Research reveals green shoots in the on-trade

The London Wine Fair organisers have commissioned a second state of the nation report in the lead up to the 2015 show, following on from its 2014 study on Generation Y. ‘Carpe Vinum 2015 - The On-trade’, sponsored by Wines from Rioja, investigates the on-trade sector in the UK.  The study, which was carried out by leading market researchers, Wine Intelligence, suggests that the UK on-trade is in recovery after seven years of economic recession and a slump in consumer spending.

The on-trade has been diminished and is badly in need of innovation to draw back consumers lured away by cheap supermarket deals.  The recession has been instrumental in changing the face of the on-trade, with more young people eating out more frequently and moving the restaurant sector towards informal, ‘no frills’ environments.  Traditional on-trade formats are blending with brasserie-style restaurants serving more affordable and better quality food, resulting in a growth in food sales and more restaurants opening. Conversely, drink sales are declining and pubs are closing as consumers demand quality and value over choice. 

However, some drinks categories are performing well.  The demand for quality has extended from food to drink, as witnessed by the craft explosion, which has filled the market with small-batch, provenance-based and artisanal products. Particular success stories include craft gin, with sales up 13% since 2011 (CGA strategy/WSTA Market Report 2011-2015) and craft beer, as consumers rate provenance and production as increasingly important.

Innovation has followed in the wine trade, with more hybrid wine bars where it’s possible to dine and then buy the wine on a retail basis. Better wine at reasonable mark-ups demonstrates a recognition that providing the consumer with better value will encourage them to experiment, try new wines and ultimately increase their spend; 41% (Wine Intelligence Vinitrac data) of consumers say that they enjoy trying new and different styles of wine on a regular basis. Yet, despite this, not enough is being done to demonstrate that as far as the provenance and artisanal craft trend is concerned, wine ticks all the boxes.

A desire to trade up has led to a boom in sparkling wine, particularly prosecco; sales increased 34% from 2011 to 2015, while champagne fell by 2% (CGA strategy/WSTA Market Report 2011-2015). Innovation in the way wine is served has helped

wine sales, but much more can be made of the opportunity this presents; over a third of consumers say they want to see half bottles of wine in the on-trade, while 33% (Wine Intelligence Vinitrac data) want carafes to be available.

At least in London, people are experimenting more with international drinks, with rapidly growing interest in such areas as soju, Japanese whiskey and agave-based spirits (tequila sales grew 17% in 2014 - CGA strategy/WSTA Market Report 2011-2015). This desire for creativity and new flavours leads neatly into cocktails, with many premises taking on the challenge and making cocktails for the first time, or expanding their repertoire to hook in cocktail-curious consumers. Cocktails present an excellent opportunity for the on-trade to draw consumers off their sofas and out of the supermarket. The RTD category is leading the charge as far as flavour fusions are concerned, with a boom in the selection of fruit flavoured beer and cider, as well as blends of spirits with beer and cider.

Event director, Ross Carter, comments: “Investing in Carpe Vinum is part of our commitment to add value to the UK wine industry.  Whilst this – our second report – focuses on the on-trade sector, its findings, which highlight that success comes with innovation and quality, are pertinent to the industry as a whole.”

Richard Halstead, chief operating officer at Wine Intelligence, comments:  “It feels like the UK on-trade is coming out of a long winter, but the cold winds of austerity haven’t quite finished with us. The sales data shows all drinks sales are down over a 3-4 year period, especially in beer, but on-trade spending intentions are looking positive. So we’re moving off the bottom of the curve, but clearly some way to go before we reach pre-recession numbers.”

There will be an industry briefing at the fair on the findings – presented by Richard Halstead – at 10.30m, on Tuesday, 19 May.  The panel will comprise leading figures from the on-trade: Lawrence Hartley, co-owner, Joe Allen’s and Orso; James Jones, group marketing manager, D&D London; representing Wines from Rioja, Jose Pizarro, restaurant owner, Pizarro Restaurant, José Tapas Bar and José Pizarro Broadgate; and Will Smith, co-founder and co-owner, Arbutus, Wild Honey and Les Deux Salons.

Hard copies of Carpe Vinum will be available free-of-charge to all exhibitors and also to the first 1,000 visitors attending the London Wine Fair on each day. For further information, visit www.londonwinefair.com

Picture: Wines of Rioja

5 May 2015 - Felicity Murray The Drinks Report, editor