Pizza power

Italian wines are mourning the demise of the traditional trattoria.  But never underestimate the pizza-pasta chains or the "Pinot Grigio effect", says Tom Bruce-Gardyne

THE FATE of Italy in the UK on-trade and that of the New World are joined at the hip.  Much depends on just how determined producers from Down Under are to claim their rightful share.

Having smashed their way past France to take pole position in the off-trade, Australian wines are seizing an ever-growing slice of bar and restaurant sales.  The attraction goes beyond simply selling more.

The on-trade represents a haven from retailer power and the rumbling price war between British supermarkets in which the big wine brands often find themselves caught in the cross-fire. It also offers the prospect of higher margins.

According to Paul Henry at the Australian Wine Bureau, the statistic that has people buzzing is that the on-trade accounts for 19% of the volume but 42% of the value of the UK market.

This little known secret used to be safe among Old World producers, but not anymore.  Many of the big restaurant chains have embraced the New World as enthusiastically as the High  Street has.

Given the shifting dynamics in the ontrade away from the independent sector towards chains, this must be worrying for countries like Italy.  Unlike the supermarkets with their bar-codes, tracking the on-trade is notoriously difficult and any statistics have to be taken with a large pinch of salt.

For all that, ACNielsen estimates that Italy was squeezed into third place during the 12 months to September 2004.  Italy’s share of the market has remained fairly flat over the last few years at just over 15%, while Australia is now on 17%.

"The Old World continues to suffer," says Jeremy Dunn, brand manager at Waverley TBS for the pan- Italian brand, Trulli. "Our Italian sales are reasonably buoyant even if the overall category is static.  But it depends on the space on the wine list.

If the range is very tight with just 10 wines and six of those are now New World, then the whole of the Old World has to compete for the other four. At which point the manager might well be asking himself ‘Do I list a Valpolicella or a Rioja?’"

Aussies in the house

These sentiments are shared by Enotria, one of the UK’s biggest Italian specialists with a big presence in the on-trade.  Because the company also imports New World wines it is well placed to follow this trend.

"It’s certainly having an effect at the lower end," says Damian Carrington, Enotria’s marketing director.  "With house wines and just above there has been a real decrease in the Italian wines we sell at that level which is definitely mirrored by an increase in the Aussie, Chilean and Argentinean share.

Basic generic Valpolicella, Soave and Chianti are definitely suffering. Above that I think Italy is holding its own at the moment.  And with classic wines like Chianti Classico and Barolo it is still doing pretty well at the top end.

But we’re aware that this is an area the New World is beginning to target quite strongly." Carrington defines the bottom end as wines from £8 to £14 on a list, with "medium" up to around £22 and anything above as "top-end".

Mention of Valpolicella and its twin sister Soave brings to mind the boom years of the Italian on-trade when the pair swept into every bistro and trattoria in Britain sometime in the mid-seventies.  Being bright and breezy and wonderfully cheap they were drunk by the gallon. 

As long as Monty Python was there to lampoon Australian wine on TV, this cheeky double-act from Verona appeared to have little to fear.  Then one day, like the dress-sense of the waiters who served them – tight flares, wide open collars and gold medallions – it all seemed a bit dated.

Yet the brand that led the whole Soave/Valpolicella revolution has proved remarkably resilient in the UK on-trade.

Family fortunes

Bolla, now part of the Brown Forman empire, is "rapidly approaching 100,000 cases," declares Simon Legge, the company’s European marketing manager for wine. As such it is possibly the biggest Italian brand in the on-trade by volume.

Last year sales grew 15-20% thanks to increased distribution and by "playing to Bolla’s core strengths" Legge explains.  The homeland of Bolla, at least with its flagship Veronese wines, is in the traditional independent on-trade.

 "We need to be in good neighbourhood restaurants, not working men’s clubs or 3-star Michelin restaurants," says Legge.  Unfortunately, the health of the traditional family trattoria is giving cause for concern.

Many have been customers of Enotria since the company started in the 1970s.  "If I have to be honest, that segment of the market is slowly dying with the original owners either selling up or dying off," says Carrington.

"Either the next generation are not interested in the restaurant trade at all because they have seen their parents struggle through it for 20 years and not make any money, or, if they are interested, they want to change the concept of the restaurant into something more international or up-scale or just not Italian at all."

For Bolla any losses have been made up through chains like the Hilton Group and JD Wetherspoons where the company has launched its first ever Chianti. While Italians, wine journalists and the ethnic on-trade perceive Bolla as a brand from the Veneto, consumers see it as simply Italian, according to research by Brown Forman.

This has given the company the confidence to turn Bolla into a pan-Italian brand. Apart from Chianti, there will be wines from the south under the Sol Meridiana label which will be sold  into the off-trade.

Anything aimed at retail will keep its packaging distinctive so as not to upset the on-trade. For Legge this is a sensitive subject although it is much more a trade issue than a hang-up among consumers.

On-trade/off-trade cross-over

At Waverley TBS, Trulli is sold under the same label whether it is sold through retail or the on-trade.  Jeremy Dunn is adamant that the same brand can work equally well in both  sectors of the trade, especially in the chains.

In fact, he reckons having a major presence on the High Street can boost sales in a restaurant because customers like the reassurance of a brand they have tried at home.  If a restaurateur or bar manager is prepared to try such a brand the upsurge in sales soon dissolves any initial concerns over unflattering price comparisons with the supermarket.

At least that’s the theory according to Dunn.  But Damian Carrington remains sceptical. "Clearly if you have the ontrade power of the likes of Waverley you can make Trulli work, especially if you have it in enough pubs by the glass," he says.

Waverley is owned by the brewer Scottish & Newcastle, which has a string of tied pubs. Enotria is happy to sell its Sicilian brand, Planeta, in both the on- and offtrade but only because of its premium price.

"We find that when wines go over £10 on the shelf there definitely seems to be less concern in the restaurateurs’ mind about retail exposure," says Carrington.  The company takes a more pragmatic approach to its other Sicilian wine.

"With Cantine Settesoli we have a joint venture.  We have the Inycon brand for the off-trade and Mandarossa for the restaurant trade. 

These are run as two separate brands.  Inycon is a £4.99 supermarket wine that does one job, while Mandarossa, which sits just above house wine, does another.

We wouldn’t be comfortable with one brand in the on and off-trade." The biggest brand by value is probably Antinori which has been an Italian, as opposed to regional, brand for years.

Last year sales of its Puglian off-shoot, Tormeasca, doubled. By price and inclination the on-trade is the natural home of Antinori as opposed to the High Street. Past dealings with aggressive supermarket buyers often left the brand bruised and battered.

Villa Antinori is still sold in Sainsbury’s and there are listings in Waitrose and Majestic, but the focus is heavily biased towards medium to topend restaurants.

Through its UK agent, Berkmann Wine Cellars, "We can also sell into prestige hotels and restaurants that have no link with Italy," says brand manager, Elisabeth Ferguson.  "It’s very important for a brand like Antinori not just to be associated with all things Italian."

If the traditional, family-run trattoria is in decline, other parts of the trade are on the up, especially the dynamic pizzapasta sector.  This ranges from the mighty Pizza Express to the slick, smaller chains like Strada and Carluccio’s in London.

For modern Italian wines this can be the perfect environment to flourish on a list devoid of any foreign competition, especially for those called Pinot Grigio.  The popularity of Pinot Grigio, the sexy, quintessentially Italian white varietal, is hard to exaggerate. It is literally everywhere and shows little sign of waning.

This can be frustrating, as Carrington explains: "There’s a lot more to Italy than Pinot Grigio and that’s what we’d like to get across.  We get the feeling that a Pinot Grigio drinker is not necessarily an Italian drinker. They could easily be switched to Chilean Sauvignon." 

Pinot envy

While it has dented sales from other wine regions, especially basic generic Soave, Pinot Grigio has helped buoy up the Italian share of the on-trade.

Without the Pinot Grigio effect, it is probable that Italy would have declined along with France whose share of the on-trade fell from 39% to 34% in the year to September according to ACNielsen.

Pinot Grigio is now the top-selling white wine at Whitbread, eclipsing even Australian Chardonnay. In many of its outlets it’s the only Italian on the list other than a Valpolicella or Montepulciano d’Abruzzo.

Additional volume comes from two house wines, a Garganega and a Sangiovese, sold through the company’s Brewer’s Fare and Brewsters pubs. In all, Italy has 20% of Whitbread sales, according to buyer, Eileen Ginger.  This compares to 33% for Australia and just 7% for France. 

There is some good news from Café Uno, the 60-strong chain owned by the Restaurant Group. After extensive trials last year, the chain is set to dispense with the New World and introduce an all- Italian list this February with eight reds, eight whites and a rosé, (£10.95 to £19).

And according to operations director, Russell Stone, "Apart from the unstoppable Pinot  Grigio, Sauvignon and Valpolicella are also doing well."