• Liberty Wines: diners are happy to trade up on premium wines

    What wines are most popular in the premium on-trade, and which are the ones to watch? Helen Arnold delves into Liberty Wines annual on-trade report which reveals some fascinating insights into the UK’s wine market.

    What wines are most popular in the premium on-trade, and which are the ones to watch? Helen Arnold delves into Liberty Wines annual on-trade report which reveals some fascinating insights into the UK’s wine market.

    By October 5, 2016

    In the first of a series of a reports dissecting the Liberty Wines’ Premium On-trade Report for 2016, Helen Arnold takes an overall look at the grape varieties and countries that are performing the best.

     

    Despite the scaremongering headlines about middle -class middle-aged binge-drinking Brits knocking back bottles of wine at home every night, the reality is that the consumption of wine in the UK is actually on a downward trend.

    However, while British consumers are drinking less wine overall, in the on-trade it’s a very different story. Here, sales continue to grow year on year, with sales of wine in top restaurants, gastro pubs and wine bars thriving, according to Liberty’s latest Wines Premium On-Trade report which was produced in tandem with CGA Strategy.

    “Our insight shows that the premium on-trade wine market is currently flourishing,” said Liberty Wine’s  managing director, David Gleave MW. “We believe this is due to more consumers choosing premium venues when dining out, coupled with people spending more on wine when they do.”

    Stellar growth of fizz

    Champagne is outstripping sales of Prosecco in the premium on-trade by four to one
    Champagne is outstripping value sales of Prosecco in the premium on-trade by four to one

    One category in particular has been enjoying stellar growth, with sales of sparkling wine in the premium on-trade outstripping the entire wine category, rocketing by nearly 33% (32.9%) in volume and by 58.3% in value over the last year. And despite the price premium, it is Champagne which retains the lion’s share of this market, accounting for double the volume of Prosecco and four times its value.

    Perhaps unsurprisingly, London comprises over half (57%) of all Champagne consumed in the premium on-trade, accounting for more than double the volume and spending more than four and a half ties the value on Champagne as on Prosecco. However, growth in the capital is slower than in the south of the country, where sales of Champagne have tripled. 

    Champagne may dominate in the on-trade, but Prosecco’s performance in the past year has been nothing if not impressive. Its sales continue to show astonishing success, up by more than 77% in volume and nearly 84% by value in the past year. It also accounts for 22% of the total market share of sparkling wine, with more than half being consumed in London. However, the fastest growing UK region for Prosecco drinking is the central area.

    And while 80% of Champagne in the on-trade is drunk in restaurants, the consumption of Prosecco is spread more evenly across all types of premium outlets, with the fastest growing being in wine bars.

    English sparkling on the move 

    English sparkling wine’s success is now starting to make itself felt in the on-trade too, and while it only accounts for a tiny proportion of the total sparkling wine market (less than 1% by both volume and value), consumers are beginning to acquire a taste for domestically produced bubbles. The sector has grown by nearly 13% in volume and 10% in value in the past year, with the wines being given high profile on-trade listings in London and elsewhere.

    Still white wine

    While still wine is not in the same league as sparkling in terms of sales growth, Liberty’s report reveals that over the last three years, the growth of white wine in the premium on-trade has also outstripped the overall growth rate of the market at 9.9% compared to 6.3% in volume. 

    Opportunity to up sell

    Diners are more willing to trade up on wine lists if encouraged
    Diners are more willing to trade up on wine lists if encouraged

    In 2015 Sauvignon Blanc and Pinot Grigio together accounted for over a third of sales in the premium on-trade. These two dependable old favourites have almost become a “brand” in their own right, and are more recognisable to many consumers than producers’ names. This represents a good opportunity, claims the report, for sommeliers to persuade buyers to experiment with higher quality or single vineyard examples of these favoured grape varieties.

    And it’s London’s drinkers who can’t get enough of Sauvignon Blanc, accounting for six out of ten bottles of all Sauvignon Blanc drunk in the on-trade, with the majority coming from New Zealand, though French, South African and Chilean offerings are making more headway.

    Growth in Chenin Blanc

    Another white varietal that is proving increasingly popular in the on-trade is Chenin Blanc, growing at 18.4% in volume, more than double the rate of total white wines, and at 19.7% nearly double by value. Sales have been boosted by its strong presence in premium outlets, particularly in London.

    Premium diners choose Chardonnay

    Not to be forgotten, good old Chardonnay is still experiencing steady growth, and remains firmly in the top four varieties in the premium on-trade. With nearly 10% of the market by volume and just over 10% by value, chardonnay remains the preferred choice for premium diners in the restaurant sector.

    While the market share in the on-trade has given way to whites over the past three years, men are still more likely to drink red wine than white, with 53% of men preferring red, compared to 51% of women.

    Anything…providing it is Merlot

    It appears the Sideways hangover is over as Merlot now accounts for more than 30% of the red wine category in the premium on-trade, and is the only red grape in the top four grape varietals. With its value growing three times as fast as its volume growth, Merlot is continuing to encourage consumers to drink higher priced example of this variety. 

    Pinot Noir appeal

    Pinot Noir is now developing to be a  “significant player” in the on-trade, according to the report. It is now the second most popular red grape varietal after Merlot, and commands 13% share of the market, a 3% increase on last year. It has performed particularly well in top end restaurants and hotels, especially in London, where it has overtaken Tempranillo and Cabernet Sauvignon.

    Syrah leapfrogs Malbec

    Other red grapes tempting drinkers in the on-trade include Syrah, which has grown by more than 14% in volume and nearly 17% in value in the past year, overtaking Malbec in the process.

    Grenache too, has an increasing number of fans, and the grape has seen its sales double in the past 12 months.

    Sangiovese gains market share

    Sangiovese is still gaining market share and thriving, particularly in premium restaurants which confidently sell top notch Tuscan wines. However, Liberty’ Wine’s report points out that like Pinot Noir, the “tricky nature” of Sangiovese does not lend itself well to mass production, so it will never beat the more versatile merlot in terms of market share.

    Rosé retains market share

    Rosé wine sales are doing well in the premium on-trade
    Rosé wine sales are doing well in the premium on-trade

    Rosé wine, meanwhile, has held onto its market share in the premium on-trade, remaining stable at around 8% in both volume and value. But at the same time its sales have increased, up by 15.4% in volume and 9.4% in value, showing that consumers are splashing out on higher value rosé wines than last year.

    Countries in growth 

    Despite the growth in the premium on-trade, only four wine producing countries have increased their sales every year between 2013 – 2015 and these are France, Spain, Chile and New Zealand.

    And of those, only France has shown consistent growth in both the premium and total on-trade.

    With 31% share by volume in the premium on-trade, France leads the pack, ahead of Italy in second place with 28% market share; Spain, Australia and Chile all on 8%; South Africa with 6%; New Zealand and the US both on 5% and Argentina with 3%. 

    • In part two of our analysis of Liberty Wines’ on-trade report we will take a close look at the London on-trade scene, widely regarded as being a completely separate market to the rest of the country. 

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