David Gleave MW: Drinking up recovery

By David Gleave

Published: 07 April, 2020

David Gleave MW, MD of Liberty Wines, on how upselling diversity in wines will be the way to thrive

When I look at how much has changed in the past month, and how little of it could have been predicted, it would be unwise to forecast what will happen when restaurants reopen and the world returns to normal. But the ‘normal’ of the UK wine scene prior to coronavirus (Covid-19) will not be the ‘normal’ that greets us when the current necessary restrictions are relaxed.

We will be stepping into a brutal recession. Most economic forecasters are predicting a slump of 15% in GDP during the second quarter of 2020. Whatever green shoots of recovery we think we’ll see, their growth is going to be slowed by the chill of the recession.

While some of us will aim to make up for lost time and visit our favourite haunts as soon as we possibly can,
many people will be reluctant to venture out due to concerns about a contagion that may have been controlled but not eradicated.

Others will be looking at the damage done to their bank account, share portfolio or property price during the crisis and feel a little less willing to spend as freely as previously. Still others will be focused on finding a new job. It is no wonder figures such as Chris Galvin and Richard Corrigan, both great chefs and restaurateurs with years of experience, are predicting a very slow start for restaurants after the reopening.

“If we go back to 50% we’ll be doing well,” Corrigan recently told Richard Vines, Bloomberg’s chief food critic. This is a sobering thought for all of us involved with the on-trade.

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Consumption shift

We were already faced with falling wine sales. In the past five years, the on-trade has lost 44.1 million bottles of wine (3.7 million cases) while the off-trade is 51 million bottles (4.2 million cases) smaller than it was in 2015. It is likely that the off-trade’s decline would have been greater had there not been a tangible shift of consumption from on-premise to home. Over this five-year period, the on-trade has gone from representing 19% of overall UK wine volume in 2015 to 16% in 2019. A smaller slice of a smaller pie is only appealing to the austere among us, and austerity had fallen, thankfully, out of fashion.

The one positive message we can extract from the analysis of the UK wine market done by my colleague, Alex Linsley, is that people’s dislike of austerity is manifesting itself in a higher average selling price for wine in both the on and off-trade. In the premium on-trade (outlets where the house wine starts at £25 a bottle), the average selling price per bottle has risen by 8% per annum in the past five years, while in the off-trade it has risen by 3% a year. This equates to an average increase of 55p a bottle, half of which is swallowed up by excise duty increases and foreign exchange.

I find this heartening as the higher the price, the more wine – and the less excise duty – consumers are drinking per bottle. This means they should be drinking better wine, which will help to stem the tide of people who left wine in the past five years, partly because of the commoditisation brought on by almost two decades of damaging BOGOFs and partly by increased competition from other sectors. We still need to work hard to retain people, and one of the ways of doing this is to improve the quality of what we sell, and the story we use to sell.

Fighting Don Quixote-like battles against a £6 average selling price is not where our energies should be focused if we want to win and retain consumers who seem to have more interest in wine than ever.

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Interesting lists

While this is important in the off-trade, it is going to be vital to the recovery of the on-trade. Restaurants will be quieter, and menus and wine lists are likely to be shorter. But just as we don’t want chefs putting only steaks and hamburgers on the menus, nor should we be looking to play it safe on wine lists. We have to get across the message that consumers will be looking for value, and that the only way we can provide value-for-money wines is to compile an interesting list that starts at £25 and goes up from there. Any wine below that price will at best be fresh, clean and correct, but we won’t be doing our customers – the restaurants – or their consumers any favours unless we can give them a glimpse of the dazzling diversity available in today’s wine world.

It is only by selling this diversity, and focusing on quality from grape to glass, that we can hope as an industry to thrive again once Covid-19 is defeated.

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