UK: Accolade Wines targets innovation as wine sector stutters

Accolade Wines is putting its faith in better consumer research and innovation as prices in the UK wine market rise and competition increases.

In the last five years, Accolade has spent GBP6m (US$9.3m) to develop a consumer research database as it seeks to eke out opportunities in a UK wine market showing little potential for overall growth. The Hardy's winemaker has set up an in-house research unit to better understand who is drinking what, where they are buying it and when they are drinking it. 

From this, the company hopes to work with a wider number of on- and off-trade outlets to capitalise on pockets of growth. Innovation is a key part of the strategy, with top-line growth identified as a priority by Accolade's Australia-based owner, Champ Private Equity.

Speaking to just-drinks earlier today (23 November), Accolade's commercial general manager for Europe, James Lousada, said: "We still think there's great opportunity in the UK. It's a 120m-case market and people here still like drinking wine." The country is Accolade's largest market by volume, accounting for 19.9m cases annually. Australia is the firm's second market, on 9.8m cases.

However, a weak domestic economy, an unfavourable exchange rate, regulation and strong competition have made the UK a tough place for Australian wine firms like Accolade to do business. Next year, the firm expects the average price of a bottle of wine to pass the GBP5 mark in the UK for the first time, driven entirely by duty tax rises. At the same time, figures released today by the country's Office of National Statistics forecast that consumer wages will fall by 3.5% in real terms this year.

In 2011, Accolade has reconciled itself to losing some volume market share in the UK, as a result of its decision to reduce volumes on Echo Falls. "It would be foolish to continue to sell millions of cases that don't make any money," Lousada said. While the group accepts that it will lose share in the short-term, Lousada said that the firm will remain above the 15% volume share mark in the UK. 

By 2014, Accolade wants new products, including new packaging formats, to contribute to 10% of the group's annual gross profits globally. When asked what the current contribution is, Lousada would only say: "It's below that right now. But, for a lot of consumer goods companies, 10% is the minimum target that you would expect."

Low-alcohol wine is considered to have significant potential. This year, in the UK, Accolade has launched Banrock Station Light and Moscato varieties, at 5.5% abv, and Echo Falls Spritz in a can, at 4% abv.