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Is fine wine an old people’s game? If so, how does one bring the younger generation into spending their hard earned income on better bottles?

Screen Shot 2015-01-23 at 13.56.22Purchasing fine wine is not only expensive but it also demands a level of wine knowledge. Therefore it naturally suits those consumers that have accumulated both wealth and experience over the years. Unsurprisingly, the younger generation tends to pay less for a bottle of wine as they earn less money and lack the confidence in their choices. One way of making wine more accessible is to educate young consumers but not everyone wants to be educated, so the challenge for the wine trade is to give the new generation confidence to engage with wine in an entertaining, non-intimidating way.

Fine wine is often seen as too formal, exclusive and rather complicated and none of these traits attract younger drinkers who seek fun and inclusivity. Therefore, the challenge is not only to inspire wine drinkers to trade up but firstly to motivate young consumers to appreciate good wines. In order to get consumers to drink less but better wines the wine trade needs to build effective new marketing strategies that are focused on the consumer and their eating and drinking behaviours.

There is currently a real interest and enthusiasm in food and wine in the UK concentrated particularly in London. The explosion of gourmet establishments such as trendy bistros, coffee shops, cheese and bread specialists, pop up restaurants and wine bars has seen an exciting revolution. Wine bars such as Vinoteca, 28-50, The Remedy, Sager & Wilde offer customers an opportunity to indulge in a better choice of wines and small sharing dishes while creating a deeper social bond and building loyalty, lacking in other sectors.

Diners are not only broadening their taste horizons when eating out from hotdogs to lobsters, but they are also starting to experiment with different ways to enjoy wine. Drinking wine over ice or mixing it with fruit juices are a couple of ways that a new generation of drinkers are getting their first taste of wine.  The latest consumer trend is towards fresher lighter still and sparkling wines for their versatility and food friendly appeal. In addition, indigenous grape varieties are increasing in popularity driven by the consumer desire for provenance and authenticity. Not only tastes are changing and challenging traditional wine perceptions but also the way consumers value the shopping experience.

Wine shops like The Sampler, Bottle Apostle, Vagabond Wines and Hedonism Wines are rightly putting the consumer at the centre of their business and focussing on their emotional as much as their rational reasons for buying wine. They have managed to embrace innovation and create shopping spaces where people want to be. Using Enomatic machines people can now sample wines before their purchase. By creating relaxed areas with beautiful displays, customers can socialise and be inspired to drink better wines. The most successful retailers don’t just sell wine but offer an experience.

However, the painful truth is that a huge amount of mass-produced uninteresting wine and food is still sold through supermarkets. Consumers may be more interested in the provenance of food and wine, seeking local organic produce but the price and promotional activities are still the biggest purchasing drivers. This has resulted in miniscule margins for producers and agents but worse still a dire selection and no service for consumers. It would be too easy to just blame supermarkets who under the premise of giving consumers what they want, use bottom end wines and heavy discounts to lure people into stores. But the wine industry would really benefit more from giving consumers a clear purpose for the consumption of better wines by offering incentives and connecting with them emotionally.

Nevertheless, the UK is one of the most price-savvy markets in the world. Wine consumers slot primarily into two distinctive groups. The minority who are highly involved and interested in fine wines, and a large group of consumers unwilling to spend more than £4-5 per bottle (according to the UK Wine Market Landscape Report by Wine Intelligence carried in 2014). Over 16 million consumers buy wine in the supermarkets and despite some large retailers (such as Majestic, Oddbins etc.) successfully selling more premium wines, the majority of wine is still sold at £4. The average price per bottle has increased to £5.34 but this figure provides a false perception of people trading up. When you consider the duty increase by 46% in the last five years the real price of wine has in fact fallen in recent years. As Tim Atkin MW put it bluntly “a lot of people are still drinking wine that is mediocre or worse.”

Despite all the challenges, there are many opportunities that the wine trade can embrace in order to engage with young consumers. Strategic use of social networking where consumers are encouraged to like, review or recommend on a wine online is one of them. The new generation is technology savvy and this trait sets them apart from previous generations. They spend 108 hours per year on average browsing the internet for work and study, 77 hours a year reading news online and 71 hours a year on Twitter. Thanks to social media they can participate in conversations about wine and post and share wine photos. Whereas advertising offers a wide coverage, it is limited to one-way conversation between the brands and consumers. However, directly engaging with consumers through social media has become a fantastic two-way marketing communication tool especially for producers that are based many miles from their target market. New World producers such as those from New Zealand and Australia have proved to be natural communicators reflecting their understanding of social media and its value in engaging with consumers and the wine trade.

An online retail presence is also a great platform to attract new consumers but is still very much under utilised by wine companies. It not only offers convenience, which is often a key deal-breaker for today’s consumer, but also competitive cost, a wide range of exciting wines and fast hassle-free delivery. Whereas purchasing wine in store or restaurant can involve social risks by being embarrassed in front of friends or colleagues, buying wine online offers a more friendly and relaxing environment. It also helps less experienced consumers to search for wine in a less daunting way that assures them that the wine is good enough to share with others, instead just using price as the quality indicator.

To further battle the intimidation driven by lack of knowledge, producers can use packaging to communicate with consumers. Many young less experienced consumers rely heavily on descriptions from labels (or for that matter medals won and alcohol content). There are thousands of wines to choose from and it can be difficult for consumers to select one over another. Still many labels are as confusing as ever making it hard to gauge the quality of wine prior to purchase, even for a wine expert. Clear descriptive clues and attractive label design manages the perception of wine’s quality and drives the likelihood of purchase. Clever packaging can offer a promise of value that consumers will appreciate and a promise of something special.

Design recognition (including logo, brand symbols, patterns, colours etc.) also plays a key role in brand familiarity which is one of the most informational cues consumers use to assess wines before buying. Investing in brand image and marketing requires an entirely different approach depending on the scope and goal of brands. Whereas consistency is required for mass brands, experiences are essential for luxury brands. Many luxury brand owners have realized that the story of wine and its lifestyle projection can inspire and emotionally engage with consumer as much as the actual taste of wine.

Despite the visual appeal of a bottle and its brand familiarity, the most powerful influencer in selecting wines is a friend’s recommendation. When asked, the majority of consumers are more comfortable to ask for a recommendation from friends and family than asking questions in a store. The same factor wins when asked what would encourage consumers to trade up. Retailers have the opportunity to change consumers’ perceptions of the shopping experience by creating a more approachable atmosphere and using language that consumers understand. The wine trade also has an opportunity to create more wine events and focused tastings in order to encourage people to spread the word. Each loyal consumer has the power to play a role of an ambassador for the individual producer or brand.

Boutique wine producers may be able to learn from the recent rise in popularity of craft brewers around the world. They have much in common as they are small, independent and traditional. Neither have large financial investments yet their impact is significant. Craft breweries use experimentation with flavours and packaging to cleverly tap into the Millennial’s desire for adventure and to encourage beer drinkers to come back for more. This has resulted in the UK beer market seeing a shift in demand from lager (which has dominated the market for nearly 40 years) towards more full-flavoured beers, stronger Pale Ales and seasonal beers.

In conclusion, when communicating with the consumer, the goal should be to encourage people to make their choices on more than simply price and to experiment and try new styles. In order to make wine less intimidating, the wine trade would benefit from using familiar language that consumers understand instead of focusing on exclusivity and formality. Furthermore, the wine trade should not merely expect consumers to buy better wines but needs to offer incentives to do so. The most effective strategy to achieve this is to build on brand familiarity and loyalty, grasp the power of communicating through packaging and label design, encourage recommending and sharing of wine online and above all to offer a better shopping experience. Wine does not have to be a commodity but can be an enjoyable and social experience. Ultimately, the biggest challenge is to make good wine more recognizable, available and accessible to consumers.

 
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Posted by on January 23, 2015 in Wine Market

 

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Which export markets should German brand owners concentrate on?

Blue-NunWhich export markets should German brand owners concentrate on?

Export markets are volatile – tastes change, economic conditions affect personal spending power and competition can drive prices to a point where there is little financial benefit to producers.  A canny brand owner must be able to match brand strengths with potential consumers, balance production capability with demand and price their product competitively, all the while navigating the volatilities that influence demand.

In the current landscape, Germany, the 7th largest wine-producing nation, exports approximately 16% of wine produced annually with most of this consumed domestically. Their major trading partners are concentrated in Europe, North America and eastern Asia. The expectations of export vary from the promise of generating higher revenue, attracting wine consumers with higher disposable incomes, exploring new routes to premium markets or seeking high volume branded demand.

German producers have possibly not approached export markets in the best way so far. Continuous failed efforts to demystify German labels and styles, the engrained reputation for high volume semi-aromatic semi-sweet wine of no character or appealing image (known as Liebfraumilch) have played a key role. Also the fact that many producers are keeping their best efforts at home yet exporting some of the worst does not help matters. The director of the German Wine Institute recognizes that due to stiff international competition, producers will have to develop new markets more aggressively and innovatively in order to regain and maintain market share.

For brand owners whose aim is primarily an economic one, the ideal target markets should have balance of a large population, large disposable income and above average spending per capita on imported wine, with the USA being full of potential in particular.  The USA is currently the most important German export market, importing 297,000 hectoliters of wine, worth EU 103 million (EU 2.8 per bottle), equivalent to about one third of all export earnings. It has a large population with high disposable income and the highest spend on alcohol (and tobacco) in 2011.  Despite the USA producing over 18 million hectoliters of its own wine, consumers’ demand is so substantial that imports have increased by a whopping 170% in the last year. The growing trend towards more sophisticated and premium wines together with minimal discounting provides a perfect target for quality-conscious producers. The other end of the market also offers potential prospects as any innovative brand owner can profit from the latest US trend for Moscato, causing its sales to rise by 71% in the last two years.

Jan Matthias, owner of Weingut Staffelter Hof based in Mosel, producing organic premium wines, has successfully focused on the USA market. He explains that being able to offer modern labels, award-winning wines and a one thousand year history of winemaking provide a unique selling point and an important factor in consumers wine choice. Despite his total exports representing close to the national average of 15%, Jan is keen to expand his interest in Australia, South Africa and New Zealand but admits there is still a lot of work to be done.

Tapping into new markets in Australia is particularly tempting as many consumers are familiar with the variety. The increasing disposable income, forecasted stability of the Australian dollar and the third highest alcohol spending per head of any nation offers great potential. However, the country’s geographically remote cosmopolitan centers, loyal domestic consumption (one third of Australian wine production) and local abundance of low-priced wine will pose logistic and pricing challenges. Unsurprisingly, neighboring New Zealand wine continues to account for the largest share of total imports here. German wine imports are currently occupying 7th place and growing healthily, with Riesling being the most successful and the easiest to market.

The brand owners planning to introduce a new wine style or aiming to brave the heavily discounted game, should target the UK, a trendsetter market but with very challenging margins.  While the USA market is full of potential and Australia promising a glimpse of new interest, the UK is showing an unsurprising decline in both value (by 14%) and volume (by 20%). Yet it is still the largest export market worldwide, worth EU 38 million. Timid marketing activity combined with the persisting confusion over German labeling (even by aficionados) and the focus on the heavily discounted lower-end of the market is fueling this decline. Despite the average price having risen by 8% over the last year, it is still disappointingly low at EU 1.3 per bottle and is a poor commercial proposition.  The UK market is one of the most sophisticated yet challenging and competitive worldwide due to aggressive discounting driving sales. However the continuing consumers’ thirst for bargain opens up an opportunity for competitively priced high volume brands with generous marketing budgets. Naturally low alcohol Riesling production could tap into the evolving trend for lower alcohol wines. Alternatively, Pinot Noir or Dornfelder based Rosé could take advantage of its globally gaining demand (now presenting 10% of worldwide wine production). It is also a stepping-stone for any new products and an important market for setting wine trends.

On the opposite side of the market, if your brand offers scarcity, is high scoring and you are prepared to battle out logistical challenges and cultural etiquette then Japan and China is your bet. Just about every brand wine owner wants to do business with China. Its imports have increased by 19% over the last year, replacing Japan as the largest Asian market for German wines. Recent Wine Intelligence research predicts that China will be the most attractive Asian market for wine exports in the next 5 years. However, the challenges may overweigh the potential of this market for German producers. Even if you survived the bureaucratic issues, significant tax and logistical demands, the journey does not end there. To be able to understand the consumer behavior of 19 million wine drinkers may be the biggest challenge of them all with in-country presence being a necessity. Western consumer stereotypes just do not apply here. German brand owners may struggle to attract either adventurous connoisseurs (not brand seekers) or prestige-seeking traditionalists who account for 65% of all spending on imported wines according to Wine Intelligence’s Vinitrac survey in 2012. On top of that, German brand owners are, in most cases, white wine producers – a challenge given the Chinese love for robust red prestigious and status-driven wines.

Despite new emerging trends towards everyday affordable imports by younger and more experimental consumers within the Asian market, it seems unprofitable (in the near term at least) to market German wines to Asian consumers with low disposable incomes, low spend per head, a family oriented culture and with wine purchasing often as a gift rather than for personal consumption. The relatively obvious potential for Asian food matching with German Riesling is over-generalized as it is like saying that it matches well with European cuisine.

Many other markets may be worth exploration but brand owners must be aware of their challenges and suitability for their brands. Switzerland, with common language and cheap transportation. Norway with the highest spend per capita on alcohol and high brand awareness yet whopping alcohol tax (EU 6 per bottle). India with potential reach to 30 million new wine drinkers yet complex tax structure. Hong Kong with no duty on wine, optimum logistic capabilities and the highest average value per bottle (EU 6.8) but a tiny wine consumption (4.5 lt per capita). Singapore with demand for high volume brands yet limited market. Korea with its new drinking culture switching whisky for wine consumption and increasing wine sales at large-scale discount stores.

There is no one-answer-fits-all when it comes to recommending export markets to German brand owners.  Despite the various markets being complicated, looking at basic statistical research on national disposable incomes, alcohol spend per head and value per bottle of imported wines in potential target markets, some initial conclusions can be drawn. In brief, the USA offers the richest picking, UK trend setting and Asia the potential for growing prestige brands.

 
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Posted by on January 29, 2013 in Wine Market

 

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Producing, distributing and selling wine and/or spirits in a global recession – November 2009

The global economic crisis together with falling value of the pound has had a significant impact on the UK wine market.

This essay aims to explore what challenges have UK retailers been faced with and the subsequent surviving tactics that they had to establish in order to continue trading and to keep UK wine market growing. So is it all just gloom and doom or is there a light at the end of the tunnel for UK retailers?

Introduction

UK wine market is ruled by multiples with 74% of share (2008). This will be the key focus of this essay set in the context of the wider retail marketplace. -There are many factors that influence how multiples trade but the two main considerations are their customers and suppliers. Suppliers include importers, producers or other distributors that supply directly. -The UK population is ageing and there are 500k fewer wine drinkers than 10 years ago. There are around 23.5 million regular drinkers who represent 95% of the value to the industry which was translated into 135 million cases of wines drunk in 2008. Almost forty pence of every pound spent on alcoholic drink goes on wine. However, UK wine drinkers are comparatively modest consuming 27 litres per head as opposed to the biggest drinkers Italians who consume 56 litres per head. It is Australian wine that is our favourite tipple and taking over France position well ahead of US, Italy and South Africa in that order in both value and volume. Chardonnay is the most favourite grape variety with Pinot Grigio the fastest growing style and Rose wines the only significant wine growing category (ref 1). -Suppliers together with retailers have been working hard to follow the current trends and offer enticing wine range in the right price. However, the relation between retailers and suppliers is becoming strained as the fight for survival forces many companies to consolidate. One of the recent casualties is Somerfiled merger with Coop and HwCg being acquired by PLB. -Despite the current tough times, there are some positive signs in the UK wine market growth. Off-trade annual sales translate to £5 billion in value which is 6% up from the last year (2008) and 98 million (9ltrs) in volume (ref 1). The major players are Multiples who account for almost three quarters of both value and volume (ref 1). It is Londoners who account for the highest consumption within UK drinking up to 14% of the total volume.  -UK retailer’s structure is diverse and grouped into specialised sectors. -In 2009, there were circa 45,000 off-trade outlets in total of which 7,000 are Multi Grocers (Multiples and Multi Specialist) and their large share continues to grow via their out of town formats (this is particularly relevant to Multiples). The rest is split between Impulse including Off-Licences, Convenient Stores, Independents and other Impulse. -The big players are Tesco, Sainsbury’s, Asda, Morrison’s, Cooperative (ex- Somerfield), M&S and Waitrose, sharing sales worth £3.5 billion with 70% primarily based on branded sales (ref 2). In addition, there are discounters such as Aldi, Lidl and Netto whose strategy is not that dissimilar to multi grocers in volumes and range they offer. Nielsen Homescan (ref 4) revealed that 60% of households now shop in discounters where Aldi has attracted the most new shoppers. -Impulse traders are loosing some of its sales to multi grocers. The wine annual sales are now worth £475 millions (ref 2) with volume sales down 9 % to 7.4 million (9ltr) (ref 1).  -The wine market is fragmented and different players in the market are affected by the recession in different ways. The following Discussion describes the lead up to the recession, the challenges the recession has brought and the tactics that companies have adopted in response.

Discussion

Wine sales have been steadily growing year on year over the past 10 years showing retailers’ flexibility to adapt to changing trends and customer demands. Even during the last recession in 1990/91, sales increased as consumers spending actually grew about 10%. On the other hand, margins have been decreasing with retailers changing strategies balancing the demand and supply ratio. As Mike Paul explains: ‘Arguably the tipping point was the explosion in Australian supply in 2000-2001 that let to the market-leading and value-chasing brands of the 1990s being forced down the volume route’. Oversupply shifted the balance of power even further towards the retailers, leading to a spiralling down of margins and value-added marketing investment.’ (ref 5). Since then Australian wine has been losing share continuously to South Africa which is emerging as one of the biggest threats with other ‘value countries’ such as Hungary and Bulgaria. -A couple of years ago, the wine trade has turned to trading up – to get customers to drink better quality wine and educate them by offering wider range of wines. Some major distributors such as Diageo and Pernod Ricard growth strategy was driven by premiumisation where moving customers to trade up provides higher margins for retailers and overall bigger profits for those in supply chain. ‘Eighty-three percent of suppliers questioned in an OLN poll said encouraging customers to trade up is essential, with many saying it is more important than ever in the current economic climate.’ (ref 3). -However, the hard times brought by the recession have changed everything. David Williams hits the nail on the head when he says: ‘’Today, most suppliers are happy to trade at all, let alone to get their customers to trade up. The new buzzword in PowerPoint presentations and sales pitches, on retail shelves and wine lists, is the rather more down-to-earth value’’ (ref 10). –  -A similar story applies to the multi grocers where previously they had genuinely exciting ranges praised by many journalists. As an example Tesco added an extra 360 new lines within 2007 with a number of these wines dedicated to their fine wine range. However this changed when (as Nielsen reported) 250,000 households stopped purchasing wine in 2008.  -The recession brings challenges for the whole supply chain from winegrowers and producers who are at the most risky position as they need to predict future trends to reflect their decisions in the vineyards, through suppliers who are forced to cut costs on every level, through to retailers whose margin demand keeps increasing and putting ever more pressure on their suppliers all in order to offer ‘value for money’ to their customers.  -The main problem brought by the recession is the drop in consumption of wine where customers are trading down, tightening their purses and focussing on own labels as they perceive these are more value for money. This is increasing the already strained relations between suppliers and retailers. On top of this retailers are faced with duty increase (Excise Duty per 75cl in France is £0.02 compared to the UK at £1.61) which together with VAT represents about 50% of the retail price of a £4.99 bottle of wine. The government’s role is significant with a likely further increase in drinks taxes as well as possible extra regulation fuelled by the anti-drinking lobby – for instance introducing a mandatory code that bans certain drinks promotions (already in place in Scotland). Adding to these has been the deterioration of the value of sterling against other currencies, notably the Euro. Inevitable job losses are predicted. Some 300 jobs have been lost so far and further casualties are expected amongst major distributors such as Constellation, Foster’s and Pernod Ricard. -High street stores such as Majestic Wine and First Quench Group are also suffering through the economic downturn but their further issue is cash flow reduction and credit refusals from their suppliers.  -Despite the sales decrease there seems to be a new opportunity in online retailing which is picking up sales. Laithwaites, the UK’s biggest online home-delivery wine business and other rivals such as The Wine Society are amongst those taking advantage. Alan Lodge reports that ‘’Consumer sales at TheDrinkShop.com are up by 9% and sales to its trade customers have increased by 22%. This growth is attributed to an increasing customer base rather than to higher individual spending’’ (ref 15). The reason why web purchasing is becoming more and more successful is its delivery efficiency, price competitiveness (especially if one is prepared to buy by case), ease of use for the customer and low overheads (no need to worry about shelf-space).  -Another new growing trend is a shift from out-of-home drinking to at-home entertaining and drinking which has a significant influence on trading up and shifts sales from on-trade to off-trade. This is reflected in wine sales in pubs and restaurants which has decreased 1 %, the equivalent of 12 million bottles. All this has not come unnoticed by the big players who have been taking advantage of this trend. M&S offer‘ £10 Dine in for Two’ meal deals, Sainsbury’s can ‘Feed your family for a fiver’ and Morison’s is ‘Helping you cut the cost of your weekly shop’. -There is also a new kind of ‘big player’ who seems to make the most of the current market. These are big discounters such as Lidl, Aldi and Netto who have been around over 10 years but it is now that these retailers, socially more acceptable then ever, are benefiting from selling wine to bargain hunters. Being able to sell big volumes at low prices is what it is all about these days and these three major discounters have mastered this efficiently, increasing their market share. Offering smaller wine selection in basic palletised display and therefore minimising staff makes them more competitive with lower retail prices than supermarkets. Another advantage of their strategy is a focussed range that provides them flexibility. But their strategy has some similarities to supermarkets – offering good quality wines at good value prices such as Echo Falls at £2.99 or Jacob’s Creek at £3.99.  -Retailers answer to attract more sales is 3 for £10 and BOGOF promotional offer which has spread like wild fire across multiples and has major presence in Asda and Tesco. Supermarket buyers are trading down and focusing short term on value wines whilst many producers have been working hard to reposition themselves and seeing their future in the upmarket wines. Further supplier misfortune is the loss of brand loyalty and as volumes through promotions are higher then ever, retailers also require higher margins on promotions, averaging 25% across multiples. The multiples are very powerful as they can demand below cost pricing and can offer very competitive prices to customers. The Wine Report 2009 reports that the main outlet from which wine for drinking at home is bought is Tesco. 65% of wine shoppers rate Tesco as the best place to buy wine for convenience, wine choice, value for money and promotions. ‘’Sainsbury’s and Asda come next, then Morrisons, Waitrose and M&S, while the Coop, Bargain Booze, Threshers and corner shops lag behind.’’ (ref 2). -Supermarket buyers tell us that their aim is to bring value for their customers but I wonder what kind of value we/consumers are getting when one can buy 3 wines for £10. As if this was not enough, Threshers are now offering 3 for £8 – madness. How can anyone produce wine like these and still make any profit at all? It seems that high volumes seem to compensate somewhat for tiny profits but it is obvious that only certain producers/importers are set up to cope at a sub £3 market. -Retailers’ tactics for surviving the downturns are to offer more and more extreme promotions and discounts while stressing the value of these products and this technique seems to be successful. It is attracting those bargain hunters who are then willing to do their weekly shopping in exchange. Also value lines such as ‘Sainsbury’s basics’ or ‘Waitrose’s essential’ are experiencing strong growth with a real threat to brands. -Tesco’s response to the current wine trends is to reduce their range to 900 permanent lines by trimming some of the fine wine lines but creating more space for rose and sparkling wine. Also their current promotional offers reflect the customers spending. -The latest Marks and Spencer’s marketing stunt to attract more customers was to offer a one-off 1p sale to celebrate its 125-year anniversary and the famous ‘Two dine for £10’ which has also been adapted by other retailers such as Waitrose and Sainsbury’s. -However, the promotions driven market is only a short term solution to the recession, and the only way to survive is to develop a long term decisions and relationships. -The wine industry should join forces in a mission to make wine more aspirational through the creation and promotion of premium brands. The focus should move from heavy discounts to good quality wine in wide price range so that all parts of the supply chain have sustainable future. Being more innovative – providing clever products that deliver against more than one trend. Changing the way wine is perceived by customers – less snobby and serious and more relaxed but with sophistication. Targeting a younger audience and educating them about wine and the effects of alcohol. Spending less on traditional advertising and focusing more on wines that have medals from wine competitions such as Decanter, IWCS and IWC in order to earn credibility. Each retailer has to develop their own individual tactics to survive the downturn.

Conclusion

While the global economy appears to be stabilising, there is still plenty of uncertainty in the UK wine market and some predict that 2010 will be even more challenging for some. However, there are also some positive predictions voiced through The Wine Report 2009 where 38% of participants of the recent survey announced that they feel very confident and 49% feel fairly confident that sales will grow in the coming year compared to only 4% who are expecting sales to fall (ref 2). -The outcome from Wine and Spirit Trade Association annual conference in September 2009 is that within next year off-trade will recover, however on-trade will still be trapped in the downturn as it is not perceived as good value for money. Online retailing is predicted to be the upcoming new star as the fastest growing sales channel according to Wine Intelligence. The market strategy will be to continue to build mid-market brands through premium offerings and focus on value rather than volume growth. Efficiency savings are crucial and any investment needs to be with a long term view. Many multiples suggest that the future priority will be on saving money, cutting waste and investing in discounts brands with the focus on new smart product developments such as lower alcohol wines, new format packaging in 50cl, Tetra Pack, bulk wine and innovative new merchandising approaches. -There are many more challenges ahead but global wine production is expected to rise by 4% to 3 billion cases in the coming years reflecting the rise in consumption coming from China and Russia. It is also predicted by International Wine and Spirit Record (IWSR) that Rose and sparkling wine will continue being the fastest growing style of wine and that UK wine consumption will increase by 20 million cases by 2012. -There will be winners and there will be losers. Big brands such as Hardy’s, Blossom Hill, Gallo, Jacob’s Creek and Wolf Blass will grow in a mutual relationship with supermarkets. Which brands will do well in the future depends primarily on the promotional offering they are able to sustain. -All in all, it seems that the sector is armed with a number of strategies for not only surviving the current down-turn but prospering in the years to come. –

Bibliography & References

1. AC Nielsen MAT TO WE 13.06.09 -2. The Nielsen Company (Report May 2009) -3. The Nielsen Company (Report May 2008) -4. The Nielsen Global Liquor Symposium, United Kingdom, Gavin Humphries, Nielsen Liquor Services UK 2009 -5. Off licence news, March 27 2009, Volume 40, No 6 -6. Off licence news, February 27 2009, Volume 40, No 4 -7. Off licence news, February 13 2009, Volume 40, No 3 -8. Off licence news, January 30 2009, Volume 40, No 2 -9. Harpers Wine & Spirit, February 2009, Issue n.1 -10. Harpers Wine & Spirit, August 2009, Article: ‘Why value really does matter’, By David Williams+-11. Harpers Wine & Spirit, August 2009, Article: ‘Tesco recession proofs range’, By David Williams -12. Harpers Wine & Spirit, August 2009, Article: ‘If you can’t beat them…’, By Claire Hu -13. Harpers Wine & Spirit, August 2009, Article: ‘How low can they go?’, By Simon Woods -14. Harpers Wine & Spirit, April 2009, Issue 5 -15. The Drinks Business, Issue 84, July 2009, Article: ‘Wine sales click into space’, Written by Alan Lodge -16. The Drinks Business, Issue 84, July 2009, Article: ‘In high spirits’, Written by Patrick Schmitt -17. The Drinks Business, Issue 85, August 2009 -18. The Drinks Business, Issue 87, October 2009 -19. http://www.Telegraph.co.uk, April 2009, Article: ‘Wine sales plummet in recession’ -20. http://www.independent.co.uk, January 2009, Article: ‘The recession shouldn’t affect wine sales too badly. The world will not stop drinking wine’, Written by Anthony Rose -21. http://www.decanter.com, May 2008, Article: ‘Consumers will carry on drinking wine despite recession: survey’, Written by Richard Woodard -22. http://wineeconomist.com/2008/10/25/trading-down/, October 2008, Article: ‘Trading Down: Wine and recession’, Written by Mike Veseth -23. http://wineeconomist.com/2008/10/04/how-will-the-economic-crisis-affect-wine/, October 2008, Article: ‘How will the Economic Crisis affect Wine?’  -24. http://www.harpers.co.uk, May 2009, Article: ‘Mandatory code blow for industry’, Written by Eamonn Houston -25. http://www.harpers.co.uk, June 2009, Article: ‘Sticking with wine prices pays off in downturn’ -26. http://www.talkingretail.com, July 2009, Article: ‘Drinks industry pledges £100m to responsible drinking campaign’ -27. http://www.thedrinksbusiness.com , August 2009, Article: ‘Is premiumisation on its way?’  -28. http://www.thedrinksbusiness.com , September 2009, Article: ‘Off-trade to recover but on-trade set to struggle’, By Alan Lodge -29. Off Licence News, July 2008, Wine Report 2008 (Sourced from Nielsen’s Scantrack Service) -30. Off Licence News, July 2009, Wine report 2009 (Sourced from Nielsen’s Scantrack Service) -31. The Wine Intelligence (website search) -32. Wine & Spirit Trade Association (website search)

 
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Posted by on August 31, 2011 in Wine Market

 
 
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The Joseph Report

Czech girl living in London, studying for Master of Wine and discovering wine, food and far far places

Matt Walls Wine Blog

Practical tips, tricks and info to help you get the most out of wine

Decanter

Czech girl living in London, studying for Master of Wine and discovering wine, food and far far places

Tim Atkin – Master of Wine

Czech girl living in London, studying for Master of Wine and discovering wine, food and far far places