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These are strange times for the on-premise channel, particularly when it comes to wine. Category commentator Chris Losh takes a look at one area of the on-premise channel that is in rude health, but it's an area full of challenges for the wine industry.

Around 15 years ago, the UK's supermarkets changed tack. After a decade of growth that saw ever-wider ranges and big opportunities for wine producers, ranges began to be cut back and own-label increased. The UK was still, at that time, seen as the world's vinous shop window, so producers still wanted to be there. The chances of accessing it through the mass-market off-premise, however, were curtailed.

Rather than abandon the UK altogether, many producers switched strategy, aiming instead for the on-premise. The latter was a slower burn, requiring more man-hours for reduced volumes but at least the margins were, generally speaking, good. Or, good enough to justify the effort.

For a long time, this worked. For the first 15 years of this Century, restaurants - in the big cities at least - sprung up like desert flowers after a rain shower. Sure, maybe no-one was getting rich supplying the UK's burgeoning number of eateries, but it was, at least, a viable business.

The last few years, however, have been a wake-up call. Back in 2017, there was a feeling that the country had hit peak restaurant, and the news since then supports it. Top-end restaurants might be broadly doing okay, as are budget eateries, but there has been a hollowing-out of the middle of the market, with casual dining chains and mom 'n' pop restaurants alike feeling the heat.

From star-fronted restaurants such as Carluccios and Jamie Oliver to chains like Byron Burger, Strada Café Rouge and Prezzo, burners are being turned off in big numbers.

One branch of the on-premise experience, however, has bucked this trend. Competitive nights out are booming. From darts and table tennis to problem-solving panic rooms and (particularly) mini-golf, customers are spending their down-time smashing, putting, clambering and thinking rather than just eating and drinking as an escape from day-to-day life. While electronic leaderboards record their success, the quarterly figures of the event-owners record theirs.

I visited a mini-golf venue recently. It has pulled in almost half a million visitors in the 14 months it's been open (at over GBP10 (US$12) a game); three venues have opened inside 18 months, and they're planning to have 20 in the UK alone within five years. International expansion is also on the cards. The contrast with the ailing restaurant business is striking.

As, in fact, is the catering. There are decent bartenders making halfway-decent cocktails, and chefs turning out freshly-made burgers, wings and pizzas. It's not Michelin-starred, but it's as good as you'd get at a local pub or pizza joint. Half the revenue comes from the activity, the rest from food and drink.

And, this is the issue. These 'comp-ertainment' venues don't just want customers to pop in for a one-hour game then head off. They want them there for drinks beforehand, a meal halfway through, and more drinks afterwards. They want to own the evening.

As one bar-owner morosely pointed out to me: "They've got people for three or four hours and, by the time they leave, they don't feel like going anywhere else afterwards." So, rather than consumers moving from one venue to another, now all the food and drink spend is being concentrated in one place.

This is bad news for local venues, who will inevitably see a dip in revenues. But, it's also particularly bad news for wine. The nature of both the food and the atmosphere in the comp-ertainment sphere means that they are more about beer and cocktails than they are about wine.

In one venue that I spoke to, beer and cocktails made up 75% of the drinks take. Even though they serve plenty of food, wine was less than 10% - only just ahead of soft drinks. It's a place where you refuel rather than kick back over a lingering three courses with a couple of glasses of Cotes du Rhone.

For wine producers, it's a problem. Unsurprisingly, lists in these venues tend to be small and uninspiring, and the opportunities for listings are minimal. If local wine-focused eateries with 40- or 50-bin lists are closing (which they are) and beer-centric venues with tiny lists are taking their place (which they are), then we'll see fewer bottles of wine being listed and smaller volumes of wine being drunk.

It might be good news if you're a producer of cheap Pinot Grigio, Malbec or Prosecco, who's on the books of a large merchant. For everyone else, it's likely to mean listing opportunities lost rather than gained.

Since lists at these competition venues are all sole-supply, it means a cat-fight between prospective merchants to win lucrative contracts. Margins might be cut back to almost off-premise supply levels, but there are obvious attractions to supplying businesses in an area that's growing.

And after all, even if wine is only 10% of wet sales, as a supplier it's still preferable that all that money comes to you rather than your competitors, whatever the margin. This might be the on-premise, but when it comes to the wine rationale, it's more supermarket than restaurant.

If this all sounds somewhat demoralising, that's probably because it is. After a decade of growth, the UK on-premise is in trouble. Traditional venues - bars and restaurants that may, it's true, have over-expanded in the good times - are now starting to close. Meanwhile, the area that is in most growth - themed entertainment-driven nights out - offers wine minimal opportunities at lower margins.

Consumers worldwide increasingly want experiences from a night out - ideally ones that they can video or photograph. It could be Michelin-starred food, beautifully-presented cocktails or a game of crazy golf. But, it's increasingly unlikely to be a plate of perfectly good but not very instagrammable steak-frites in the local bistro.

Given that this is where wine has always seen its natural home - and is the place from where much of the volume if not the value of the on-premise has been driven - these are changes that don't augur well.

Wine - and restaurants - need to find a way of adding pizzazz to their pizzas, and fast.


Sectors: The on-trade, Wine

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