencer says that rosé appeals to a youngish drinker who may be new to wine and has a whole repetoire of other drinks: "Rosé is an easy entry point," he says, adding that it offers a fruity transition from drinks such as alcopops.
Gallo is hoping to boost rosé further by following cider's lead with an over-ice serve - currently being promoted in the on-trade with its white grenache and white zinfandel. Thomas says he expects an off-trade roll-out this summer with retail partners including the c-store sector:
"I think Magners revitalised cider with over-ice serving, and ice is now seen as trendy. The reception to rosé over ice from the on-trade has been phenomenal."
Jones says he's not sure the 'Magners effect' will work for wine: "People mix wines with all sorts of things. It's the same
as the spritzer in some ways. But I don't think that's going to be a real driver for the market like it was with cider."
Blossom Hill marketing manager Helen Wright says that Percy Fox is taking a wait and see approach: "We'll be watching intently. It's something that's come up in brainstorming meetings with us. In the end we'll all benefit if it works."
Innovation like this, says Spar trading manager wines & spirits Gyles Walker, is an indication of a kind of 'rebirth' in branded wine from packaging to marketing strategies: "A consideration is the maturity of the UK wine market; brands are now out to steal share from each other, along with the threat of the importance of own-label sales."
As well as strong growth in rosé, other wines on the up are pinot grigio and riesling. Waverley TBS national account manager for
c-stores Joanna Dawson says: "Finally, pinot grigio is in rapid growth, however the average c-store needs to upgrade their offering to increase their wine sales."
One of the reasons suggested for rosé's popularity is that its abv strength tends to be slighly lower than other varietals. According to the May Consumer Intelligence Report by the Wine and Spirit Trade Association (WSTA), lower-alcohol wines are becoming more fashionable. Tim Wilson, director in consulting at analysts Deloitte, says: "I think consumers misunderstand how strong wine is. In the last 25 years we've gradually seen an increase in stronger wines. I think we're seeing signs of a reversal - going back to German wines with a lower abv."
Jones sees this move as part of a wider look at health issues by the general population: "Alcohol levels are now being looked at in a different way. In the past there was a strong minority that believed the higher the alcohol level the better; now there's an emerging market for lower alcohol and lighter style wines. Germany is very well placed, having some of the most northerly vineyards producing light, delicate wines naturally low in alcohol."
Fosters EMEA customer marketing manager Anita Leith says: "There's a growing trend for lower alcohol and lighter wine styles, hence the popularity of styles like rosé and pinot grigio." The company targeted this market last year with the Early Harvest brand.
Ehrmanns marketing director Keith Lay says that health and lower abv are now firmly on the agenda: "We understand from recent reports that the government is to target middle-aged binge drinkers along with anti-social teenage binge drinkers as part of a new strategy." In anticipation of this, Ehrmanns is developing a portfolio of lower abv wines in conjunction with several of its producer partners. Says Lay: "Ehrmanns already has lower abv wines available, particularly in its German ranges, Erben and Blue Nun, where a lower abv naturally occurs in many of the wines."
Until only a few years ago it seemed that wine packaging would always remain the same. Of course the screwcap and bag-in-a-box changed all that, and now, following the re-emergence of wine in Tetra Pak with Boisset's launch of French Rabbit last year, it seems that wine displays in c-stores could be about to change forever.
Jones says that Reh Kendermann already uses Tetra Pak in other countries and thinks the market here may be ready soon: "The wine business is certainly looking at it. And PET bottles is an area that's just beginning to be considered. Now wine is an everyday drink, people are looking at it much more realistically. Tetra Pak's presentation has improved enormously and they appeal on a green level. They're good for picnics and tend not to break when they're dropped."
Thomas says that Gallo is also interested: "The Tetra Pak is something we're looking at - we do it in Canada and it's big on the Continent."
Wright says that packaging is just one of the areas Percy Fox is looking at to target the c-store sector: "We're looking at packs that target the convenience market. It's a question of trying to understand what people are buying in a c-store."
Spencer says that he thinks the transition from cork to screwcap shows that people are willing to accept change: "There's a lot of exciting innovation in packaging coming. I don't think anybody would have believed 10 years ago that premium wine would come with a screwcap enclosure."
A good example of innovation in packaging is Aniston Bay's e-pak, a collaboration between The Company of Wine People in South Africa, Palandri in Australia and Ehrmanns. The pouch, say the companies, is light-weight, convenient and more environmentaly sound than glass. Arniston Bay will be the first wine available in the pouch in the UK in a 1.5-litre format, although other sizes are being looked at. Lay says: "This packaging is the perfect fit for c-stores - the perfect grab and go".
Wilson thinks packaging of wine may be a real driver for sales in
c-stores: "Whether its packaging in Tetra Pak vs glass or different sizes, c-stores can really lead on that."
What to stock?
For now, the retailer has mostly bottles and bag-in-a-box to contend with. Jones says that overall c-stores are doing a good job and he's been struck by the enormous improvement in the last 10 years.
Pernod Ricard UK wine development director Adrian Atkinson says retailers should use displays effectively: "By cross-merchandising and secondary sitings between ready meals, snacks and the fractional sizes of wine, retailers can encourage consumers to make an additional purchase to the one they had considered before entering the shop."
Distell Europe managing director Gary Greenfield says: "Convenience retailers don't have the space to have hundreds or even dozens of wines so it's important to monitor the fixture and stock wines that represent the popular brands, the leading countries of origin and especially the wines that represent great value."
When it comes to price promotions most would agree that a culture of high-low pricing (where wine prices are slashed by as much as half price) and/or multiple deals has produced an expectation of discounting from customers in supermarkets, but that doesn't mean it has to extend into convenience. According to Deloitte's Wilson, around 90% of all wine is bought on promotion.
Jones says: "Traditionally, price cutting was supported by brand owners to encourage trial. In many cases this has been overdone to extent that the consumer will only pay the promotion price, in which case real damage has been done to the brand's value. We believe that the long-term price promotion should be used sparingly."
Wright says: "It comes down to driving footfall, but if you're going to sell the wine anyway, why put the price down?"
Dawson says that c-stores are trading up: "There are signs that
c-store operators are looking to upgrade their wine offering as the consumer becomes more familiar with this hugely diverse and sometimes bewildering category."
However, Wilson says this raises the question of whether retailers with little wine knowledge can sell wine above a certain price.
Wine education is a tricky one for c-stores, however, Lay says retailers can use the press and the internet: "With very little research retailers could offer information to the consumer, to help with their buying choice. Depending on how involved they'd like to be, or have time to be, they might want to host wine tastings for customers."
Where knowledge is lacking, branded wines offer the perfect solution.
Atkinson says: "The success of branded wine supports the idea that many consumers are reassured by the quality, value and consistency that brands offer."
Thomas says: "The top 10 brands in impulse account for 31% of sales; in grocery its 22%. Branded wine is more important and is increasing the market share in impulse. Of these, 62% are New World in impulse compared to 55% in grocery. New World is increasing the market overall. All the evidence is saying stock the branded wine to highlight the range, so Jacob's Creek highlights Australian, Gallo California and Kumala South African."
Despite last year's blip, the wine industry seems to be confident about the future, particularly in branded wine.
Thomas says: "As long as we face the challenges and find answers to them it all looks - no pun intended - pretty rosy."
Product & brand news
Blue Nun is running a cashback promotion due to roll out this month for retailers, who will get the opportunity to claim a cheque for up to £40 cashback dependent on the level of purchases. For four cases, retailers can claim back £5, through to 24 cases for £40 cashback.
Constellation has launched Hardys Chef of the Year to find the nation's most creative chef, which will be backed by a £10m campaign.
Blossom Hill has just launched a new dry rosé at £4.99 into Sainsbury and MBL, with a plan to roll out next year if successful.
Blue Nun has teamed up with Foxy Bingo for an on-pack promotion which begins this month, offering a free £5 play of online bingo with every purchase of the wine.
Gallo has recently launched a shiraz rosé which they hope will appeal to drinkers who like a
Black Tower hopes to reach 100,000 consumers this summer with a sampling campaign focusing heavily on pop and rock festivals and concerts.
Reh Kendermann brand Kendermanns has been repackaged with a contemporary pack design with a split label featuring an eye-catching logo.