Champagne benefits from on-trade boom

Britain’s ‘premium’ on-trade market is booming with Champagne a notable beneficiary – not Prosecco, as many propose.

Prosecco’s market share was significantly smaller by volume and value than Champagne in the premium on-trade during 2014

According to an interim on-trade report from Liberty Wines called Looking forward to Christmas, wine sales (including sparkling) increased by 17.9% in volume and 10.2% in value in the premium on-trade during 2014, which contrasts with the overall on-trade, which is still suffering a slight decline.

The report defines ‘premium’ on-trade as wine bars, restaurants, gastropubs and pubs that have a wide range of drinks and a minimum wine bottle price of £20, according to Liberty Wines MD, David Gleave MW.

The study, which uses data collected by CGA Strategy, includes a particular focus on drinks sales during December, when wine consumption is 20% higher than the rest of the year.

Notably, premium on-trade sales during this month showed that 63% of sparkling wine sales were Champagne – a four-week period in 2014 when Champagne sales grew at 22.2% by volume and 52.4% by value.

In contrast, Prosecco’s market share was significantly smaller by volume and value than Champagne – both in the calendar year to December 2014 and in the month itself (see Chart 9, below, which is taken from the Liberty Report).

Such a result may surprise many in the trade considering the growth in Prosecco sales witnessed in the retail sector last year, and speaking yesterday to db, Gleave explained the reason for a disparity.

“The statistics show that in a way, as a trade, we have been a bit lazy over the years in thinking that what works in the off-trade works in the on-trade, but buying habits change when people go through the doors of a restaurant, and that is the case with Prosecco and Champagne: people are happy to have Prosecco at home, but when they go to a restaurant, or when they are entertaining, there is an expectation that there should be Champagne – or, indeed, English sparkling wine.”

Gleave also said that restaurant goers “return to the classic regions of France and increasingly Italy as they approach Christmas”, and, consequently, he told db that Libery Wines, which specialises in Italy, would be “continuing to expand our French portfolio because it’s doing well for us – we are seeing great growth for France.”

In terms of numbers, the Liberty study showed that French wine sales rose by 30.7% by value in December 2014 compared to the same month in the previous year.

As the report states: “In December, consumers turned to France: France was the only country in the premium on-trade to increase market share by both volume and value during this period.”

Gleave recorded, “As people spend more money they want reassurance, and so they look for the names, from Chablis to Bordeaux.”

Finally, red wine proved a particular beneficiary from the increased spend on drinks in the premium on-trade in December, doubling in value during the month compared to the rest of 2014.

One driving factor in this growth is the popularity of Pinot Noir, which was the fastest growing grape by volume during both December and all of 2014, which the report said coincided with the increased consumption of French and New Zealand wines, two specialist Pinot Noir producing countries.

Overall, the study proved the importance of December trading for the on-trade as a whole, with 11% of the year’s revenue in the premium on-trade being generated in this month alone.

As a result, Gleave said that December was “a crucial time of the year for on-trade profitability.”

The key findings from the Premium On-trade report can be seen below:
1.  Double-digit growth of 10.2% by value in calendar year 2014
2.  Wine sales in December 2014 up 11.4% by volume and 23.3% by 
value on 2013
3.  Wine consumption 20% higher in December than the rest of the year
5. Consumers turn to France – sales up 30.7% by value in December 2014
4. Red wine sales growth doubled by value in December 2014 vs rest of the year (14.2% from 6.9%)
6. 63% of sparkling wines sold in December 2014 were Champagne