Grape and the good

Despite a strong resurgence of wine, publicans are still not doing enough to fulfil the sector's potential in the on-trade. Ben McFarland reports.

Few within the trade will have been surprised by the long-awaited appearance of several branded wines in last week's The Publican Brands Report 2001.

What is surprising, however, is that it has taken so long for the likes of Hardy's, Jacob's Creek and Blossom Hill to break into the top 200 at a time when the British consumer is in the throws of a wine romance.

Although the service, quality and range of wine have undoubtedly improved over the last few years, (albeit from a fairly mediocre starting point), disgruntled murmurs from within the trade suggest that publicans are still not fulfiling wine's undoubted potential.

One only has to look at the off-trade trends to realise that the gap between supermarkets and pubs and bars is continuing to grow, much to the distress of the major suppliers and wholesalers. Dale Phillips, buying director at Waverley - one of the UK's leading wholesalers -highlighted the difference in consumer tastes as a key point of difference.

"There are different dynamics going on in the off-trade that are clearly not going on in the on-trade. For instance, 80 per cent of growth in New World wine is in the off-trade while Old World wine still drives the on-trade."

The performance of Australian wines, which are spearheading the emergence of the New World order, is a case in point. While many predict the wines from Down Under will overtake the French offering within the next two years, Australia commands a mere 10 per cent of the on-trade market and is the number three importing country behind the traditional duopoly, France and Germany.

And although the Old World European wines still dominate the on-trade market, a quick glance at The Publican's Brands Report will reveal that aside from the ever-present Stowells of Chelsea, all the new arrivals originate from the New World.

The success of Australian and Californian wines such as Hardy's, Blossom Hill and Jacob's Creek can be attributed to the fact that, unlike the Old World wines, they have tapped into the consumer's insatiable appetite for brands.

While vast quantities of Liebfräumilch and Vin de Table are still quaffed on a daily basis at the lower end of the market, few believe that these varieties represent the future of pub wine.

Dale added: "The New World is very upbeat and the consumer associates Australian, American and Chilean wines with freshness, energy, youth and a relaxed lifestyle while the Old World wines are deemed snobbish, arrogant and intimidating."

Any attempt by the majority of French winemakers to adopt the branded approach will be restricted by the rigid appellation laws that have not only tied their own hands but left the door wide open for the New World order.

According to Nick Mantella of Southcorp Wines, listed by Matthew Clark on its Grants of St James's 2001 wine list, it is the traditional French winemakers that are partly to blame for the slump in wine from across the Channel. He said: "They've shot themselves in the foot! Their strict appellation laws, meant that the French stopped Australia calling its wine Burgundy or Chablis, and forced them to label their wines with new names that everyone can pronounce and find easy to understand."

However, French Vin de Pays wines, produced in the more bohemian regions of the country that are free from the shackles of appellation laws, are beginning to spearhead a French wine revival and have gained a real following in the UK.

A number of good quality, competitively priced Vin de Pays wines have been included as part of Matthew Clark's Grants of St James's 2001 list. Matthew Clark's Graham Donald was quick to sing its praises. "France has been in decline for a number of years now and Vin de Pays has been its saviour. Its brought in Australian winemakers into the Vin de Pays vineyards where there is less heritage and less pride to be swallowed."

Despite the success of New World branded wines in the off-trade, not to mention the accompanying substantial marketing and advertising support, publicans are still displaying a stubborn resistance to the branded approach.

The principal dissuading factor for publicans is the idea that customers are aware of the price of a bottle of Jacob's Creek or Sutter Home in Sainsbury's and are consequently reluctant to pay up to three times as much in a pub.

However, findings from research carried out by Waverley suggest that this fear is misplaced. Almost two-thirds of people interviewed said that brand was an "important" factor when ordering wine, while 22 per cent thought it was "very important."

Not surprising when you consider, everything else behind the bar is brand driven and brand loyalty in other categories such as beer and spirits is rarely questioned.

"Most consumers are still not very knowledgeable about wine - they just know they like it!" comments Clare Griffiths senior brand manager for Grants of St James's Wines, on the results of recent research carried out by the company. She said: "Pub operators need to recognise what motivates their consumers when choosing wine and ensure that their wine offering reflects this."

Brands are one of the ways in which consumers can cut through the confusion surrounding wine, according to Clare. "A brand offers quality and consistency _ the consumer knows that the glass or bottle of Stowells of Chelsea he purchases today is going to taste exactly the same as the one he purchased last week or last month."

Clare is confident that brands will continue to grow their share of the wine market. "The dominance of brands in other drinks categories such as lagers and FABs means that the young adults now coming into the wine market are extremely brand-aware."

Nick Mantella added: "Whether it is the grape variety, country of origin or colour, people are always buying by the brand. Brands go with brands - it's an easy correlation.

"People want that safety net and an unbranded wine list is very intimidating for customers as they struggle to recognise any well-known names. People then play safe and opt for house wines as they haven't heard of the more expensive wines that are, of course, the ones that command high profit margins."

Ah, yes. The margins issue. Despite an overwhelming bank of evidence from the off-trade suggesting that customers are increasingly trading up to more expensive wines, publicans continue to drive suppliers and wholesalers mad by insisting on buying on price.

Graham Threader, sales director at Waverley, said: "There's a huge disparity between what the trade thinks the consumer wants and what they actually want. The trade is hooked on percentage gross profit and insists that price is the most important factor despite research that shows that people don't want cheap wine anymore.

"This fixation with gross profit is driven by the stock takers and it's not right because the consumer is not buying into it," he added. By working with cash margins instead of the percentage approach, publicans encourage customers to trade-up by making the transition from the lowest priced wines to the more expensive varieties a little less steep.

This campaign to persuade publicans to convert to cash is part of a more widespread Waverley category management initiative aimed at improving the general wine offering in pubs. Graham singled out visibility and merchandising as two areas that need improving in the mass outlets and highlighted training and education is key issues at the premium end of the market.

He said "Our research estimates that the on-trade is losing 70 per cent by default.

"Pubs need to further increase the choice and quality of wines available and encourage different types of drinkers to drink more wine more often."

Of a