Average spend per bottle rises 9% in UK premium on-trade

The average spend per bottle has increased at a level significantly above inflation, rising 9% per year between 2015 and 2018 in the UK premium on-trade, a new report by Liberty Wines has found.

Liberty Wines’ Premium On-Trade Report 2019 has revealed that while on-trade alcohol volumes are continuing to fall, value remains resistant.

The report also found that the average bottle is 60% higher in restaurants in the premium on-trade than outside, and this is growing at a rate of 3% year-on-year.

Compiled in partnership with data expert CGA, the report looks at the reasons behind wines sales in premium on-trade outlets across the country. Analysing restaurants, hotels, gastropubs and wine bars the report refers to market data compiled between July 2017 and June 2018, unless otherwise stated.

CGA has looked at data from 119,616 on-trade outlets in the UK and matched it with sales data from Liberty Wines. The top 5,900 outlets (5%) constitute the premium segment. The report also includes consumer research compiled with responses from over 1,000 premium wine drinkers.

Liberty’s report noted that restaurants have a higher market share by value (28%) than their share of physical outlets (21%). It noted that alcohol volume sales were falling at a greater rate than value (-5% compared to -2%).

It attributed this to the “highly-trained” staff at restaurants being able to “convey the stories and personalities behind complex and unusual wines more effectively than in other on-trade outlets.” Wine lists at premium restaurants boast the highest number of wines from different countries, which the wine distributer says, “reflects their focus on hand-selling and staff education.”

Among the higher-priced wines sold in restaurants that are reporting growth are Sauvignon Blanc from New Zealand and Cabernet Sauvignon from France, while there’s also demand for varieties including Viognier and Montepulciano. Lower-priced wines, including entry-level Syrah, Cabernet Sauvignon and Chardonnay from Chile, as well as lower value Merlot from France and blends from Spain and South Africa have all lost volume and value share.

At premium restaurants in the UK, nine Old World countries account for 66% of both volume and value sales, the report finds, with seven countries from the New World providing the rest. This compares to gastro pubs who source 40% by volume and 37% by value from the New World. Liberty Wines suggests this might be because less hand-selling and explanation is need for these wines.

The report also highlighted the difficult climate for restaurants in the UK, with 2018 being marred by a series of high profile closures. According to statistics from UHY Hacker Young, the combined profits of the top 100 restaurant groups across the total on-trade were down 64% in 2018, with 35 of these businesses reporting a loss. With a special focus on London, the report states that food delivery services are becoming increasingly popular, up by 8% in the 2017/18 period in London compared to 4% across the UK, according to the ONS. This, it states, puts pressure on the on-trade, together with the revaluation of business rates which has seen reported rises of as much as 300% for some central London businesses, according to Colliers International.

Despite the challenging times, the premium share of the total UK on-trade still wine market increased, up from 10% by volume and 14% by value in 2017 to 11% and 15% respectively in 2018.

The on-trade report also included a breakdown of the different preferences according to sex and age. Liberty noted a third of women list Sauvignon Blanc in their top three wines and that they also said that they’re more likely to choose more expensive wines if different serving sizes are available. Meanwhile, men list wine critic scores and a frequently changing wine list as important when choosing more expensive wine (less important than more knowledgable staff) and 83% noted that they want good glassware.

The 18 to 44 age group are twice as likely to drink Prosecco more frequently than Champagne than those over 45, while only 21% rely on wine list tasting notes and recommendations to choose their wine. 49% of those under 45 drink weekly or more often in the premium on-trade, making them the most frequent visitors to such establishments, Liberty Wines notes.

Conversely, 17% of those aged 45 and over find wine confusing (compared to 50% in the younger age bracket), while only 9% look out for biodynamic or organic wine (compared to 41% in the lower age bracket.) 57% of those aged 45 and over believe staff knowledge is not good enough while one in four are looking to try something new or unfamiliar when dining out.

David Gleave MW, managing director of Liberty Wines, commented: “It is clear that consumers are still responding positively to help from informed staff, are looking for more, not less information on the wines and regions, and are actively seeking encouragement to try different wines. They are calling for good glassware and well-designed wine lists to help make their choices easier.

“These characteristics of the premium on-trade set this sector apart from the rest of the industry. They are relatively straightforward for on-trade operators to put into practice and, when combined with a good range of well-chosen wines, will lead to happier consumers who we believe will reward outlets that respond to their needs.”