What’s coming in 2020: Wine
Where is the on-trade wine market headed this year? CGA’s senior development manager Mark Newton flags up the trends to follow.
This article was reprinted with permission from The OnTrade Preview 2020.
While some drinks categories like flavoured gin and craft beer go from strength to strength, it’s fair to say that wine struggled in Britain’s on-trade in 2019.
Sparkling wine remains in growth, thanks in large part to the long-term popularity of Prosecco, but still wine sales are falling—as are total sales. This is an increasingly polarised category, with changes in consumers’ behaviour creating sharp contrasts in pricing, styles and countries of origin. But while the market is complex, there will be big opportunities for operators and suppliers to rally sales in 2020.
Trading on up
For the majority of drinkers, the most popular option on wine menus continues to be low to-mid ranged wines. However, for around half (52%) of wine drinkers, there is a potential willingness to trade up—as long as the quality is right. The wine knowledge of these buyers is high, and food matching is often a factor in their decision-making.
At the other end of the purchasing spectrum, nearly a quarter (24%) of consumers typically opt for the cheapest or second cheapest option on a wine list. CGA’s research shows that this group is typically older, and identifies price as the most important driver when they choose to drink wine.
Old versus New
A not insignificant 16% of consumers say they don’t know the difference between Old and New World wines—and the figure rises to more than a quarter for younger age groups. But among those who express a preference for New or Old, quality rather than price is the primary factor. Since Old World wine buyers are potentially willing to spend over £5 more per bottle on average than those without a preference, there is an ideal trade-up opportunity here.
Country club
Although sales growth is slowing, Prosecco remains the wine category’s biggest driver, which means Italy retains its position as the biggest country of origin by volume sales in the on-trade, ahead of France. On the other side of the world the top performer is New Zealand, primarily driven by premium Sauvignon Blanc. Its reputation for quality has built over the years to the extent that over two thirds of those who show a preference for New Zealand wine are prepared to pay more for it.
Grapes of choice…
The on-trade wine market is still dominated by classic grape varietals like Merlot, Chardonnay, Shiraz and Cabernet Sauvignon—but several lesser-known grapes are emerging. In the mainstream, Malbec has seen modest growth, with year-on-year sales up 6%. At the niche end of the market, premium-orientated grapes such as Cortese (the varietal of Gavi) and Albarino are growing in popularity.
Looking to the future
In 2020 and beyond, innovation and new product development are going to be crucial for retailers and suppliers. We can expect to see a growing interest in quality no or low alcohol options, spritzers and flavoured varieties, and serve will be a crucial factor in developing a more premium outlook for drinkers. As high-tech ‘by the glass’ dispense technology becomes increasingly accessible, wine consumers may be more easily swayed into regular experimentation and trading up.
These and other developments give grounds for positivity about the on-trade wine market in 2020. Competition from other categories is certainly high, but there is still widespread consumer interest, especially in food-led occasions.
CGA’s series of Wine Insight Reports provide an outstanding perspective on wine market trends and consumer behaviour. For more about great value subscriptions, and to learn how CGA’s research sources and reports can optimise strategies across the wine category, contact Mark Newton.
This article was reprinted with permission from The OnTrade Preview 2020.
Source Data: CGA BrandTrack 2019/ OPM P12 2019
