What does 2004 hold in store?

There will be a rise in premium wine sales; multiple grocers will get bigger; and we’ll pay more attention to "second line" wine countries

How will 2004 turn out? What trends will be observed during the year? Forecasting is always a dangerous, albeit lucrative, art: dangerous in the sense that forecasts are almost always incorrect; lucrative in that this sort of information, however faulty, is worth a lot to the right people.

So, for what they’re worth, here are some predictions for 2004, followed by the evidence on which they are based.  The main assumption here is that press mentions by wine writers are what economists call a "leading indicator", ie they are predictive of future customer behaviour rather than reactive to existing customer behaviour.

Clearly, this is an arguable assumption, but one we have to live with. Welcome to the world of forecasting.  On the basis of the evidence so far from In The Press, we think three important things will happen during the course of 2004:

• More people will be buying premium and super-premium wines than last year.

• Multiple grocers will continue to grow market share, particularly in wines above £5.

• "Second line" countries (those outside the top five such as New Zealand and Argentina) will get more coverage than last year.  So what’s the evidence behind this? One clear trend that we have observed over the past few months is a shift on the part of most wine writers towards recommendations of more expensive wines (ie those costing over £5).

In February of this year, 80% of wines recommended cost more than £5; a year ago this figure was 60%. If you look just at wines costing more than £7, the difference becomes even more stark: 59% of wines recommended this February cost more than £7, versus just 36% in February 2003.

For the second prediction, we need to turn to the long-term trends regarding mentions of supermarkets versus specialists and independents.  While February was not a great month for multiple  grocers, the fact is that this group consistently accounts for more than half of all mentions in the press.

Note too that these same grocers will all be pushing £5 plus wines this year. Why? Their loyalty card data is telling them that people who spend more than a fiver on wine are also more likely to buy other high margin items (fresh fruit, vegetables, shellfish, expensive ready  meals) during their shopping trip and end up at the checkout with a bill somewhere north of £100.

Besides, given that multiple grocers already account for three out of every four bottles of wine sold, it is not too risky to predict that they will benefit from a shift in consumer behaviour to the over-£5 sub-category.

Finally, why do we think "second line" countries will do well? The data so far is showing that wine writers, having stuck to fairly safe choices during times of war, recession etc, are looking to flex their individual tastes again. In February 2004 we had strong performances from Austria (thanks largely to Jancis Robinson in the FT) and New Zealand (mainly The Guardian and Observer).

The early returns for March show that we will be seeing support for Portugal and possibly Germany.  All this will doubtless come at the expense of the big guns such as France, Australia, and to a lesser degree Spain and South Africa.

We’ll provide an update at mid-year to let you know how the predictions are panning out.