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LWF: Chasing the Premium - Harpers Briefing

Published:  23 May, 2017

‘The trade needs to sell confidence’ was a key message from the panel at LWF during Tuesday’s Harpers debate on how to encourage more premium wine sales and build in greater value across the supply chain.

With margins low and most in the trade committed to encouraging consumers to trade up, the questions were posed as to how best to achieve this common aim and what obstacles stand in the way.

All agreed that a race to the bottom, price-wise, is damaging for the trade, agreeing that fewer are now engaged on fighting it out on price alone, but the panel also raised the issues of rising costs generally as a barrier to raising consumer expectation.

As Ted Sandbach, managing director of Oxford Wine Company put it, “our entry level where we are in Oxford is high anyway, but the entry level – for all levels of wine - keeps rising, which is a real issue.”

Despite this, suggestions were made as to how to deliver greater value to consumers, including agent and importer Andrew Bewes of Hallgarten Druitt’s revelation that alternative sources, such as emerging countries and styles, are gaining traction with the accounts that he supplies. It just means going that extra mile, both as the trade, and as retailers looking to engage the consumer.

Education – in its most direct form – came in for something of a bashing, with subtler and alternative routes of engaging consumers proposed.

“[The tools we need are] all there, we just need to connect the dots,” said Bewes. “The trade needs to sell on confidence, to encourage consumers to look at different wines and understand why those wines offer value.”

Morrisons senior buying manager for wine sourcing, Mark Jarman, outlined a “need for new consumers to be recruited into wine, so that there is a new generation of wine drinkers to trade up”, adding that innovation is essential in brining these new (and typically younger) people in.

Product innovation, wrapping new varieties and styles in packaging that appeals to people brought up in a world of craft beers and fast moving product development elsewhere, was identified as important.

As was innovation in the ways and channels through which wine is sold.

Stephen Finch outlined the Vagabond model, a successful hybrid of independent off sales and on-trade outlet, saying that the rational for setting his fast expanding group of outlets was to attract a new type of wine consumer in a different way.

The panel and many in the audience agreed that the trend to drink better – and not necessarily less - appeared to be gaining ground, and offered an opportunity to offset upward pressures on price.

Given those ongoing upward pressure on prices, exacerbated by currency depreciation post the Brexit vote and with general uncertainty among consumers prompting cautious spending, the panel agreed that ‘chasing the premium’ has become an ever more critical path for the trade. And that the trade should work more collectively to communicate to the consumer the worth of seeking out real value in the glass.

A fuller report on the Harpers Industry Briefing ‘chasing the premium’ will appear in the magazine and online