Service Included

The Sherry Institute is seeking to redress Sherry’s on-trade/off-trade imbalance with a concerted pub and restaurant campaign, says the drinks business managing editor Patrick Schmitt

Sherry needs all the backing it can get but occasionally, a little like over-enthusiastic parents at a sports day, that support can be rather embarrassing. I’m thinking of the Conservatives’ “Sherry parties” – supposedly informal events that test prospective parliamentary candidates’ social skills. Certainly Spain’s most famous fortified wine should welcome any chance to increase consumption, but the association with what, one imagines, are hardly riotous evenings, is more likely to be a hindrance than a help to Sherry’s already shaky image. In fact, it’s hard to know who is more uncool – Sherry or the Conservatives.

But both can breathe easy, these Sherry parties are no more, having been recently declared defunct. Conservatives and Sherry producers, unshackled, can each go and attempt to recruit new followers using a fresh image.

But how should Sherry attempt to whip up an enthusiastic, almost evangelical following? It should turn to the on-trade, because that’s where brand managers can influence the way the drink is consumed, and converts behind the bar can encourage the curious to sample the vast diversity of Sherry styles, and at a low cost – by the glass (and definitely not schooner).

However, Sherry’s main market both currently and traditionally in the UK is not the bar, pub or restaurant scene. In fact, the drink is unusual in its skew towards the supermarket sector. Jeremy Rockett, marketing director, Gonzalez Byass suggests
some 80% of sales are through the off-trade – Sherry has a £112 million off-trade market versus £28m on-trade. And although certain brands do have good distribution in the latter, their rate of sale is somewhat glacial.

To address this, Sherry producers need to carefully tackle the major problem areas – the way Sherry is stored, served and perceived. On a macro scale the image of Sherry as a whole needs a major makeover, but importantly, on a much smaller scale, Sherry must ensure every bar, club and pub where the drink is stocked knows exactly how it should be drunk.

To look at image first, links with those Sherry parties and the likes of Dot Cotton in EastEnders have hardly helped Sherry’s reputation. However, UK generic body, the Sherry Institute, has done much to try and dust off the drink’s image, with campaigns like Ten Star Tapas, involving Michelin-starred chefs who endorse Sherry’s versatility and quality, and in the process, remind consumers you can still be cool and enjoy a glass of
the stuff.

Gonzalez Byass has also done much for the Sherry category with the mould-breaking Tio Pepe in its wine-like guise. The packaging of this product alone has been enough to prove Sherry can compete style-wise in the 21st century, while sponsorship of Hell’s Kitchen gave Tio Pepe widespread exposure.

Sherry makeover
Beginning this year, however, is an important campaign directed specifically at the on-trade, and not just at Spanish restaurants or the fine dining sector. The Sherry Institute is working with the Spirit Group on an initiative being tagged “Perfect Serve”. As Matt Arrowsmith, representative for the trade body says, “We are upping the scale. Perfect Serve will be rolled out to 200 pubs, proving that Sherry can be a profitable bar drink and that it should be treated like a wine. We then hope to take the concept to around 1,000 gastropubs.” In practice the approach will involve training those behind the bar about how to serve Sherry correctly, while for those in front of the bar, “there will be consumer-facing Sherry promotions, for instance a half bottle of fino or manzanilla,” adds Arrowsmith. “There will also be ideas for upselling the creams, for instance, serving them in a tumbler over ice with orange.”

Finally, it’s worth noting that Arrowsmith is hoping to work with Matthew Clark on the model too.

Tapas tendency
The Perfect Serve campaign is certainly a significant step in the planned reversal of Sherry’s long-term decline, not least because traditional attempts to boost sales of the drink in the on-trade have focused on outlets selling Spanish food only. Although concentrating on Spanish restaurants and tapas bars can yield impressive results through those places, as Marcelino Piquero, export manager, Sanchez Romate, says, “The problem is that although tapas bars are growing, it is still not a big number.”
Nevertheless, the recent emergence of national tapas chain La Tasca has certainly fuelled a growth in on-trade Sherry sales according to Arrowsmith, while Robert Wheatcroft, sales director of Fields, Morris & Verdin, which handles Lustau sherry, notes in particular the amount of Sherry sold through Conran’s Spanish Soho haunt, Mezza, where Wheatcroft has “done lots of tastings for the staff”. Then there’s Fino on Charlotte Street, a bastion for Sherry producers of all styles, proving Sherry can mix with fine dining but also, importantly, a trendy clientele in a contemporary environment.

However, as Wheatcoft continues, echoing Piquero’s concern, “It’s important to get away from the idea that Sherry can only be served with tapas. We don’t want to cultivate the idea you have to be in a Spanish restaurant to drink Sherry.”

In fact, one area of the restaurant scene in growth, and considered a suitable platform for Sherry sales, is Japanese. Javier Hidalgo, for example, says how well his La Gitana Sherry goes with sushi, while Wheatcroft records the success of Lustau Puerto Fino in Nobu. Rockett similarly says Tio Pepe’s on-trade push is far from focused on Spanish restaurants, but “definitely Japanese, Thai and Chinese. Hakkasan serve a fantastic glass of Tio Pepe,” he says, before pointing out that “Spanish restaurants are always the ones who know how to serve Sherry correctly,” and for that reason, should not be the focus when it comes to staff-training and the like.

Similarly, Alan Montague-Dennis, prestige business director at Mentzendorff, new agent for Bodegas Hidalgo, believes Sherry “must look beyond the obvious, not just Spanish restaurants,” and is particularly pleased with the decision by wine buyer Hamish Anderson to promote La Gitana throughout the summer at the Tate Modern.

Sherry shortcomings

There is something Rockett calls “negative distribution”, where Tio Pepe is stocked in places he would rather it wasn’t, for example “outlets which don’t serve food or don’t focus on their food”. As he says, “Why should we spend time and money on getting people to drink Tio Pepe if a restaurant is not even going to put it in the fridge?”

And if it’s not chilling Fino that frustrates Rockett, it’s overcharging for it. “I went into one of the top bars in London and was served a 6.25cl glass of Tio Pepe for £6. That’s around half a wine measure, making a margin of around 900%, which is more like a spirit margin. If you served a 10cl measure for £3, you would make a 60–70% margin, similar to that made on wine.”

On-trade trainer and co-director of Vintellect, Emma Maurice, knows these problems only too well. “Sherry is one of the most misunderstood beverages sold today. It is misunderstood in terms of image, how to serve it, glass size, temperature, storage. Nine out of 10 pubs, bars and restaurants serve it incorrectly.”

However, one of the best ways to ensure at least decent measures and a Sherry that’s fresh is to use half-bottles. Hidalgo points out that La Gitana comes in 50cl half-bottles and that “70% of the business in bars and restaurants in Andalucia is half-bottles”.
Tio Pepe has just introduced a 20cl bottle for the on-trade. “That equates to two small measures,” says Rockett, “and it makes it very easy to keep the Fino fresh.” Apparently “a couple of major London restaurants are quite interested” while he is also talking to chains like All Bar One and Pitcher & Piano, “because we want to spread more widely”. However, he does warn that the problem with widening the distribution is that “Sherry can get on the list, but no-one actively sells it.”

Good will goes flat
What’s the on-trade wine buyer’s experience? Young’s wine buyer Michelle Angear tried to push Sherry a few years ago. Post a trip to Jerez, she “came back motivated to get behind the category” because as she says, “It’s a fantastic, well-made product, that’s good value,” before adding, “but so difficult to sell.” She put half-bottles of dry manzanilla into the fridges of Young’s restaurants, tried advertising the sherry on blackboards with bowls of roasted almonds, revamped the labels of the standard pub sherries and made them more prominent on the back bar. The result? “I have to say we had very little success. I’ve still got some of the half-bottles in the warehouse.” Angear does wonder, however, whether such a promotion would have worked better in more contemporary places, where younger people who are more receptive to new ideas tend to hang out.

Eileen Ginger, wine buyer at Whitbread, similarly reports a limited scope for Sherry in the company’s outlets. “We only do Harvey’s Bristol Cream plus Tio Pepe in our business which is a shame because there are so many different styles out there.” She wonders whether “doing Sherry flights in quality restaurants/hotels, allowing customers to try different styles” might boost Sherry business, while also stressing the importance of food and sherry matching on menus. For instance, sommeliers and brand managers alike report the success of sweet Sherries, in particular PX, when paired with puddings.

However, as Javier Hidalgo sums up, pointing out the problem, “The Brits who introduced Sherry did so without introducing the habits in Spain.” But let’s face it, those habits don’t travel that well.

A WORD OF ADVICE

By Dan Slark, director of on-trade distribution specialists,
Box Marketing

In trying to revive Sherry sales there is a great temptation to attach youth attributes. This is a route that should be considered carefully because there are distinct dangers in following this course. Firstly, it is easier to win back former customers than it is to convert brand new ones. Getting older consumers back into the habit of buying the drink by
re-establishing product benefits should be automatic. The best way to do this is through sampling. Remind them what they missed. Also, the demographics of the nation are moving upwards at an increasing pace. In a few years nearly a third of the nation will be aged 50 years or more.

Just as important, a younger audience will buy drinks brands as quality or value purchases. The attributes which are the buying triggers of the grey market. Positioning the product as being sophisticated with good quality cues is inclusive of all demographics. It also avoids the danger of making Sherry a fashionable drink aimed at younger markets that will inevitably go out of fashion.

Sherry lends itself fantastically well to merchandising in pubs and bars because of the distinct shape of the glass it should be served in. A creatively designed branded Sherry glass would allow the consumer to instantly make a very bold statement about themselves. The glass provides great brand “standout”. This can be combined with sampling and the chance to win Sherry glasses for consumption at home. It is a great marketing opportunity. It should be a question of which brand gets the proposition right first, not if it happens.

db  March 2006