• CGA & The Buyer report: How the on-trade can overcome Covid-19

    CGA’s new ‘Overcoming Covid-19’ is the fourth and final edition of the 2021 series of Wine Insights Reports produced in partnership with The Buyer. It is arguably the most comprehensive analysis of the impact that Covid-19 has had on the on-trade, consumer spending behaviour and the performance of the wine category in particular in relation to all drinks categories across the last 15 months. It looks at the impact the pandemic has had throughout the 2020 lockdown on the on-trade and then sets out the roadmap the sector is likely to follow in the months to come as it plots its way out of social distancing, the rule of six and gets back to full on trading.

    CGA’s new ‘Overcoming Covid-19’ is the fourth and final edition of the 2021 series of Wine Insights Reports produced in partnership with The Buyer. It is arguably the most comprehensive analysis of the impact that Covid-19 has had on the on-trade, consumer spending behaviour and the performance of the wine category in particular in relation to all drinks categories across the last 15 months. It looks at the impact the pandemic has had throughout the 2020 lockdown on the on-trade and then sets out the roadmap the sector is likely to follow in the months to come as it plots its way out of social distancing, the rule of six and gets back to full on trading.

    mm By June 16, 2021

    Overcoming Covid is the last in four reports produced by CGA in partnership with The Buyer. The other three reports are still available to buy for £875 each or £2,600 for four, including: The Wine Menu In Focus, Emerging Worlds of Wine and The Future of Fizz.

    As we all slowly emerge from our Covid-19 lockdowns we will each have our own personal experiences of how far the pandemic has hit our personal and business lives.

    There is certainly not one business in the country without its own covid story to tell and how it has had to adapt its model to either grow or simply stay afloat. There are sadly many companies and operators across the on-trade that have not made it, or remain perilously at risk hoping upon hope that the sector can fully re-open as soon as possible.

    But as we now all start to collectively brush ourselves down and prepare for life beyond covid, it is also time to start reflecting and learning the lessons from the last 15 months and, in particular, just what has been happening in the overall drinks and hospitality sectors and not just our own tiny part of it. Just what sort of industry can we expect to work in over the coming months, and how soon will sales and profits get back to pre-covid levels?

    Those are just some of the issues covered in CGA’s latest on-trade wine report, in association with The Buyer, suitably titled ‘Overcoming Covid-19: How the crisis has changed the wine trade’.

    Comprehensive analysis 

    The pent up demand for people to be able to go back out eating and drinking again has been in sales figures since the May 7 re-opening date for indoor hospitality. Picture

    This is the first comprehensive report of its kind the market has seen and provides an invaluable insight into what the sector was like before March 2020, how it was able to respond and start to recover in the weeks when the on-trade was allowed to be open over the last 12 months and then, crucially, what the early weeks of trading have been like since hospitality came out of its winter lockdown on April 12. This in-depth study delves into all areas of wine consumption, and purchasing behaviour across all drinks categories, looking both back and forward to see where the sector is likely to go next.

    Mark Newton, CGA client director sets the scene for what to expect in the report: “Lockdowns have changed wine drinkers’ preferences in subtle but very important ways. Operators and suppliers need to be right on top of consumers’ habits and the shifts in on premise occasions, and stay responsive in range, pricing and trade-up strategies. For businesses that meet these new needs, there is a great chance to unlock the high levels of latent spend across the wine category this summer.”

    It’s also very much still a mixed picture and hard to draw cast iron conclusions as the situation continues to evolve and more operators start to re-open. What is clear is the real impact on wine and Champagne sales on re-opening the on-trade is not going to be fully seen until 2022, but encouragingly CGA is predicting a 97% recovery rate compared to 2019 figures.

    The exact figures, however, show how far on-trade wine and Champagne sales slumped in 2020 down to 624,378 hectolitres in 2020, and whilst they will recover to 921,881 h/l in 2021, they are still down on the 1,521,572 h/l that was sold in 2019. The 2022 recovery will see it return to 1,467,597 h/l. So there is very a positive future to look forward to, albeit based on the industry largely reverting back to where it was in 2019.

    Stepping stones 

    Stanislav Ivanitsk
    The chance to have a quality cocktail made by a professional bartender has been one of the highlights of bars re-opening: Photo by Stanislav Ivanitsk on Unsplash

    The ‘Overcoming Covid-19’ report does exactly what it promises and details the stepping stones that on-trade operators, wine suppliers, distributors and producers are going to have to take. It also does so against the backdrop of chronic staff shortages, as the double whammy of Brexit and Covid has forced many European hospitality workers, in particular, to return home. Just how long it takes for some of them to come back will also determine how far the on-trade can recover.

    What is clear is that social distancing rules mean the on-trade continue to trade with one arm effectively behind its back, with CGA also reporting only 40% of operators expect to turn a profit in June.

    Key areas discussed in detail in the report include:

    • How consumers are increasingly confident about eating and drinking out, with more than a fifth of wine drinkers planning to spend more time and money in the on-trade than before Covid-19.
    • Premiumisation and how the lockdown has only accelerated consumers’ interest in good quality, premium products and will actively seek out outlets that offer them a good choice and opportunity to trade up. The key here is a desire to move away from the cheapest wines on the list and a preference to explore more towards middle and higher priced options.
    • It indicates that a substantial proportion of consumers started to drink wine at home for the first time over lockdown, and plan to extend their new habit into the On Premise. Of those who drank wine in lockdowns, nearly a third  experimented with wines that are different to what they usually drink.

    The last year has shown how resilient, adaptable and fast changing the UK hospitality sector is and the extraordinary steps that outlets and chains were able to take to keep their heads above water. The next few months are going to be vital, leading up to Christmas, in how the sector as a whole is going to be able to kick on and try, as this report so clearly sets out, overcome Covid and plan for a bigger, better future.

    • To order and find out more about the Overcoming Covid report email Mark Newton on mark.newton@cga.co.uk. 

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