Comment - Wine - Will Consumers Follow Prices North?
Average bottle of wine to cost more than GBP5 in UK
Wine prices in the UK are soon to break a new barrier, research shows, but will consumers continue to pay? And, is the trade doing enough to keep them on-side? Chris Losh reports from a supermarket wine aisle, somewhere in Middle England.
In the next six months or so, the average price of a bottle of wine in the UK will go over GBP5 (US$8) for the first time. The trade has been talking of breaking through the GBP4.99 ceiling for almost 20 years, but now that it’s about to happen, few are likely to be cheering the crossing of this particular Rubicon.
Not consumers, who are paying over 20% more for their bottles than a few years ago; not producers who are selling less volume. And not retailers either, who fear that higher prices are going to disenfranchise the majority of their customers and leave tumbleweed blowing down the wine aisles.
“I’m not anti-premiumisation," says Tesco’s BWS category manager, Dan Jago. “I’m just concerned when it’s the only solution to what is a mainstream product.”
The wine trade could be forgiven a certain cynicism here. There is, after all, a big difference between ‘premiumising’ to increase margins and raising prices in response to duty, exchange rates, costs of raw material etc. What, they might ask, is the alternative to charging more? Selling at a loss?
And yet, Jago’s concerns are valid. The timing is undoubtedly awful. At a time when disposable income and general consumer confidence are the lowest for 30 years, expecting a cash-strapped public to cross a historically-sensitive price point for a bottle of something that remains an optional extra rather than a necessity is a big ask.
According to Jago, 450,000 UK wine drinkers have stopped buying wine in the last year. Even if they only bought one bottle a month each, that’s still 6m less bottles being sold a year. There is, perhaps, some mileage in the idea that the industry is in danger of premiumising itself to death. The question is, what should be done about it? Jago has been vocal in calling for more innovation from the trade for a number of years, and his mantra is sounding ever-more urgent as the prices head north.
“If the wine industry is heading over GBP5 for mainstream wines, and a lot of consumers are not prepared to spend that on a bottle, what are the other options available?” he asks.
It’s a point that gets to the heart of the matter and should lead to the industry asking itself some pretty uncomfortable questions about what it produces and how it sells it.
Jago’s suggestion of developing the 'British-made wine' category (grape must, fortified and then diluted to 8% abv) is likely to raise a few hackles. But, if the alternative is losing half a million drinkers, perhaps it should be given some consideration. After all, the trade’s track record at second-guessing what the public wants is not good. There has been a consistent tendency to overestimate both the importance of the product to the purchaser and that purchaser’s level of engagement. Maybe BMW really could be the ultimate drinking experience...
It would certainly be cheap – and that’s one thing to which everybody agrees the public responds.
Research by wine writer Robert Joseph, founder of DoILikeIt? – a company specialising in research and community building for the drink industry – backs this up. Some customers are fairly interested in who made the wine and where it came from, but the majority simply want to know what it will taste like, where to get it and what to eat with it.
And, everyone likes a deal.
Sounds obvious? Well, take a look at how many back labels seem to be written with the tiny minority of consumers who care about terroir, picking times and vineyard orientation in mind.
“Wines are incredibly uncommunicative,” says Joseph. “The average punter gets very little information.” This, surely, will have to be addressed if there is to be any hope of holding onto sales figures.
The industry probably ought to rethink its mistrust of success, too. Whether big brands or fashionable styles, if it’s popular, the chances are it’s being slated and its proponents denigrated. While most Pinot Grigio might be pretty thin stuff, its undeniably true that the public loves it. Yet, incredibly, during an Italian wine summit organised by UK drinks trade magazine Harpers last month, there was a serious suggestion from the floor that restaurants consider taking PG off their list. Does this look like an industry that empathises with its audience?
Yet, although there are areas where the wine industry undoubtedly needs a metaphorical boot up the backside, its record on innovation is not bad. The problem, rather, seems to lie with the public, who remain highly conservative.
Screwcaps might have been accepted, but plenty of ostensibly good ideas - Tetra-pak, 50cl bottles, Bag-in-box, single-serves – have had little impact.
This isn’t purely a production problem either. Supermarket chain Waitrose, for instance, recently completed a three-month trial where wines were presented not by region, but by broad style: luscious, crisp, smooth, intense etc. It’s a technique that has been a proven success on wine lists and you’d think that would cross over easily to the off-trade.
Yet, the findings seem to have been far from conclusive. And, while the retailer might have taken a gamble on such an innovation during happier times, as buying manager Andrew Shaw concedes: “The industry is more risk averse now. The scope for this kind of innovation is more limited.”
If retailers aren’t keen on taking risks right now, it’s hard to see why producers should be any different.
- Cuba-US Normalisation: Bacardi, Pernod Winners?
- Review of the Year 2014 - Part IV: Spirits
- Sustainability in Wine - Part I
- Sustainability in Wine - Part II
- just the Ten - Top Analyses of 2014
- Belvedere vodka tie-up over new James Bond film
- Diageo welcomes verdict on Crown Royal "confusion"
- Bacardi, Pernod Ricard welcome US-Cuba deal
- Diageo ups focus on China with Mortlach roll-out
- Coca-Cola Co promotes CEO's assistant to sales job
- Global vodka insights - market forecasts, product innovation and consumer trends research
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends research
- The IWSR Forecast Report - 2014-2019 Global Review
- just-drinks on-trend: Craft beer - fortunes and future
- Global Tequila Market 2014-2018