SOUTH AFRICA SEMINAR – Raising the Bar

01 March 2006 By db staff writer

“standfirst”>From top-end dining to mass market pubs, there’s an incredible range of on-trade venues in the UK. But where does the greatest potential lie for New World wines? Julie Sheppard reports

Some sectors of the UK on-trade have more room for improvement than others when it comes to wine sales. Restaurants easily make the grade, since wine is the number-one choice with food for most diners. But in the pub and bar market, competition from beers and spirits is fierce. According to ACNielsen, in value terms wine sales in multiple and independent on-trade outlets are currently worth £2,256 million, against £3,371m for spirits and a huge £13,029m for beer.

Wine could certainly up its market share then, and a closer look at the picture reveals that managed pub chains are already leading the way, with sales worth £428m, followed by leased and independent pubs and bars (£334m) and tenanted pubs (£308m).

Wines of South Africa (WOSA) was keen to find out how New World wines in general – and Cape wines in particular  – could grab a bigger slice of the action in these sectors. So we invited a panel of experts to one of Laurel Pub Co’s Slug and Lettuce bars to discuss the secrets of mass-market success.

Our panel comprised Michelle Angear, the wine and spirit development manager at Young and Co; Melanie Taylor, communications manager at the British Institute of Innkeeping (BII); Stuart Elms, restaurant manager, Noble House Leisure; wine consultant Kate Thal, who owns Green & Blue wine bar and shop; Emma Maurice, co-director of training and consultancy company Vintellect; and Sophie Waggett, marketing manager for WOSA.

To kick-start the discussion, the panel considered how widely the term “New World” is recognised by on-trade customers and whether there is a clear consumer profile for these wines. “My customers may not know what New World means in terms of taste, but they certainly know that New World refers to Australia, California, South Africa, etc,” said Thal. Angear agreed, adding that many consumers feel they are getting better value for money with the New World. “Women in particular seem to feel very secure with the New World offer. I also think that 21- to 35-year-olds feel more comfortable with these wines as they’ve been brought up with them via the supermarkets,” she argued. Maurice commented that while people are becoming more informed, it’s not reflected nationwide. “There’s a real mixture – some people wouldn’t even know what Chardonnay is,” she said. Elms agreed: “A lot depends on location.”

However, Angear commented that regional differences are due to a combination of factors. She explained what happened when Young’s took over the small chain of 16 Smiles pubs in the West Country in November 2000.  “At that time the lists were divided by country and offering the cheapest possible options. A lot of the old-style managers and tenants were reluctant to alter their lists because they had got so used them. But, funnily enough, the customers were very keen to move and change. It was about training the managers and tenants, as much as the customers.”

The panel agreed that the New World has increased consumer confidence by pushing grape varieties as brands. “In the Old World the region is more of a brand – take Rioja, Bordeaux, Chablis – whereas the New World is about grape variety and country,” said Angear. But the New World focus on branded products is a double-edged sword for the on-trade. “Brands can work for and against,” explained Maurice. “Some customers go straight for them because they feel comfortable and others won’t go near them.”

But many pubs and bars make that choice on behalf of customers. “Some breweries only go for big brands because they deal with Waverley or Diageo for example, and that’s what they are offered,” pointed out Angear. “So you will always see Jacob’s Creek or E & J Gallo on their lists.” In her opinion customers feel cheated when they realise they are paying more in a pub for a wine they can buy for less in a supermarket. “If you can buy it in a supermarket we tend not to put it on the Noble House list,” concurred Elms.

“Customers want to try something new and different, something that they couldn’t have at home,” said Taylor. “Either it’s the way a drink is served, the environment, or what you are actually drinking.” This steered talk towards the subject of encouraging customers to experiment and trade up and the role of staff training. “In the UK people don’t expect the staff serving them to know anything about wine – particularly in pubs,” said Maurice. “That’s why training is so important. If a member of staff is knowledgeable, enthusiastic and can recommend a wine, the customer is more than likely to go for it.”

 Focused marketing and promotional activity is also driving growth in the pub and bar sector. “Wine and food promotions generally work well,” commented Maurice, though Angear disagreed. “I’ve been trying to push food and wine pairings in our top-end food pubs for a number of years now and it’s a struggle, because people tend to go back to what they’re familiar with,” she said. “The promotions that seem to work best for us are those focusing on one country, where we’re working with the generic bodies to push the wines of that country, educate the customers about the regions and sub-regions, grape varieties and styles,” Angear continued. Young’s has also done promotional work with film companies. “Wine and film are cultural, part of a certain lifestyle,” she explained.

The focus for New World marketers should be selling a lifestyle, said Elms. “Australian producers made wine fun and open to everybody. That’s something other countries can follow. Make it lively, make it different, sell sunshine in a glass.” However, Waggett wasn’t sure that South Africa should simply be following in Australia’s footsteps; the country needs its own USP. She explained that the current thrust of WOSA’s marketing activity is to link the biodiversity of South Africa’s grape-growing regions to that of the country’s floral kingdom. “South Africa has an amazing biodiversity – there are more plant species growing on Table Mountain than in the whole of the UK!

We want to focus on stylistic differences,” she continued. “A variety like Sauvignon Blanc will produce totally different styles of wine depending on where it is grown. Although we still haven’t really discovered which varietals work best in which regions,” she admitted.

Angear thought this could be holding South Africa back in the UK market. “You get a very broad selection of varieties from Australia, Chile and California. Producers there are very creative and experimental, whereas South Africa hasn’t been so far,” she said. South African-born Elms wondered if his country has missed the mark in the on-trade in terms of providing a quality varietal offering for mid to high price points. “If you talk about Australia people know about Shiraz and Chardonnay, if you think of New Zealand it’s Sauvignon Blanc and Pinot Noir. With South Africa the first thing that comes to mind is Pinotage, then Chenin Blanc, but in the cheaper end of the market.” “And really cheap Chenin and Pinotage are horrible!” added Maurice. 

Another major concern for the panel was the high alcohol content of some South African wines. “It’s a negative point about New World wine in general,” said Angear. “The alcohol level makes a big difference in terms of drink driving. And if you’re eating, for example, you don’t want something too overpowering. Our South African Pinotage came in at 15% ABV and as buyers, serving these wines by the glass in our pubs, we really have to consider that.” However, Thal argued that there is a place in the on-trade for wines with higher alcohol. “With slightly more experienced wine drinkers, there is some understanding that if you are making wines in a warm place, with ripe fruit flavours, you’re going to get high alcohol. I recently did a tasting of wines that were all over 14.5% ABV. Half of my customers thought the wines were marvellous and they weren’t at all phased by the high alcohol. The other half thought they were too much.” 

The panel concluded by discussing recent legislative changes in the on-trade. Will longer drinking hours change the drinking culture in the UK and if so, will this create fresh opportunities for New World producers? “Pub companies will have to address the potential gap in the market and not just think about quick profit,” said Angear. “You can’t apply for a licence to stay open until midnight or one in the morning without considering your running costs and paying your staff. You have to open up your offer. All pubs could be offering more.” She suggested serving coffee and snacks alongside alcohol to create a “more sophisticated European environment” and move away from the binge-drinking culture.

“But the difficulty is changing the whole mind-set,” said Elms. “If you have one place that’s doing that, but the other one down the road isn’t, it still won’t work.” Taylor was more positive, adding that the BII had backed the new legislation from the start. “If we could get a mixed clientele in our town centres, not just mega-pubs like Yates and Wetherspoon’s, it would change,” she argued. “I think the new licensing laws will open up niche market opportunities for pubs and bars, where you can buy premium drinks and not rush to finish them by 11pm.” And that could be good news not just for South Africa, but for the whole trade.  Db