On the United Kingdom, discount junkies and the need for innovation
The UK, while recognised as one of the world’s most important markets, is currently suffering from the success of its discount pricing strategies, and is no longer considered as dynamic as it was. ‘We have to accept it, but there is a growing fear among wine producers that UK consumers are being turned into discount addicts and promotion junkies,’ said Chris Brook Carter of just-drinks.com.
More innovation is needed from producers said Angela Mount from the UK supermarket chain Somerfield, which has 1,000 outlets across the country. The customer must be a central thought for all producers, Mount said. ‘It is not about what I want, nor what you [producers] want, it is about what my customers want.’
Mount advised producers to do their homework before coming to see the big supermarket chains, and to consider the fact that alternative outlets might be better suited to their wines. ‘Producers need to forward plan, and to think about things like volume, margins, discount strategies and promotions before they talk to me,’ she said. ‘You need to give me reasons to sell your wine, and tell me where it fits in my range. Have your USP.’
Asked for specific advice for South African producers Mount told WineNews that she found South African reds had a lot of green fruit and were of a lesser quality at all levels than its white counterparts. She also said Pinotage needs to be better understood by UK consumers.
The need to create a better premium sector was the plea from Constellation Europe’s chairman, Christopher Carson, who said UK supermarkets did not understand their customers. ‘America is selling at a much higher level than we are managing in Europe,’ Carson said. He accused supermarkets of not giving enough room to premium quality wines and at the same time advised producers to consider other outlets for their wines such as gastropubs, hotels, wine clubs and the internet.
A wine producer commented that other outlets might be useful, but said that as 70% of wine sold in the UK is through supermarkets, nothing could replace a slot on their shelves.
On the US and harnessing fragmented production for consumer choice
In stark contrast to the UK, where the average price for a bottle of wine is stuck at £3-£4, US speakers, for whom $10-$15 is the norm, were far more upbeat.
‘The US is not the UK,’ said Vic Motto of investment bank, Global Wine Partners. ‘We don't have the dominant retail chains; our largest national chain has less than 3% of market share. With us it is the distributors who have the power.’
An expanding middle class with an interest in wine, plus coming changes in distribution laws will drive US wine sales, Motto predicted. Retail and distribution strategies, however, need to take advantage of fragmented markets in terms of both suppliers and buyers. ‘Consumers want more choices, how can we use fragmentation [of production] to their advantage?’
On American ‘import loyals’
Know your customer, was the call from both UK and US experts. However, while the UK is roughly divided into discount junkies versus Bordeaux first growth drinkers, the US customer profile presented was much more detailed, particularly in terms of a category dubbed as ‘import loyals’.
Import loyals are a consumer category identified by Patrick Merrill of Merrill Research. Fifty percent of the wine they drink is imported, Merril said.
They represent 37% of US wine drinkers, are likely to be in the 21 to 30 age group, and live in a city. They drink more red, more table wines, preferring intense, bold wines, and they buy wine in wine shops rather than supermarkets. They pay an average price of $10-$15/bottle, drink 2.6 glasses per occasion and frequent restaurants more than four times a month.
On rising retail prices and fashionable Pinot Grigio
Asked about the future in the UK and the US, Carson predicted a rise in UK retail prices in the next two years and a rise in UK government excise duty in the next few months. Mount, on the other hand, said she felt UK consumers were happy with the wine they were getting for the money they paid. Both predicted a continuing preference for Pinot Grigio and Sauvignon Blanc and, Carson added, prevailing alcohol levels of 12.5 to 13%. The probable rise of smaller, quality convenience shops in the place of big supermarkets was also forecast.
On the future of wine education and the blogging phenomenon
US trends included a growing interest in wine education, either by visiting wineries or taking courses, use of the internet to buy wine, growth of expert wine blogs as well as popular critics who demystify wine and make it easier for consumers to understand complex wine ideas.
Gary Vaynerchuk, of Wine Library TV, was cited as an example. Vaynerchuk describes himself as the second most important wine critic in America, after Robert Parker it’s assumed. He webcasts from a beat-up leather sofa in a garage, with the latest American football scores on a board behind him. He spits and swirls and explains the different flavours of a ‘new world fruit bomb’ with clarity and confidence, pausing only to say that for him, the wine, Pillar Box Red 2005, is more of an 89/90 than a 91. (Wine is Fun, Period, episode 138)
US market researcher Mark Engel of B/R/S said wine bloggers were important for producers. ‘Pay attention to bloggers, accept you don’t have total control, participate in consumer discussion and, finally, be authentic,’ he implored.
Engel said the old consumer model was the producer saying, ‘here is my story’, while the new one is consumers saying ‘catch my interest and I will build my own story’. His examples of new ways of catching public interest included a wine, Hook & Ladder, that sent out free bottles asking bloggers to review it, and the Francis Ford Coppola winery, which is running a competition for the best one minute film titled ‘Wine for Everyday’. Stills from the winning film will be used on the wine labels of Coppola’s upcoming vintage.
For the official media release issued by the organisers of Wine Evolution 2007, click here.