Looking ahead: Richard Cochrane, Félix Solís UK
As we head towards the second half of 2018, Harpers asks key trade figures to highlight the current challenges, on-going trends and opportunities.
We continue our series with insights from Richard Cochrane, managing director of Félix Solís UK.
How has the first half of 2018 been compared to 2017?
Félix Solís has had a strong first half of 2018 with double digit volume and value growth over 2017 across all channels. Global volumes from most countries were short after the small 2017 harvest, which in turn drove the price of wine upwards at a time when most consumers have increasingly felt the pinch. As a result many good businesses have been able to post increased revenues largely as a function of wine inflation, however much more challenging has been the small number of these businesses that have also maintained volume or indeed increased the number of bottles sold. We have exceeded our plans to grow both volume and value in 2018 so far.
What, currently, are the biggest challenges for the trade (excluding Brexit)?
UK earnings and disposable income have not grown for 10 years. This has put long-term pressure on the wine industry as consumers have faced wine inflation with less to spend on their preferred glass of wine. The positive outcome has been a long-term reduction in alcohol consumption, as people choose to treat themselves less often with better wines. But it is this latter element that is becoming increasingly challenged. People are simply turning away from wine to less expensive purchases or indeed away from all alcoholic drinks, especially the under 30s. This posses a very real threat to the wine industry over the mid-term. In this context Félix Solís has worked hard to provide sustainable solutions.
What outcome would you like to see from Brexit and why?
“Realistic clarity” has been much absent from the Brexit discussions thus far as we appear to descend Dante-esq into more difficult territory. We need people to still visit and come to the UK to work to provide much needed resources in the on trade, amongst other sectors and we need to avoid delays and increased costs in the movement of goods at the borders. Currently both of these outcomes seem further from our grasp.
What will be your focus for the second half of the year, leading up to the Christmas trading period?
Félix Solís plans to continue our core strategy and build on the first half of 2018. As we make ready for the vintage in Spain, which is running a few weeks later than last year, it is a blessed relief that more normal volumes look possible this year, which will help our planning for the end of 2018 and onwards into 2019.
Are there any specific challenges that you’re planning for?
The forge of the UK market has beaten out a fiercely competitive mature wine category and we expect more of this in the remainder of 2019. Spain has historically performed well during the most difficult periods in the market and the growth we have seen this year reflects this.
Any specific trends you anticipate?
The slow-down in the growth of Prosecco is likely to continue and Felix Solis is planning for strong growth in our Charmat method wines from Spain as consumers switch to new solutions. The role of Spanish white wines, especially the premium performers like Albarino from Rias Biaxas and white Rioja continue to grow. Likewise, the role of Spanish red, white and roses continue to provide great value and reliable quality underpinning the volume segment of Spain.
Which channels are likely to perform best and which will be under the greatest stress and why?
All channels a facing ongoing stress due to the financial tension of wine inflation and reducing disposable incomes. In the on trade volumes have dropped fastest as consumers have to make difficult choices on where and how they spend their hard won income. In part this favours the best on trade operators who continue to appeal and the off trade. The discounters continue to grow, but the scale of change in the big retailers illustrate how the market is evolving to meet the ongoing financial tension.
How optimistic are you – will business for the drinks trade be better or worse between now and 1 January 2019 compared with last year and why?
Félix Solís is planning ongoing growth, investment and innovation in the second half of 2018, but it is likely the overall UK wine industry will be smaller by 1 January 2019. “Less and better” looks like the way forward, but better not just in terms of quality of product and service, it must also be better in terms of meeting evolving consumer needs.
Keywords:
Search
