The UK wine market is an intensely competitive one made even more so by the UK’s Brexit decision on 23rd June. The Brexit vote will have a significant impact on wine consumption in the months and years ahead.
So now is most certainly the time to start taking stock, looking at the detail of your wine list and asking the question how it can improve your business.
There are two short to medium term changes that will significantly impact the UK’s wine business.
- Currency exchange rates and their effect on the pricing of an imported product.
- The general economic impact of the adjusted pound in consumers pockets.
As most wine is imported this has a direct effect on the prices of wine. But hold on before you whack an extra couple of quid on every bottle, what is your supplier’s position?
Have they ‘hedged’ their currency, meaning that they won’t put up prices until September or the New Year even? It is worth asking the question and finding out before hitting your consumer’s wallet. But be certain, price increases are coming, it is just a question of when and by how much. At this moment my guess would be sooner than you might think and more than you will like.
It would be easy to react to the first supplier that broaches the subject of price increases and stop working with them. The wine supply industry i.e. the wholesalers are consolidating. The big are getting bigger most usually by acquisition, and whilst in the past it may have been easy to find reliable replacements, doing that now is becoming less easy. So having a supplier strategy based on your customer needs, whilst allowing flexibility of change is very important.
The UK economy is the second area of impact and we will have to wait and see how and to what extent. Consumers are not about to stop drinking wine and the top 10 wine exporting countries collectively recognise the UK as their 3rd most lucrative market.
There are long-term consumption trends to consider and the Mintel report (December 2015) says the UK market is not predicted to return to wine consumption levels of pre 2008 for some time. Post Brexit the prospect of growth is now less likely. However, we have seen increased polarisation in the last few years, consumers are drinking less, and they are also drinking better. The post Brexit effect makes this trend increasingly more interesting.
So having a creative trade-up strategy is key in finding a profitable route through the uncertainty delivered by political and economic events recently.
At one end of the list you might try ‘wine cocktails’. According to the IWSR (Independent Wine and Spirit Research 2015) fruit flavours with wine are becoming a trend. Prosecco has demonstrated this recently and now there are some suppliers and brands developing wine and fruit mid range alcohol drinks into supermarkets.
They will begin to be launched into the on-trade, but there is every reason to trial making them behind your bar if you believe your consumers would try them. They are innovative bringing colour and fun to what most consumers (especially 25-35) see as an attractive category of wine.
At the other end of the list make sure that there are selections people can trade up to and ideally have someone on hand to explain to the consumer why they should. This brings staff training into focus. It is a critical part of being able to make the most of your wine list having knowledgeable people talking with customers.
Make every wine work for its place on your wine list. Make time to analyse what every wine does for your business. If you can’t make the time ask your supplier (you might get a biased answer) or bring in a specialist consultant. Both should offer a training service, based on wine knowledge and sales skills.
Now is the time to be even more alert to and aware of how wine is contributing to your business. Consumers will adapt and change their wine consumption so make sure you have strategies and tactics in place to meet and profit from these changes.
Post Brexit, the UK wine market is changing and it’s changing now.
Alistair Morrell
Hospitality & Catering News, Wine Content Executive