MCA market insight director Steve Gotham discusses why wine is losing out to other alcohol categories and suggests that lack of innovation may be to blame.
Having been writing these articles for almost four months now, I feel we have reached a stage in our relationship whereby I can be a bit more open and honest with you. So here goes… while I don’t smoke or do drugs, I am rather partial to a glass of wine in the evening. I genuinely believe it enhances the taste and enjoyment of food – though I should add that I am trying to cut it out on at least a couple of nights in the week. Anyhow, that’s quite enough confessions for now, what of wine consumption in the out of home market?
MCA’s Eating Out Panel consumer tracking allows us to better understand drink consumption at meal times. At Q1 this year, just 3% of lunches and 14% of dinners were accompanied by wine. Concerningly for some, these proportions were down on the equivalent period last year and further still from the 5% and 17% comparatives from Q1 2016. Wine (after beer) might still be the second most popular beverage choice at dinner, but the evidence suggests wine consumption is losing out – but why?
Certainly, over the three-year period, the popularity of beer and cider as accompaniments to dinner food has remained more resilient, while we have seen modest increases, albeit from a lower base, in the enjoyment of spirits/cocktails. There can be no denying that beer, to an extent cider, but certainly spirits and gin, in particular, have benefitted significantly from the craft-led boom with assorted artisanal products very much in vogue. Beer festivals continue to be popular and my local Guildford event is delighted to source product from 30 different independent and micro-breweries within a 30-mile radius of the town. Moreover, I could say that beer has raised its game at seeking to increase awareness of different food pairings.
By comparison, the wine industry has been far less innovative, too complacent and too stuck in its traditional ways. As such, it has become too reliant on more mature consumers, who frankly, are just getting older – which means going out less than their younger counterparts who typically have an underdeveloped appreciation of grape-based delights.
Okay, mini rant over. To be fair to wine, it has been targeted (unfairly hammered according to some in the trade) as a soft touch for duty rises by successive UK governments. Since 2000, duty rates on still wine have increased by 100%, significantly higher than the 47% on spirits, the 53% on cider or the 59% on beer. This means that 61% of a £5 bottle of wine is tax (duty and VAT) and it is not until you pay £6.70 for a still wine that you are starting to pay more for the wine than in tax. Clearly these are just supermarket prices – inevitably there are additional mark-ups that apply in the on-trade.
Talking of which, and merely using the limited lens of a few leading restaurant chain operators, it would appear that wine is not a high-profile development category. In terms of product offer, it is noteworthy that the customer choice at the admittedly more youthful, Nando’s and Wagamama, has barely changed over the past three years. At Nando’s you still get three white, three red, two rosé and a sparkling (new), while at Wagamama you still get five white, two red, one rosé and a sparkling.
Interestingly however, and to their credit perhaps, the prices at Wagamama have not changed from three years ago. The cheapest and dearest glasses of white and red are unaltered – and range from £4.50 to £6.75. The only price change is the 30p increase on a glass of Prosecco, up to £4.95. By contrast, at Nando’s price rises of between 50-70p have been applied across the board, with the entry-exit price range now stretching from £4.25 to £5.80.
I can almost hear the wine aficionados rumbling about my choice of restaurants, so let’s bring Côte into the picture. Here the wine offer is unsurprisingly far more substantial, but again, barely changed. Whites still number 16, reds 18, rosés four and sparkling three. Regarding cost, prices for cheapest glasses start at £4.95 for white and red, having both increased by 45p. The dearest price on white has also increased by c.10%, though the exit price on red has been reduced by 5% to £7.15. That said, the dearest bottle price has risen, up £3 to £92, for the intense black cherry fruit and lush finish of a Chateau Talbot 2013.
So, what to say by way of a conclusion? Whereas a few years ago it might have been the case that the wine category was far from broken, so why try to fix it, now I am not so sure. I wonder if present diminishing trends continue, and if we don’t see more on-trade innovation that helps to bring more youthful consumers on board, then wine sales will only decline further. And sadly perhaps, I won’t be the only one continuing to enjoy my wine mostly at home?