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Shifting retail landscape likely to benefit independents, Wilson says

Published:  05 March, 2015

Shifts expected in the off-trade over the next 12 months are likely to create a "huge opportunity" for independent merchants, according to Tim Wilson of the Wilson Drinks Report.

Speaking at Harpers' March for the Independents conference yesterday, Wilson said there had been a lot of debate over the impact of Tesco's range changes over the last few weeks. "However it shakes out, we'll see fewer skus in Tesco and the other big retailers and that has got to be good news for the independents," he added.

Although there may be more activity from the discounters who are increasingly using premium wine as a "hook" to get people in, he said their ranges were still limited, providing independents with the opportunity to differentiate themselves. Starbucks' trial of wine was also potentially good news he added, as it showed an emerging pattern of informal drinking for consumers, a wine café culture that would benefit those independents already selling wine on their premises.

Online was also likely to provide a "huge opportunity" for independents - but they would have to work hard. "Just saying on a website 'we don't stock supermarket wine' is not enough," he said. "It is a fantastic place to tell your story about who you are as a retailer and what wines you sell - make full use of the channel. It currently makes up 10% of wine sales but could easily grow to 15%."

However he warned there was a "small risk" duty could rise by 2.1% in March if the Chancellor decides a cut in petrol is more important to voters than a cut to wines and spirits duty.

There was a marked difference between online and off-trade retailing, Wilson said, as he outlined the latest off-trades and online sales data.

Off-trade trends

Across the off-trade, only four countries showed value growth in the 52 weeks MAT data to 31 January 2015, according to IRI data provided to WDR. Australia was in out front but growth was slow at 3.7%. Chile also saw 3.7% growth, while New Zealand rose 13.4%. Growth in Argentina also remained strong, up 37.6%, albeit of a smaller base. There was also a split in performance of the major regions, Wilson pointed out, with only three regions showing growth - South East Australia was significantly ahead with an increase of 12%, followed by Marlborough, up +11% and Rioja, up 10%. Meanwhile, two smaller regions (where sales amount to £20m- £100m) stood out, Mendoza up 49.2%, and Maule Valley, up 32.6%.

Sparkling wine also saw growth - one of the few areas in wines and spirits to do so - but it was all about Italian sparkling. This rose 60.1% in the 52 weeks MAT data to 31 January 2015, according to IRI data provided to WDR, and Wilson added that "Prosecco wars" were likely in the next year. The success of Italy in particular has had a knock-on effect on cava, he said, which fell 10.3%. Champagne sales were flat, but other French sparkling wines, including Cremant, saw "nice growth" of 10.6%, he added, albeit of a small base.

Online trends

Sparkling wine was not seeing similar levels of growth online, Wilson pointed out, although there was a "significant" mix change between Champagne and Prosecco, which was contributing to the falling price of sparkling, down from £10.75 to £10.60 in the MAT 28 Jun 2014 vs MAT 29 June 2013, according to data supplied to WDR by 13 online wine retailers.

Red wine dominated online sales, accounting for 43% of total value, Wilson pointed out, providing a contrast to the off-trade where white wine is the biggest seller. French wine was also a winner online, with more than twice the value sales of the next biggest country. "French wine is very suitable to sell online, so make sure you have a good, strong French offer", Wilson said.

The average rsp for France was also "unusually" high at £8.59 for red, up around 3.5% year on year, as online provided an opportunity to sell more premium French red and white wines. This trend was also seen with the average price of wine online higher than in the off-trade and rising versus the previous year. In the MAT 28 Jun 2014 vs MAT 29 June 2013, it rose around 5% from £6.53 to £6.89, around £1.20 higher than the off-trade average.

The online data yp yj is the first to show the full year figures, Wilson said, and is supplied to WDR by 13 online retailers. It comprises a mixture of supermarket by-the-case websites (Tesco wine by the case, M&S, Waitrose Cellar, and Asda Wine Shop), wine specialists, Majestic, Laithwaites, The Wine Society, Berry Bros & Rudd, and wine clubs, The Sunday Times Wine Club, BA Executive Club, Great Western Wine and Telegraphwine.