Turning the tables

The Australian Wine Bureau is working to achieve a 20% share of the UK on-trade by the end of next year. Is this wishful thinking or eminently achievable? asks Patrick Schmitt

WE ARE absolutely convinced that if you look at the ontrade in three years’ time the Australian share will be much closer to what it is in the offtrade," says Hew Dalrymple, marketing director at Waverley TBS, the company responsible for the fastest growing on-trade brand ever – Aussie-sourced Moondarra.

For his prediction to come true, Australia’s share of the on-premise would have to shoot from its current value share of a little under 18% to 24% (it’s off-trade value share MAT to end of June 04), by 2007. Likely? Well, if Australia continues with its year-on-year gain in on-trade share of around 2%, fuelled by an approximate 20% increase in sales, in three year’s time it would almost match its present off-trade share.

Whether it can keep up this increase is, of course, questionable, but with the work being done by Australian producers, on-trade agents and the Australian Wine Bureau (AWB), one would have thought it possible.

For this reason, the on-trade leader, France, should be worried. Australia appears to be stealing its market at both ends of the on-trade, or at least it’s trying to.  At the more mainstream end – where vins de pays was once the byword for house wine – pubs, bars and chain restaurants are gradually switching to the New World, and in particular Australia, to supply their entry-level offer.

At the top end, the AWB in particular has been promoting a regional message and targeting the most influential sommeliers in the UK, to try to play France at its own game.  If the latter is to fill page after page of wine lists with the likes of Chablis, Rhône and Bordeaux, Australia wants to steal space for Barossa, Coonawarra and McLaren Vale, "not just one generic proposition per grape variety or wine style", as the AWB’s Paul Henry puts it.

Top down tactics

Whether the AWB’s attempt to build geographically defined sub-brands has already taken effect is hard to detect and most believe consumers are yet to really pick up on regional differences.

Nevertheless, using anecdotal evidence at least, it seems Australia is starting to creep into the top end of the on-trade.  "Paul Henry has taken two groups of sommeliers to Australia [and is soon to take his third]," recalls Great Western Wine’s managing director, Paul Addis, "and that has had a very positive impact in the London on-trade.

Those people have come back and been so much more receptive to Australian wine, and they are people who talk to a lot of people in the national quality restaurant sector."  But this suspected swing in sommelier opinion at the fine dining end is not just a result of the AWB’s efforts.

Addis also believes it’s due in part to independent merchants "who are perhaps doing a bit  more work than they used to to find smaller, highly focused and individual winemakers".  And coinciding with this is the emergence of just such winemakers in Australia.

Great Western’s Ben Glaetzer is a good example – "a very good winemaker who’s getting lots of attention," according to Addis, who also believes sommeliers are receptive to Australian  wines above the £25 mark "because they are not widely available".

In other words, these wines are attracting interest because they are novel.  Similarly, Laurent Perrier’s relatively new Australian agency, Thorn-Clarke, has made a name for itself in the UK with its Quartage, a Bordeaux blend from Barossa.

"The Quartage has been really good for us in the UK," comments managing director Sam Clarke, "because here you appreciate the structure of Bordeaux (in the US they like the fruit of Shiraz)." 

Nevertheless, it is the element of rarity that has caught the sommelier’s imagination because "although you see Cabernet Francs and Merlots, you rarely see all four varietals," adds Clarke about his blend.

But to return to those ontrade wine buyers who have been out to Australia courtesy of the wine bureau, it is the Great Eastern Hotel’s head of wine, Joelle Marti, who has really responded to her antipodean experience.

To coincide with the early 2005 Australia Day programmes, the hotel will be running a promotion called Australia, Down Under at GEH.  The main focus of this, according to Simon Willis, creative director at the Great Eastern, "Will be special set-price menus – from two courses and a glass of Australian house white or red for £10 in the George restaurant through to three courses with a glass of premium Australian wine for £30 in Aurora."

There will also be a series of tutored Australian tastings.

Another effect of these visits has been the gradual seepage of older Australian wines into the UK on-trade at the request of a handful of sommeliers.  Henry explains, "The first group we sent out identified that if Australia wanted to start really punching its weight in the way Europe does then we would have to start to introduce back vintages, and, as a result, a number of wineries released cellar/library stock, which is now populating wine lists back in London."

Mainstream flood

However, while the presence of Australian wine in the fine dining sector of the UK ontrade is important for the country’s credibility, it is not going to significantly boost volumes overall. Certainly, Australia needs to succeed at the top end to achieve its full potential in the on-trade, but the real commercial opportunities are found at the mainstream end of the onpremise.

For instance, as Waverley’s Dalrymple points out, "When we pitched and persuaded S&N Retail, which is now Spirit, to the merits of Moondarra, their decision to switch its entry level wines from France to Australia at a stroke moved 100,000 cases from France to Australia.

That has now happened in Mitchells & Butler and Whitbread, and it is only a matter of time before the New World takes the share in the on-trade that it has in the off."  Moondarra is now over 300,000 cases and Waverley currently sells nearly 1m cases of Australian wine to the ontrade.  That figure was 400,000 only three years ago.

The success is both because the consumer perceives Australian wine to be consistent and good value, while the on-trade retailer benefits from the greater rate of sale and higher profits of branded wines, Australia’s most powerful proposition (in terms of volume).

Furthermore, as Dalrymple suggests might be the case, "With perhaps the exception of Chardonnay, there is an awful lot of liquid swilling around Australia, and companies can buy it on the stock market, so I suspect some of the larger managed houses, if they have direct purchasing, can pick wines packaged to their own spec very economically."

However, he also believes Australia’s encroachment into the on-trade is a natural continuation of its success in the off-trade because, if consumers drink Australian wine at home, why wouldn’t they in a restaurant? The same is true of branded wines.

The delay is partly explained by the fact the ontrade is more traditional than the off-, and hence the French wine share in the ontrade is more than 50% bigger than Australia’s. This,according to Dalrymple, "is not because of the intrinsic merits of France in the category [on-trade] but because the category is slower to adjust to where the consumer is".

"There is a huge potential for Australia in the on-trade," Dalrymple continues, "but they are going to have to be careful not to get too complacent because on-trade buyers look at price as well as consumer proposition, and it’s possible, with the competitiveness of the dollar, that somewhere else sneaks in.  With exchange rates, there are some very competitive other New World wines around and although they don’t have the benefit of brand Australia, I would say they are a bit hungrier."

Having said that, at the time of going to press, the AWB was just finalising the second part of its on-trade initiative, one focused at the more mainstream sector.  This will be a "major nationwide AWB sponsored initiative," says Henry, "driving Australian bythe- glass sales in pubs, chains and hotels".

The aim is to ensure Australia hits a 20% share of the on-trade by the end of next year, securing another 2% gain.  And although the AWB has initially attempted a top-down approach, hoping listings of its wines in the fine dining sector will have a halo effect on the rest of the on-trade, wooing those at the other end of the on-trade may well prove highly effective.

As Rupert Dean, Torbreck’s European brand manger remarks, "The best way to get people into Australian wine in the on-trade is to target consumers that will eventually migrate into the fine wine end, and approaching gastropubs and bars is the perfect way to do that.

The top end is controlled by the Europeans, but that will break down.  However, it will take time, and an influx of a new generation of Australian wine drinkers."

In other words, when it comes to the ontrade, it’s important to be proactive, but you also need to be patient.