Wine focus: Profit potential of wine in pubs

Wine research from The Publican in association with:

In the first of a new regular series focusing on the potential of wine in pubs, Andy Knott examines how licensees are not tapping into the UK consumers' fast-growing love affair with all things grape.​

There's been a silent revolution in the nation's drinking habits over the last 15 years and the chief beneficiary of this has been wine. UK consumption doubled between 1980 and 2000 and now accounts for nearly a third of our total alcohol consumption, according to the Office for National Statistics (ONS). What's more, this upward trend is set to continue into the future - with the most recent study by Vinexpo predicting a further 20 per cent increase between 2001 and 2006.

Yet while wine features prominently in Joe Public's home - not to mention the restaurant - the paradox is that this success hasn't been replicated to the same degree in the UK's pubs. According to the ONS, the on-trade as a whole only accounts for 27 per cent of wine's distribution - a sizeable chunk of which is swallowed up by restaurants.

With this in mind, The Publican has joined forces with some of the most prominent forces in wine - Jacob's Creek, Waverley and JP Chenet - to conduct detailed research to throw some shining rays of light on to the subject.

"For the last seven years, our Market Report has shown food and wine to be the biggest growth area in pubs, with wine now clearly out in front," explains David Goulthorpe, publishing director of The Publican.

"While pubs have taken wine more seriously of late, there still seems to be a bit of a lag, and generally publicans haven't got behind the category as much as they should. We conducted this research to compare consumer attitudes with the trade's, to serve as a rallying call for pubs to really get behind wine."

The research took place in two stages. Firstly, over 2,000 consumers were asked about their wine drinking habits, on both a quantitative and qualitative level, performed by Taylor Nelson Sofres and collated by Frank Research. Next, hundreds of publicans responded to a survey in The Publican and on its website.

In an attempt to throw light on the research, over the next couple of months The Publican will take an in-depth look at the six most important issues that the pub industry faces in order to optimise wine sales. This will start next week and continue on a fortnightly basis. These issues are:

• Visibility:​ highlighting the most effective ways to promote and display wine in the pub
• Range:​ concentrating on constructing the ideal wine list for your customers, bringing in wine brands, grape varieties, country of origin and the number of wines on the list, among others
• Wine with food:​ there's already an in-built consumer association between wine and food, so how can you maximise this link?
• Wine without food:​ providing simple, practical advice how "solo" wine drinking can be improved in pubs
• Training:​ to many, wine can be an utterly confusing and complex drink, so it's imperative that pub staff can communicate wine's differences to customers to keep the sales coming in
• Wine quality:​ bringing together the infinite ways that you can employ to not only ensure you're selling the best wines available, but convince your customers that you're doing so, too.

According to our trade survey, publicans acknowledge that wine is comfortably the drinks category with not only the fastest growth but also the most potential. In the consumer survey, however, over half (53 per cent) claimed that they drink wine, but never in pubs. This means that if some simple steps are taken there's the potential to double your number of wine drinkers.

By far the largest reason given by those rejecting pub wine (31 per cent) was that they "never considered it", which suggests that some simple attention to merchandising the product well will immediately haul in some extra customers. So what should publicans do?

"Firstly, do something," bluntly advises Tim North, UK director of Grands Chais de France, producer of JP Chenet. "Far too many publicans don't even bother making their wines visible. I believe a back-bar display is the best way forward, but most importantly, give wine prominence and recognise that wine's got real potential, which means giving it space and exposure."

Another factor explaining wine drinkers' failure to associate pubs with wine is that Q-word: quality. Simon Loftus, chairman of Adnams, is forthright about wine's past in pubs. "Thankfully we're beginning to move out of a truly terrible era, where the worst wine you could get in the country was served in pubs," he said.

Consumers seem to agree. Over half (52 per cent) felt that they had been disappointed by wine in pubs. Crucially, two-thirds of the wealthy AB social group expressed dissatisfaction. This group not only has more money to spend, but is most naturally predisposed to wine.

"While pub wine quality definitely has improved recently, the consumer perception still trails behind," explains Jenny Carroll of Jacob's Creek. "Because of past disappointment, publicans need to work twice as hard to redress this."

This perceived quality shortfall, unfortunately, has not been recognised by publicans. When questioned how they could improve wine sales, improving quality was deemed to be the least important factor with 15 per cent, falling behind promotions (53 per cent), merchandising (51 per cent), training (43 per cent), range (26 per cent) and price (24 per cent).

More worrying for the majority of the wine community is that much of this perceived lack of quality is caused in the pub itself. The average length that a bottle of wine is left open was 2.3 days, while two per cent admitted to keeping bottles open for as long as a week. The wines aimed at pubs will generally only remain fresh and in optimum condition for one day at the most - a fact mercifully recognised by one-third of trade respondents.

"The simple solution to this problem," insists Hew Dalrymple, director of marketing and strategy for Waverley Group, "is to rationalise your offerings of wine by the glass, or to turn to the single-serve options which are now much more readily available."

Smaller, or "single-serve", bottles is an exciting area for JP Chenet. "We see our 25cl bottles as a big opportunity for pubs," explains Tim North. "One of the biggest issues is stale wine. Single-serve bottles serve two purposes. Firstly, they make wine more like PPLs and PPSs, in other words, fashionable. Next, it reassures customers that they'll get a fresh glass of wine, and will help shatter their misconceptions about wine in pubs."

It'll come as no surprise that Jacob's Creek, JP Chenet and Waverley (owner of the likes of Intro2 and Moondarra and distributor of E&J Gallo and Wolf Blass) also feel that wine brands deserve more consideration. While the beer and spirits categories are dominated (some would even say monopolised) by the big boys, wine brands haven't made the same inroads.

Consumers, however, seem to agree with the brand managers' sentiment. When asked what factors influence their choice, the brand name came out top with 23 per cent, although in an admittedly spread field. Also it's well worth remembering that wine's doubling of growth in the off-trade has been achieved almost exclusively by the emergence of New World wines, which predominantly deal in brands.

"The off-trade leads the