Insular wine folk need to understand competition

Insular wine folk

Most wine folk are very insular. To them, wine is everything. Wine represents place. It reflects the skill and the art of the winemaker. It’s the pinnacle of alcohol. It has no equal apart from other wine, etc and so on.

It’s a lovely illusion, and TKR has no wish to remove this illusion or criticise wine folk for thinking the way they do. Unfortunately, the reality is that wine is alcohol and has to find its place within the whole family of alcohol.

Reality, should it be wanted, can be found in the UK Morning Advertiser’s Drinks List: Top 100 brands. It’s an eye-opener, ranging from:

100: Kick Energy. Kick Energy is described as the “cheap, easy” energy drink solution by maker Global Brands and has gained decent uptake among consumers in the on­-trade since launching in 2008. Sales have grown by 17 per cent in recent years, widely down to the gaming community, which makes up 68 per cent of UK energy drink consumption. Could this be a market for pubs to cash in on?

Via:

50: Estrella Damm Premium lager beer, UK sales of the beer have risen by 1100 per cent since 2009.

To:

1: Hendrick’s Premium Gin: volume sales rising by more than 55 per cent in the 12 months to 16 April 2016 and value sales up by almost 60 per cent.

TKR hasn’t heard of Kick Energy, and has only vaguely heard of Estrella Damm. We are aware of Hendricks but have never drunk or tasted it, perhaps proving how insular we are.

Wines in the top 100 amount to six: one Australian, one Californian, two Italian, one Chilean and one French. They are, in descending order:

  • 96: Hardy’s Private Bin Rosé: a price­ per ­bottle rise of £4.14 in two years
  • 92: Blossom Hill White Zinfandel
  • 73: Bolla delle Venzeie Pinot Grigio
  • 68: Concha y Toro Merlot
  • 23: Moet & Chandon Brut Imperial NV
  • 20: Fantinel Prosecco Extra Dry

Of course, the popularity of different drinks depends on where the pub, bar or restaurant is situated, and the type of clientele it attracts. There is also more home consumption of alcohol nowadays, but it’s an interesting insight and one wine folk should take note off.

UK-wide distributor Matthew Clark (MC) has also put out a short report, Predicting 2017 Trends:

“We’re predicting that the demand for aromatic-infused drinks, classic sparkling wines and festive brews will soar over the holiday season, and the trend is set to last well into 2017. With 34 per cent of people considering specific Christmas drinks offerings important over the holidays.”

The company says 2017 will be the year that sparkling wine will go global. MC stocks more than 70 SKUs, including piccolos and magnums, but only three are from Australia: Chandon Brut NV, Omni NV and Hardy’s Stamp NV.

MC reports a 48 per cent year-on-year growth in the sparkling wine sector but it looks as if that will be for wines from Italy, Spain, England and France. To the end of September 2016 Australian sparkling wine exports to the UK were down 31 per cent in volume and 4 per cent in value. Globally, sparkling wine exports were down 11 per cent in volume and 14 per cent down in value.

Craft beers and cider are also predicted to be popular, not only for Christmas but through 2017, with dark beer leading the charge.

New spirit infusions and old vermouths and bitters long out of fashion in the UK will come back into favour, according to MC’s 2017 predictions. Ceri Lewis, Matthew Clark’s category manager for spirits and RTDs, predicts:

“A trend this year ‘to turn away from a sweeter palate and towards a more sophisticated, bitter palate’ with many brands incorporating an array of unusual aromatics which fascinate consumers.”

Pernod Ricard, owner of Jacob’s Creek, posted a 4 per cent sales increase in the US to US$1.8 billion ($2.4 billion). The increase, according to an article in Shanken News Daily on 6 December, came from:

  • Jameson: up 21 per cent
  • The Glenlivet: up 7 per cent
  • Malibu: up 1.8 per cent
  • Altos Tequila: up 40 per cent
  • Martell Cognac: up 18 per cent

The downside was Absolut Vodka, which was down 3.8 per cent.

Wine has huge competition, and not just from other wine. The market is getting ever more crowded. It’s better to be aware than not.

Competition comes in all guises and from many directions. A recent report in Shanken News Daily drawing on Impact Databank figures says US sales of Hendrick’s gin have increased 19.5 per cent to about 300,000 cases in the past year.

Roy Morgan: “Between 2006 and 2016, the number of Aussie adults who drink cider in an average four weeks has sky-rocketed by almost 600 per cent from just 337,000 to 2,349,000. The only other alcoholic beverage to have gained popularity over the same period was spirits, which saw a more moderate growth of 25 per cent (admittedly, at a larger scale, rising from 3,890,000 to 4,861,000 drinkers per four weeks).”

The chart below shows that cider and summer go together. Between January and March 2016 nearly 3 million people (2.88 million) reported having consumed cider at least once in the past four weeks, compared with 2.25 million in the quarter preceding it (October-December 2015) and 2.22 million in the quarter following it (April-June 2016).

Australia’s top 10 cider brands

Source: Roy Morgan Single Source (Australia), Oct 2015-Sept 2016, n=14,489. Base: Australians 18+

Just over half of regular cider drinkers are below the age of 35. Roy Morgan presents the following information, which is interesting, and raises the question: are cider drinkers posers?

Whether they’re in the blush of young adulthood or at the more mature end of the age spectrum, cider drinkers are markedly more likely than the average Australian to:

  • Agree that “I wear clothes that will get me noticed”
  • Self-identify as “a bit of an intellectual”
  • Agree that it’s “important to have a full social life”
  • “Look for new experiences every day”
  • Agree that “if I hear of a new alcoholic drink I will try it”

American consumer

The 2016 American Wine Consumer Survey, by Dr Liz Thach MW and Dr Kathryn Chang, Sonoma State University, has been released.

The authors are well known and highly respected. But can just 1081 American wine consumers from 50 states really be enough to judge the drinking habits of millions of regular wine drinkers?

Doctors Thach and Chang think so, but TKR remains unconvinced. Anyhow, to their findings:

  • Women 58 per cent
  • Men 42 per cent
  • Millennials (21-39): 22 per cent
  • Gen X (40-50): 22 per cent
  • Baby boomers (51-69) 40 per cent
  • Over 70s: 9 per cent

The authors point out that Millennials are down from 56 per cent in 2015, “which could explain some of the changes observed in this year’s survey results”.

TKR doesn’t think “which” is the right word. It’s such a large drop it must have affected the 2016 survey. Income stats:

  • Median annual income of the sample was US$50,000-$69,999 ($67,000-$93,722)
  • Over US$100,000: 25 per cent

Ethnicity:

  • Caucasian: 81 per cent
  • Hispanic: 5 per cent
  • African-American: 7 per cent
  • Asian: 5 per cent

Other basic facts: 62 per cent had a college degree, 58 per cent were married, 30 per cent had children under 18 living at home and 48 per cent were classed as high frequency drinkers (drink wine daily or several times a week), with the remaining 52 per cent considered occasional drinkers.

The top five favourite varietals for the 2016 sample were the same as in previous years:

  • Chardonnay
  • Cabernet sauvignon
  • Merlot
  • Pinot noir
  • Pinot grigio

Preferred style:

  • Red: 73 per cent
  • White: 68 per cent
  • Rosé: 36 per cent
  • Sparkling: 31 per cent
  • Dessert: 13 per cent
  • Fortified: 5 per cent

The survey also asked consumers how they preferred their wine to taste:

Consumer wine knowledge, self-determination:

  • Intermediate wine knowledge: 57 per cent
  • Novice: 26 per cent
  • Advanced wine knowledge: 15 per cent
  • Connoisseurs: 1 per cent

Why Americans drink wine:

  • Enjoy taste: 80 per cent
  • Relaxation: 61 per cent
  • Pairing with food: 55 per cent

The full list:

Decision-Making

Where consumed and price:

Drink at Home: common price US$9-US$15 per bottle ($12-$20) for 51 per cent of the sample. However, 15 per cent will spend US$15-US$20, and 5 per cent will spend more than US$20 per bottle.
Drink at a restaurant: common price was US$26-US$35 per bottle for 21 per cent of the sample, with 12 per cent spending US$36-US$45, and 8 per cent above US$46.

Buy by glass in restaurant: 25 per cent buy by the glass. 47 per cent spend US$7-US$10 per glass, 11 per cent spend US$11-US$15 and 3 per cent spend more than $15.

Luxury wine purchases: 44 per cent spent more than US$50 for a bottle of wine, 19 per cent more than US$100, 5 per cent more than US$200, and 2 per cent more than US$1000 per bottle.

Reasons for buying: special occasion 60 per cent; to enjoy 53 per cent: gift 42 per cent; to cellar 12 per cent.

Online sales are still low in the US, with the issues including state regulations and the requirement for an adult signature. Label design is interesting. The team created a fictitious wine label and presented it in three styles. The results:

The survey concludes that Americans are evolving in their wine drinking. This may be true for this small sample base, but TKR thinks a figure nearer 10,000 respondents is required.

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