Why you need bulk wine to innovate

Isn't that a contradiction in terms?

It's supposed to be. Helps capture your attention. But if that was your initial reaction to the headline then you might want to read on and find out how valuable and important bulk wine is to all those already working, buying and selling it.

Valuable? Come off it, I thought bulk wine was all about shipping vast quantities of ultra-cheap wine around the world to go into entry level supermarket wines.

And you're right. That's what a large proportion of bulk wine is all about. Providing retailers and major importers with the required amount of wine at the lowest commercial price points that so many wine drinkers want to buy. It is, if you like, the heart of the world of wine keeping the blood supply moving and the wine industry alive. But it is within all the arteries that feed off the heart where bulk wine gets genuinely interesting. 

Go on then, get it off your chest. What makes it so innovative?

It's not the bulk wine per se that is so important here, but what it allows those buying it to do. Just look at any of the new on-trend ways to buy and sell wine, and chances are it will be bulk wine that is making it possible. Like wine in a can in supermarkets or at a music festival, wine on tap in pubs and bars, or wine kegs in restaurants. They are all helping to change the way consumers think about wine and also give them new opportunities, and crucially, new occasions when they can drink them. It's got nothing to do with bottles and the traditional way we buy and consume wine. Then there are the environmental and sustainable factors in moving wines between producing and selling markets and the much lower carbon footprint involved. Which is becoming an ever more important factor for major retailers and restaurant groups in deciding which wines to buy.

That's all very well and good, but you're still talking about commercial, entry-level wines aren't we?

Not at all. That has been the biggest change in bulk wine in the last five years. The technology and packaging being used to control and monitor the quality of wine being shipped in flexitanks means far more expensive wines are now being shipped in bulk. Nearly all the Top 10 selling wine brands are bottled in the UK. And there are far more appearing on the lists of specialist retailers, like Majestic, at £10 to £15 a bottle.

What £15 bulk wine - seriously?

Absolutely. Lanchester Wines has even gone as far as registering “boutique bulk” as a term to identify and single out what it sees as more premium bulk wines that it is sourcing as parcels of wine from family producers with all the terroir credentials of any other £10 plus wine. It says it can only see the premium side of bulk wine increasing as improvements in shipping and bottling, like at its sister company, Greencroft, makes it the most cost effective and carbon friendly way to import wine. If cutting the cost of supply means retailers and restaurants can sell wines at higher margins that are also more environmentally friendly then it's a double win.

What else do you see happening with bulk wine?

We are already seeing more restaurants and wine merchants in the UK move over to serving interesting, funky wine from keg and on tap. Vinoteca has for the last few years, been serving a wide range of wines from France and across Eastern Europe that come in by keg. Borough Wines has even modelled its business on sourcing and supplying keg wine to restaurants to serve by the glass.What about restaurants?Martin Williams, the new chief executive at the Gaucho group of Argentine restaurants, believes passionately making his customer offer as sustainable and environmentally friendly as he can. He is, for example, introducing a carbon free beef policy that he wants to see in all its restaurants by the end of 2021 as part of the revamped offer across the group. He has also turned to bulk wine in a big way to take that sustainable message over to wine. That includes, for now, a minimum choice of six wines on tap, all sourced via Hatch Mansfield, from premium Argentine producer, Zuccardi, at its newly re-opened Charlotte Street branch in London. Serving wines on tap also means using a lot less glass and huge savings in recycling costs, he adds.

But do premium diners really want to drink their wine from a tap?

Williams says he has not had any complaints, but stresses that's not really the point. He admits his customers may not be demanding to have more wines served by tap now, but “they most definitely will in the future” and it is vital groups like Gaucho keep one or two paces ahead of them. Choosing which restaurant you go to by their sustainable food and wine offer will, he believes, soon become part of his customers' decision-making about where they want to go and eat and drink. Which, for him, means putting more pressure on his suppliers to find him the most carbon-effective solutions. And if that means more premium bulk wine then so be it.

Is ‘doing good’ the biggest new retail trend of all?

Well, it certainly sounds better than ‘doing bad’. Is there such a thing as a ‘good’ way of selling wine?

To answer that would depend on what your personal definition of what ‘good’ is. You only have to look at the rancour thrown at our political leaders about their different approaches to ‘doing good’ things for the country to appreciate that. Whilst some might think increasing taxes on the rich to help fund better social investment for all is a step in the right direction, others will see it as an affront on their personal ability to make money and prosper. So it is a delicate balancing act to get right. Overall as a nation 65% of people regularly give money to charity or fund raising initiatives, which amounts to over £10 billion a year (Charities Aid Foundation). The equivalent of running the NHS for a month, building 20 hospitals, paying for an extra 250,000 nurses, 120,000 hospital doctors or funding well over a million hip replacements (The Kings Fund).

That’s a lot of hips. But what has this got to do with what we all do every day?

What we all do every day, in whatever field you work in, is to ultimately create a product or provide a service that we want someone to buy or take part in. How you go about doing that is up to you. But the world around you, thanks in part to the fact we can watch it all in the palm of our hands through our smartphones, is becoming much more choosy about who it wants to do business with. Yes, I will buy your product, take your service, but is that it? What else are you doing to help me and make me feel better about myself and the community I live in? For that is the interesting twist in our giving culture. It is becoming far more about how it makes you feel, what it does to your personal life, as it is about improving the conditions for someone else. 

 That sounds a little cynical?

It does, yes, but it’s still true. Smartphones and social media may have brought us all closer together, but they’ve also created a “what’s in it for me” culture, that sits, at times, uncomfortably, alongside our expectation that our favourite retailers and brands should be ‘doing good’.

Anything else?

We are, once we get the General Election out of the way, entering the season of goodwill. The time of the year when we are expected to be looking out for each other, buying gifts, sharing the love. It’s also when the country’s biggest retailers and household brands vie with each other to be seen as the most caring, sharing, helpful, thoughtful company of them all. Being seen to be good is, when it comes to retailing, also increasingly good for business. We remember, and care, about all those John Lewis adverts as deep down it also makes us feel better about ourselves - and the retailers and the advertising industry knows it. Emotion sells. Whether we all rush to Waitrose is another thing, but as retail chain, it has set the benchmark for how all other retailers and brands are judged. Just how ‘good’ are you compared to the dragon-loving John Lewis or Waitrose down the road?

Here’s me thinking it was just them wanting to make a nice cuddly Christmas advert?

They do, but as the IGD has identified, being seen to be ‘good’ is one of the five biggest retail trends of the year. How can they help the customers and communities they serve live better and more sustainable lives. Two of the other big five IGD trends are around health, wellness and sustainability. Which all fit neatly into our collective desire to only buy goods and work with companies we either believe are ‘doing good’ or make us feel better buying from them or both. It is noticeable that for all our apparent desire to protect ourselves online, two thirds of consumers will willingly share personal data with brands and retailers if they feel they are going to get a more personalised service and offers in return (Accenture).

What about wine?

Exactly. What are wine merchants and retailers doing to make their customers feel good about the wine they are buying? After all it’s essentially a product that your doctor will tell you is not good for you, and it’s hardly number one in the sustainability stakes considering how much water and carbon footprint goes into a single bottle. For all the Naked Wines peanut throwers out there, it has a business model that makes over 500,000 people in the UK, US and Australia feel pretty good about themselves. They have bought into the idea of giving £20 a month so that they can collectively fund and help start-up winemakers to go on and make their dream wines. They can even call themselves ‘Angels’ for doing so. Now Naked is not going to be number one in the FTSE 100 any time soon, but in terms of being seen or perceived to be 'doing good' and making its customers 'feel good' about themselves there is much for the rest of the industry to take lessons from.

Why wine retailers need to digitise to survive and prosper

You mean retailers need to go online? That's hardly news worth talking about.

No, by ‘digitise’ we are talking about how high street retailers need to find ever more innovative, creative and, most of all, relevant ways to introduce new digitally-driven innovations in-store, and create new shopping experiences. We're not just talking about flashing bits of point of sale here, but real, practical solutions that are using technology and the so-called internet of things to give busy, disloyal customers a reason, and, most of all, a need to shop with you.

OK, that sounds a lot more interesting. Tell us more.

Things are changing so fast in digital retailing that the wine sector is not going to find any answers by looking at what its competitors are doing. They're going to have to be a lot more ambitious than that. As this is a challenge facing every major retailer and high street brand, there's no shortage of clues, ideas, and innovations being implemented and tried out by some of retail's most famous names. You just have to have the appetite and imagination to know where to look. Dunnhumby, for example, the analysts that manage Tesco's Clubcard data, says the next big step in the evolution of how retailers and brands can best use data is to move from the need to retain customers through loyalty cards and promotions, to how you use that data to attract new customers. So it's going to be less about offering incentives, but more about providing a unique, and personalised shopping experience. Yes, building relationships are still going to be vital, but customers are only going to be loyal to those brands and retailers that offer them experiences that appeal to their personality. Those are all crucial differences. 

How are retailers and brands going about ‘digitising’ themselves as you call it?

First of all you have to think about the limitations in your current retail offer. What would you ideally be able to offer your customers if you had a magic technical wand? Then go out and see what new technology might be able to help you. Bearing in mind that 66% of retail customers are currently frustrated by the in-store shopping experience they get, according to Ubamarket. The good news is the lessons being learnt by the major brands and retailers are pretty much the same. It comes down to what online is best at. Making our lives richer, easier, faster, more convenient and personal. If you can then match those needs to how an in-store experience can also help you see, feel, smell, taste, or actually try on and use products, then you're going to be on the right track.

OK, give us some examples.

Look at how brands and retailers are using augmented and virtual reality. It's not just wine labels that talk to you, it's about how these new ‘realities’ allow your customers to go on their own personal journey. It may be virtually trying goods on, or playing a game, being transported Star Trek style into another world, walking through a vineyard, say, whilst all the time standing in the store where they can then pick up the product they have been connecting digitally with. The same applies to voice search. Expect to see more retailers allowing you to use in-store devices that you can ask questions to and interact with to find out more about the products they are selling.

What about the actual retail experience itself?

This is where we can see the demand for greater personalisation amongst consumers really coming to the fore. We might all walk into a particular store through the same front door, with similar reasons for doing so, but we all have different reasons for being there. That's going to be the key to digitising retail. How do you make each customer journey personal to them? It could be by tracking your previous visits or buying habits and then sending you information to your phone that entices you to go to different areas of the store based on your needs and interests. Amazon Go works by using hundreds of in-store sensors that track your every move and make your next visit even more worthwhile. When that behaviour is then linked to in-store displays, tablets, point of sale, or messages sent to you by text or social media, then we can each be given our own personalised offers, or provided with the best advice on what to buy.

So does that mean we need to digitise our staff as well?

To a certain extent, yes. New technology will certainly empower them to be better and more effective in what they can do for customers. So rather than just direct a customer to what they are looking for in-store, they can use real-time technology to let them know more about it, which particular products have sold the most in that store, what else people bought with them. The same tricks the online giants like Amazon use, but tailored to also work in-store. We can all use technology to provide better information, and education at the point of sale. Whatever approach you take, the key is to do something, to test and learn and see what digital aids works for you and your brands. It's a challenge all retailers and their brands are having to face up to, so you won't be alone and there will be plenty of case studies to follow.

Why cocktails have such a hold over future of wine

Cocktails? You're not into those sickly sweet wine cocktails are you?

Not personally, but the wine industry might need to be for the long-term health of the sector. For it's the growth in not just cocktail drinking but the number of bars and restaurants that are prioritising cocktails and mixed drinks over wine and beer that should make wine producers, brand owners and suppliers sit up and take notice.

Really why?

Just look at the figures. New figures from Kantar claim 300,000 drinkers over the last two years have swapped wine for cheaper drinks, particularly ready-made and mixed cocktails. This means they do not have to cross the mental barrier of paying £5 for their favourite drink, the price the average bottle of wine has passed thanks to big jumps in wine duty. In fact, the average bottle price now sits at £5.73, of which around 60% is duty. Cocktails, by comparison in the average consumers' mind, still offer good value for money. It has resulted in a marked decrease in the number of people now regularly drinking wine. Kantar claims 68% of households now drink wine compared to 71% in 2017. A big fall if your wine business model relies on the high volume branded and own label end of the market. Your core customers are declining. Sharply.

OK. Sounds interesting. Got any other figures to back this up?

Cocktail drinkers are also good for business. The CGA Mixed Drinks Report 2019 claims “cocktail drinkers visit the on-trade 25% more (times) than non-cocktail drinkers”. As a result it is the “cocktail market that continues to grow in terms of value at £587m”. It's cocktails that have added 10% in revenue and 8.8% in volumes to pubs, bars and restaurants in the last 12 months. All of which has seen a rise in the number of cocktail drinkers - up to 9 million - and the number of outlets stocking cocktails reaching 42,000. So if drinks suppliers and operators are going to be ahead of future drinking trends it makes sense, says CGA, that they “understand the consumer behaviour” of cocktail drinkers and the trends that are driving these changes in drinking habits. Kantar, for example, says the biggest decrease in wine drinking is amongst 18-35 year olds who are the quickest and most open to switching to cheaper, and “trendier drinks” like cocktails.

What else is happening in cocktails?

A further concern for wine is that cocktails are taking up more of the occasions when people might usually turn to a glass of wine. CGA's report says that whilst traditional cocktail mixes continue to deliver the bulk of sales, “there has been a 12.5% increase in volume sales of aperitifs in the last year, and nearly half (47%) of those drinking cocktails with food now find the idea of an aperitif very appealing - up by seven percentage points in the last year”. So rather than ordering a glass of wine on arrival, more people are looking for spirit-based alternatives, even in food-led outlets. Sales of aperitifs in restaurants, for example, are up 13.8% in value sales in the last 12 months, well ahead of the industry-wide average.

Any good news?

There is. But it means joining in and finding a place for wine within the cocktail market. The rise in cocktail drinking has also seen a big rise in demand for spritzes. In fact “nearly three quarters (71%) of cocktail drinkers now say they would choose one at least occasionally when they are out”, says CGA. OK, soda may be the most popular element of a spritz, (43% of drinkers), but Prosecco is popular with 38% of spritz drinkers, with wine not far behind at 36%. CGA expects the spritz market to become ever more versatile and also open up opportunities for rosé wines. But then it also says mainstream spirits, particularly gin, whisky and vodka, will also break into the spritz category as drinkers seek out more ambitious combinations of flavour.

So what's to be done?

It's time for the wine industry to fight back. We all know that wine is the Chancellor's favourite weapon to fill the coffers at the Treasury, but the move last year to freeze duty on spirits and beer, and only raise them on wine, is a clear threat to the future viability of the mainstream wine industry. The reason cocktails are now the go-to for an increasing number of drinkers is that they know they can pay less for them. The freeze in spirits duty has only helped. It has resulted in a split behind the scenes between the wine and spirits industries. We have seen the launch of the industry-backed Wine Drinkers UK campaign to lobby for a cut in wine duty, starting in the next Budget, now timed for November 6. If you want to play your part, or find out what the industry is doing to get wine duty on the national agenda then go to www.winedrinkersuk.co.uk. Or risk raising a glass to the 2020 Budget with a Porn Star Martini in it.

"Have you seen the new M&S?"

Have I seen the new M&S? No. Should I have?

Admittedly it's not a question you get asked every week. In fact you've probably not been asked about, never mind interested in the arrival of a new Marks & Spencer store for at least 10 years or more. Unless you are hungry driving up the M6 looking for which service station to stop at.

Exactly. So what's exciting about this 'new' M&S?

Well, the opening of M&S's second new concept store in Clapham Junction has got the chattering classes of Battersea and SW11 all in a flap. Particularly the news of an all-singing, all-dancing dedicated food store, including an in-store “glitter ball” pizza oven, “wine optics” and a live DJ (for the opening weekend). It's had the well-heeled of so-called Nappy Valley dashing down Northcote Road to take a look. The new store, dubbed 'SW11', follows the unveiling of M&S's first new fresh food store in Hempstead Valley in Kent earlier in the summer, but is even more of a vision of the “magic” that M&S will serve up under new food managing director, Stuart Machin.

So what's so special about it?

For a start it's a store dedicated to fresh food and wine with all the in-store theatre you could want. Out have gone the drab aisles of clothes you used to have to walk through to get to the ready meals. In fact, many of the ready meals have made way for larger fixtures of fresh fruit and vegetables and, rather than have all your meals ready made, you can now pick up all the ingredients nicely packed, Hello Fresh style, for you to put together at home. One of the headline fixtures, known as InFarm, is a first for the UK high street - an urban farm - which uses new technology to allow herbs and plants to be grown in-store in specially designed vertical displays. It's part of a trial with a German supplier who will visit the store twice a week to harvest and plant new seedlings.

And the wine?

This is a store prepared to put wine on the front foot. Rather than tuck the wine aisle away at the back or end of a customer's shopping visit, here wine is centre stage, literally in the middle of the store. One of its calling cards is you can now “go to M&S and have a drink” thanks to the self-pouring wine tasting optics it has installed. Being so bold as to make wine your central fixture also shows M&S is completely in tune with its regular customers. It knows they come in their droves to pick up their weekly, or daily ready meals, so has been prepared to push them to the back of the store, forcing people to walk through the fresh fixtures and wine section first. It also has an extended chiller unit for wine not normally seen in a major grocer.

So is M&S getting its mojo back?

It's a little early to say that, but it would be good news for the grocery and high street retail sectors if it does. For decades M&S ruled the waves, not in market share or square foot of sales, but in innovation and ideas, changing the way we eat, bringing convenience and premium ready meals to the masses. It was a retail chain where, famously, you did not go to buy brands, but to buy M&S brands. Or as its advertising slogan, first introduced 15 years ago, said: “This is not just food....this is M&S Food.” That famous advertising slogan has been brought back this year, for the first time in 12 years, with a series of new TV adverts as part of the chain's re-invention of its food and grocery offer. It's also pushing its revived food offer online and on social media with a regular series of day time TV-style cooking shows, What's New at M&S, featuring TV celebs, including Amanda Holden and Paddy McGuinness and members of the M&S food development team.

Sounds like some new people have got some fresh ideas?

It's very much part of a new 'transformation' strategy that chief executive Steve Rowe put in place in November 2017 which has seen the business recruit a number of leading figures to its food and grocery team over the last year. George Wright, a former Tesco executive, has joined in a new role as commercial director for trading and supply chain, whilst April Preston has been poached back to M&S from Harrods where she has been responsible for transforming its Food Hall, as its new product development director. It has also invested in £750m for a 50% share in Ocado to become its first online delivery partner and to help accelerate the expansion of its food halls.

Enough to make the other grocers sit up and listen?

They will certainly all be making a trip to Clapham Junction this week. Apart from perhaps Aldi, for it was all set to step in and buy up M&S's prized location, smack opposite Waitrose, and on the main commuter thoroughfare from Clapham Junction. But M&S had second thoughts about selling up, and instead decided to rip everything out and start afresh with this mecca for food and wine lovers. A statement of intent in itself, but also a confidence boost for the other mainstream grocers that they have brands customers will return and get excited about, if they do things that are worth getting excited about in the first place.

Why retail will be less about you but what you can do for others

Sounds like something you read in a Chinese fortune cookie? What do you mean by that?

It means what it says. Successful retailers in the future are going to be less about building their own brands, but instead providing the right online and high street platforms for brands, and other providers, to present and promote their offer to your combined customers. You could argue that's what the best retailers have always done. Hire out their shelves for major brands to rent out and sell their products on. But we are now talking about the 2.0 version of that.

You and your platforms. OK, carry on.

You might scoff, but we now live our lives on a whole variety of platforms through which we can access the products, the films, the music, the services, we want to have. Be it Amazon, Twitter, Netflix or Spotify. Those platforms are not about making themselves the hero, but the content or products they sell. It is the fact they can offer you so many of the goods and services you crave that makes them a success. Not the fact that they are specifically producing those products themselves.

But what about all our retailers who do exactly that with their private label ranges?

They are going to have think differently. For now private label is still an enormously important category for retailers and consumers alike. Because we have grown up in a retail environment where it is all about Tesco, Sainsbury's or Asda and they are the brands that we have cared the most about. But that won't be the case in a few years' time. It's already not the case in China. A mass consumer market that has grown up with an internet and digital first approach to retail, rather than high street chains dominating how we think. In China is it the e-commerce giants that rule the retail world and dictate how and where products are sold.

So what's happening in China that is so interesting?

If you don't follow what Alibaba, China's biggest online retail player is doing, then now's the time. It is going to have a bigger influence over our lives than all the Tescos that have come before us. Here's how its founder, Jack Ma, describes what Alibaba is all about: “Amazon and eBay are e-commerce companies, [but] Alibaba is not an e-commerce company. Alibaba helps others to do e-commerce. We do not sell things.” Instead, through its online sites, Tmall and Taobao, it provides the retail space for major brands such as Nike, Apple and Coke to set up and operate their own e-commerce flagship stores on the Alibaba platform. Or as Chris Tung, its CMO, puts it: “We serve as a marketplace, a bridge between the seller and the buyer, through data.” So, yes, it is still effectively hiring out its retail space to brands, but it is doing so in a way that gives those brands all the power to make the most of what Alibaba can give them.

What else are they are doing?

Here's the really interesting bit for UK online and offline retailers. Alibaba is now, through its B2C site, Tmall, running what it calls “experience centres” in major shopping centres and retail sites across China. It invites the same major brands it works with online to then create their own pop-up shops to promote and showcase their products in an experiential way. Since starting these centres in 2017 it has already worked with over 200 brands from Bobbi Brown, to Abercrombie & Fitch, Oral-B and Scotch whisky brand Ballantine's. Interestingly Tmall sees this initiative as being part of how it can become even more of a “destination for brand-building” by offering “one-of-a-kind experiences to their consumers”. Tmall's general manager, Liu Bo, said it's vital brands build “experience” into the consumer journey. “By providing consumers the chance to engage with a brand offline, they can heighten their online engagement as well. These experiences ultimately lead to stronger brand loyalty and retention,” he said.

The show must go on?

Absolutely. This entertainment approach is something we are starting to see in the UK. Particularly amongst some of our luxury retailers. If you have not been to Harrods recently then it's definitely worth a visit to see what is possible within even our traditional retailers. It is investing over £200m into transforming vast swathes of Harrods shop floor to similar entertainment experiences for its customers. So rather than just offer the chance to have a free make-up session, Harrods' is now bringing in Hollywood make-up artists to give you the full Julia Roberts makeover. It's all part of what Amanda Hill, Harrods' first chief marketing and customer officer, sees as a “race to the top” in terms of retail excellence, in stark contrast to the heavy discounting, lowest common denominator retailing we see so much of in the high street wine aisle.

So how do you achieve a “race to the top”?

Hill describes Harrods passion to get to the “top” of what it can achieve from a consumer experience point of view and then, crucially, the need to “elevate everything even further” from there. To do so means thinking less about what you do and sell in terms of product, but what you can offer in terms of “fulfilling a lifestyle need” for its customers - some of whom visit the store a staggering 50 times a year. “I really don't believe in segmentation in the way marketers traditionally talk about it, because it can make you relatively lazy and actually it's impossible to lump our customers into any kind of bucket,” she told Marketing Week recently. “You have to think about Harrods from a product perspective like a collection of incredible niches and each part is so distinctive.”

But we don't have the kind of money that Harrods' has to transform our wine stores?

No, but that's missing the point. The opportunity is there for both online and high street wine players to turn how they operate on their heads. To look at their shop floor, or website, as a stage for brands, and partners to perform on. Imagine the kind of experiences you could offer a wine customer if retailers switched their focus from being 100% about the product, to offering the kind of lifestyle experiences that Harrods, Tmall and Alibaba are doing.

If you don't have a purpose, you don't have a brand

If you say so. What do you mean by that?

To be fair it's not actually my line, but rather what the new chief executive at Unilever, Alan Jope, thinks. He made it abundantly clear at last week's Cannes Lions festival for the advertising industry what direction he is going to take the world's biggest household brand company in. Put simply, if a brand does not have a clear purpose in the eyes of its target customer then it has no future at Unilever. “We will dispose of brands that we feel are not able to stand for something more important than just making your hair shiny, your skin soft, your clothes whiter or your food tastier," is how he explained his position in a speech at Cannes. Now this won't happen overnight, but he expects that “in a few years' time” 80% of its portfolio, “will be competing with a clear view on what little good they can do for society or the planet”. It's not afraid to make big decisions to achieve that target. "We have acquired €2.8bn of turnover, all purposeful brands, and we have disposed of €4bn of turnover from brands that we think don't have a long-term proposition and are stuck in low-growth categories," he said last week.

That's all very good for him and Unilever, what's it got to do with us in the wine industry?

Everything. Unilever is responsible for making, marketing and selling a large proportion of the household brands we have in our kitchens and bathrooms. What products it chooses to make will have a major impact on how we as consumers behave, but also expect from all the other brands we bring into our homes. But what Jope says is not out of the blue. It's merely a reflection, admittedly a very big one, of what we as shoppers and consumers now expect from our major brands and retailers. We are no longer happy to form a civil queue and buy whatever brands our major FMCG powerhouses give to us. We now care more than ever about what we are putting on, or into, our bodies. We want to know how those products are made, where they come from and what impact they will have on the people who've made and sold them.

You mean the new caring, sharing, environmentally-friendly consumer we keep on reading about?

I mean exactly that. But this is no fad or gimmick. It represents a fundamental change in how an increasing proportion of people now want to lead their lives. A Mintel study, for example, in the US found that 56% of American consumers will stop buying brands they believe are unethical. A similar global survey found 91% of shoppers would switch to a brand that supports a good cause. Particularly the next generation of shoppers and workers, Generation Z, who were born between 1997-2003. A generation that, according to Bloomberg, will make up 32% of the world's population in 2019, just fractionally higher than millennials (born 1981-1996). Two-thirds of Gen Z will go out of their way to look for and buy products and back companies that are true to their values and beliefs. According to research by Ernst & Young they are also very different from the “what's in it for me” mentality of the average millennial. Instead they are self-reliant, highly resourceful and willing to get things done by themselves. They are also health conscious, risk-averse and want to have more control over their lives. Which is why over a third don't drink alcohol.

The kind of customer that Alan Jope and Unilever want to appeal to?

Now you're getting it. Yes, it's why Jope also told his Cannes' audience that “doing business responsibly is very deep in our DNA”. He is not alone. Brian Whipple, chief executive of Accenture Interactive also told Cannes Lion: “The world is changing. Generally, people [over 40] care about the world; the issue is, the younger generations care more.” So if you “want to attract the next generation of talent and sell into the next generation of clients, then there needs to be a purpose”. But this is not necessarily anything new. The best brands have always been the ones that are known for “something”. Be it Audi's “Vorsprung durch Technik” or Nike's “Just Do It”. Advertising guru Sir John Hegarty has long urged companies to “invest in their brand and not their product”. The difference now is that consumer's expectations of what brands stand for is so much higher.

All of this should be good news for a wine industry that ultimately relies on agriculture and farming?

On paper yes. But it's about far more than just planting some vines, growing some grapes and then fermenting them. Consumers are going to become, if they are not already, far more interested in how an average bottle of wine is actually made, but also how it ends up in their local store or restaurant. More questions are going to be asked about how much water and energy is used in the whole process, what sprays and fertilisers are being used. How many wine miles has a particular bottle stacked up.

So what is happening in wine?

It was a topic that came under scrutiny in the Innovation Zone at this year's London Wine Fair as different wine businesses were able to explain how they have put “purpose” top of their agenda. Like the Lanchester Group, owners of Lanchester Wine and Greencroft, the bottling business, which has always put sustainability and environmental practices at the heart of what it does. Mark Roberts at Lanchester Wines said the way it runs its business is as important to the company, and its staff, as the services they provide. It has, for many years, been self-sufficient and generated its own energy through its own wind turbines. It is now, he added, pumping water from disused mines in the North East to help power its new bottling facility. None of which ends up on the final bottle, but it is the right thing for Lanchester to do and hopefully its suppliers and customers.

And finally?

“Purpose is one of the most exciting opportunities I've seen for this industry in my 35 years of marketing,” is how Jope caught the imagination of Cannes Lions last week. It's a quote that the wine industry should take equally as seriously.

Why low/no is going to be the way to go

Low/no? What's that? Some new rap music I don't know anything about?

It wouldn't surprise me, but no, low/no is about the new style of drinks that are taking the alcohol industry by storm - by having very little or no alcohol in them. It sounds like a contradiction in terms, but they are amongst the fastest growing new products in the sector, with 10s of new launches coming into the market every month. Be it 0% alcohol beers and wines, through to spritzers, coolers, and a vast range of ready-to-drink products that are a mixture of adult soft drinks with a splash of Prosecco or gin to keep us interested.

But this is hardly anything new. We have had low and no alcohol products ever since Billy Connolly was trying to get us to buy Kaliber beer in the 1980s.

That's true. But they have, up to now, been very much about the drinks industry pushing its own agenda, and wanting to be seen to be doing the right thing and act more responsibly. Pushing a low-no category with sub-standards products that not even the big drinks companies behind them really believed in. Now it is all very different.

Why's that?

This is no longer a drinks industry issue. It's what the consumer wants. Living better and healthier lifestyles is now the standard choice for over 90% of consumers (J Walter Thompson) and that means cutting back or stopping drinking altogether. Or for an increasing number of younger drinkers not drinking alcohol at all - around a third of 18-24 year-olds are said to be teetotal (IWSR). If the drinks industry wants to be relevant to any, some, or all of these consumers, it is going to have to think completely differently about the products it makes.

Sounds like doom and gloom to me?

Not at all, it's potentially very exciting. It was, for example, standing room only at the low/no debate in the Innovation Zone at last week's London Wine Fair. The wine industry realises this is an issue it has to address. Even if it doesn't currently have all, or many, of the answers. Ivan Dixon, head of spirits at Enotria&Coe, summed up the mood: “It's happening. It's going to be massive and we need to be believe in it.” It is introducing 30 new low/no products this year into the on-trade ranging from sparkling teas to kombucha. “I did not see this trend coming. Seedlip was the game changer for the low/no category,” he added. Tom Evans from Adnams, the Suffolk brewer that produces a range of 0% beers and wines, said it is taking the category so seriously it has tripled its investment in low/no products and he is the first low/no drinks ambassador to be appointed by a major brewer.

What can we expect?

What is exciting is that people cutting back or not drinking does not mean the end of them going out for a good time. Far from it. Mark Meek, Chief Executive at research body, IWSR, told the Innovation Zone audience that these consumers don't want to be excluded from the experience of going out to a bar and sharing drinks with friends. They still want to be offered drinks that are as well made and as sophisticated and as crafted as the alcoholic versions, they just don't want any booze in them. Crucially they also want to spend as much for them. It offers huge new opportunities for both the on and off-trade, but particularly for bars that can serve a £12 gin and tonic, and charge the same for a non-alcoholic alternative.

So which products are cutting the mustard in low/no?

Beer, beer and beer. But then the big brewers have been trying to crack the 0% market for at least 30 years. Brands such as Heineken 0% appear to have cut through to the mainstream, or “stolen a march” as IWSR's Meek puts it, and proved you can get a quality beer without the alcohol. Evans confirmed Adnam's 0.5% beer brand, Ghost Ship, is now its fifth biggest seller, “and it can't make enough of it”. Wine has a bigger problem in stripping out the alcohol and keeping the flavour. David Cartwright at Seckford Agencies told the panel he believes a premium, lighter wine category at around 8-10%, that is sold alongside all other wines, was more realistic. It has already had great success with the 9.5% range of Doctors' Wines produced by New Zealand winemaker, Dr John Forrest. It is also a pioneer in the premium, lower wine category by dropping alcohol levels through better vineyard techniques rather than resorting to spinning cones. Simon Oastler at Broadland Wineries, that has its own 0.5% wine range, says the key is not to think of low/no drinkers as one set consumer. Instead they are as varied as all wine drinkers, some of whom are looking for as close to a real wine as they can get, whilst others just want a refreshing, fruity drink that looks like wine that they can have with their dinner. Evans agreed and said its 0% wine is often used as an ingredient in cocktails, or Sangria, or in a mulled wine, rather than a standalone drink.

What next?

The panel heard how the industry needs to think carefully about how it talks about low/no drinks. We are all guilty of wanting to pigeonhole new products into set categories - like low/no. The consumer, however, is turned off by being labelled as a low/no drinker. They might just be having a night off, driving or cutting back for health reasons. They want the choice of trying a ‘cooler', a ‘spritzer', an ‘adult long drink', a ‘mocktail'. Drinks that all have a positive twist to them and don't sound like you have come straight out of a temperance meeting. But then we do need to put all this into context. Low/no might be the fastest growing drinks category, but it only currently represents 1% of sales, says IWSR. But's as E&C's Dixon says. It's happening and it's the next five to 10 years that the industry needs to prepare itself for.

Why consumers are loyal to platforms not brands or retailers

Platforms? What are you talking about? You mean those awful shoes!?

If only. No, I am talking about the digital platforms that have almost sneaked up on us over the last five years to quietly take over so much of our daily working and personal lives. The likes of Google, Microsoft, Apple, Amazon, Spotify, Netflix...the list goes on. In fact take a quick look at your smartphone and look at all the apps you have. How many are for actual brands and retailers and how many are for what those in the digital world call platforms? Each providing you with a portal to either a specific world, like music and Spotify, films and Netflix, social media and Instagram, or seemingly the whole high street and Amazon Prime.

OK I get it. But we still like our favourite brands and will go back and buy from them surely?

We do, or at least we like to think we do, but how often do we actually end up going back to our tried and trusted brand or retailer now that we have all these platforms to act like our own personal shopping and lifestyle assistants. Think about the last few purchases you made online. How often did you go to an individual retailer’s site, and how often did you rely on one of these major platforms to quickly aggregate all those stores and their products and present you with a so called “preferred” list? You might have set out to buy a pair of adidas trainers, but when Amazon Prime revealed that you could buy an equally good alternative for much less - and what’s more they could deliver it to you by the end of the day - then that brand loyalty goes out of the window. Even if you do use a specific retailer’s app, the transaction will all be recorded by the smartphone platform, be it Apple, Microsoft, Google etc, so they win either way.

Yes, but it feels a bit like Big Brother is taking over.

It does, but whilst we might complain about the likes of Facebook having too much access to our personal data, we don’t mind when these sites make shopping, and let’s face it, living in general, so much quicker, cheaper and easier. We are turning to these platforms in our millions. Just look at the Top 10 list of the world’s most valuable brands. The top five are all what you might call platform brands: Apple, Google, Microsoft, Facebook, Amazon. Companies that are essentially all trying to do the same thing and become omnipresent in our lives. The retailers and brands, if you like, that we are most loyal to and will use for whatever service they offer us.

Speak for yourself. I try and avoid them like the plague.

Do you really? Are you sure? If you do then you’re missing out on a brave new world. Where else can you get a personalised playlist based on your listening history than Spotify? Certainly not HMV or Virgin Records as they have gone out of business. Even if we don’t want to use these sites it is increasingly hard not to. Look at TVs. The home page is not set up to show you what’s on BBC1, instead you are given a vast choice of different portals, from Netflix to Apple TV, that then take you off to different worlds of streaming films and TV shows that puts you, and not the terrestrial TV planners, in complete control of what you watch and listen to.

But haven't Tesco and other chains been trying to do the same with all the services they provide?

They have indeed. Tesco, as you know, is no longer just a grocery supermarket but a general lifestyle retailer that over the years has looked to offer us everything from banking to mortgages, insurance to holidays. But one by one they have failed to take off in the same way that Amazon Prime has. Because at heart Tesco is a belt and braces retailer. These digital platform giants are exactly that. Technology beasts with the knowledge and expertise to create and dictate our futures. Apple started life making computers, now it’s all about what it calls "enriching lives" and only this week we have seen it announce plans to create its own Netflix TV and film platform, become a publishing platform and run its own credit card where the user decides what level of interest they pay by how much they pay off every month. It can't carry on re-inventing technology. It needs to find new ways to "enrich" how we live our lives. Google is buying up and controlling other digital platforms, such as YouTube, and a host of advertising and lifestyle platforms that between them made a cool $97.1bn in 2018 alone. If you have stopped using Facebook, but love Instagram, well that’s owned by Facebook too.

So what’s next?

You might not take much notice of what goes on in the gaming world but Google’s announcement this month that they will be providing a Spotify equivalent for gamers could have big ramifications for us all. Its new Stadia platform will allow anyone to log on and start playing a game online without having to use a console like PlayStation or X-Box. All very convenient. But by doing so Google’s understanding of your likes and behaviour goes to a completely different level. It can now track, monitor and mine how you respond during a game, what decisions you make, how you react under pressure, how risk adverse you are. All invaluable data to then work out the kinds of products and services that are going to emotionally appeal to you. Now that’s a real game changer. That’s not to even mention the enormous differences that voice search and voice assistants like Amazon Alexa and Google Home are making. As IWSR’s Mark Meek said this month, the power of voice search means these machines will soon be making our choices for us. Having friends over for a BBQ? The likes of Alexa will know, based on your shopping record, which items to buy, from which retailer and for what price. Scary....but kind of helpful too.

That’s all well and good but what, as ever, has this got to do with wine.

Everything. How relevant are you, your business and the wines you sell to any of these platforms? Or more importantly the people, like you and me, who use them. It's going to be fascinating to see what Naked Wines does with the "Naked" brand now that it is looking to drop the Majestic Wines name. Could it create the first real digital platform for wine under a "Naked" banner that offers you a portal into a range of exclusive services, on and offline, that look to "enrich" Apple-style how we buy and enjoy wine by bringing us closer to winemakers, producers, brands, and private label wines in ways that have not been done before? The opportunity is there. We need to completely change how we sell and market our wine if we are to be relevant in this platform world. Getting a listing in Tesco or Aldi or at 67 Pall Mall is not going to be the holy grail of the future. Coming up as the recommended wine on Alexa, Prime, Vivino, or whatever platforms we have in the future, will be.

• This article was first published on Grapevine for the London Wine Fair.

Why everything but alcohol is now the biggest threat to wine

What’s this? Don’t tell me you are trying to shoe-horn Dry January into your latest posturings?

Oh, you can see right through me. Well, seeing as the rest of the world is obsessing about what we are eating and drinking this month there’s no harm in joining them, but with a new twist. Yes, there are apparently more people every year locking away the corkscrew for the whole of January and either going teetotal, or at least looking to cut back on what they are drinking. A habit many now continue into February and beyond. But this is not just postponing drinking until our second monthly gym membership goes out of our account. No, people are looking to stop drinking full stop.

Well, good for them. There’s plenty more for the rest of us...

That’s very good of you. Thanks for your support, but it’s not good news for the drinks industry in the long run. At least not unless it completely turns on its head what it is there to do. The long term drinking trends show how more people are listening to the health warnings and watching what they drink. This is particularly so amongst younger people and the next generation of drinkers that the industry, let's face it, will rely on to start drinking in the future. A recent study by the University College London claims 29% of 16 to 24-year-olds now see themselves as teetotal, compared to 18% in 2005. Those who have never sipped a mouthful of alcohol has jumped from 9% to 17%. So any amount of wine education or promotion is going to be lost on close to a fifth of the young drinking population. It’s a similar trend amongst older drinkers. The Office for National Statistics reports the proportion of adults who say they drink alcohol is at the lowest level on record - 56.9% in 2018 compared to 64.2 per cent in 2005.

If that’s the case, what can you do? You can’t force them to drink...

Of course not, but we would be fools to just ignore all the millions of consumers that no longer even think about going down the drinks aisle at all in the local supermarket or order even one glass of wine in a restaurant. Just look at what the big brewers are doing. They have been on top of this trend for years, but particularly so in the last five years. All the major brewers have now got seriously ambitious plans to change their production away from traditional beers to creating products that they can sell to the growing abstemious or non-drinking population. AB Inbev, the world’s largest brewer, has pledged that 20% of its sales will be for low or no alcohol beers by 2025. If that’s the case we can expect to see the low or no-alcohol beer category rise considerably from the £34.7m it reached in the year to July 2018, which in itself was a jump of 20.5% on the year before (Nielsen).

Really, what are they doing?

Just look at the big product launches that have come out of the big brewers in the last two years. The majority have been around lower and no alcohol, like Heineken’s 0.0. These are not just PR driven moves to get some good publicity, but vital brand saving major global launches designed to not just transform the beer and drinks industry, but keep themselves in business in the decades to come.

But they have tried low alcohol beers before and they have crashed and burned.

They have indeed, but there are three key reasons why these new launches have every chance of success. There is now a growing consumer market that wants them; the quality of the products have improved dramatically in the last two years; and they can now be served, perfectly chilled by draught, in the same way you would buy any other beer. The last point is arguably the real game changer. Ninety per cent of beer sold in pubs is by draught. Heineken, for example, is about to invest a huge amount in rolling out draught versions of its 0.0 brand, to pubs and bars across the country after an enormously successful trial last year. Its chief executive, David Forde, expects sales of 0.0 to double to 30m bottles this year as a result .

Good for them. Why is that important to us?

It’s who Forde sees as the biggest competition to Heineken 0.0 that should make every wine executive, producer and retailer sit up and take notice. He’s not looking to take on Molson Coors or AB Inbev, but instead has the soft drinks and coffee giants such as Coca-Cola, Pepsi and Costa Coffee firmly in his sights. “We believe we can go on the offensive and go after Coke, go after Fanta, go after spring water, go after tea, go after coffee,” he told the Daily Mail last week. “If you think about all the occasions that people drink a soft drink today – we can be in that market.”

So where does leave wine?

Good question, for this is as relevant for wine as it is for any other drinks category. Arguably even more so now that it is officially the most popular alcoholic drink on a night out, is the go to choice for most women and is what we traditionally choose to drink when eating out. It’s fair to say the majority of attempts to make a quality low or no alcohol wine have failed. Things are changing and, as with beer, the more major producers and brand owners that try, the better they are getting at producing brands and styles we might like. But we are not there yet.

What does the wine industry need to do?

For a start it can take a long, hard look at what the big beer brands are doing. It’s not just about getting the product right. That’s a given. Its how you then serve it. Wine needs to look at alternative ways to make low and no alcohol wines interesting and relevant to drinkers who may not even own a corkscrew. It’s time to stop thinking about ourselves as being only part of the alcohol drinks industry. If we want to have a long term future and be relevant to consumers down the line, we need to start thinking of how we could be considered part of the soft drinks industry too.

Prepare yourself...the Chinese are coming!

Really? That sounds familiar…

Yes, you might be thinking of the late good old Colin Welland, the man who scripted the Oscar-winning Chariots of Fire, who warned Hollywood back in 1982 that the film’s success would spark a torrent of new British film talent. The Chinese warning is a little more understated than that, but it’s already very much alive and kicking in the wines we are able to source, buy and put on our retail and restaurant wine lists. China has fast become one of the world’s biggest wine importing countries, with a thirst for new wines that will have an increasing impact on what is available to buy in other markets.

How do you mean?

Well just look at how Chile and Australia have upscaled their exports to China in recent years after they respectively struck free trade deals there. Wines that would normally have been destined for their more traditional markets in the UK and Europe are being swept up more and more by Chinese importers. Chile’s exports to China were 9.7m h/l in 2016 and expected to be over 12m h/l in 2018. China is now Australia’s biggest export market by value, up 24% in the last year to A$1.06bn, with volumes up 26% in the last 12 months.

But that’s just market dynamics, it’s not like the Chinese are setting up shop and looking to sell directly to us in the UK?

That’s where you are very wrong. Where the Chinese are very much looking to have a direct influence on our market is online. We might like to think we are ahead of the curve when it comes to new technology and what role it plays in our business and personal lives. But we’re very much in Betamax mode compared to what is happening in China.

How do you mean?

We might spend too much of our time on social media platforms such as Facebook, Twitter and Instagram. But when we do it is mainly to pass and share information about what we are all doing. In China, its social media platforms cover all aspects of their business and personal life. Platforms like WeChat are being used both to share funny videos and pictures of what you got up to at the weekend, but they are also fully functioning e-commerce, and retail sites that allow you to see things you like, buy them and get them delivered directly to where you are.

That’s all very nice for them, but what’s that got to do with us?

Well, wouldn’t it be nice to do the same here? Chances are in the next couple of years the same Chinese technology will be powering our smartphones and completely changing the way we behave, interact, and go about our daily working and personal lives.

Go on then, how?

The big Chinese online players are no longer just about sourcing and selling products and services to the Chinese, they are increasingly looking to spread their wings and get us to use their sites here in the UK, in the same way we might log on to Amazon. But that does not mean shipping products all the way from China. Alibaba, China’s biggest online, e-commerce player, with sub-brands, Tmall and Tbaobao, has stated its ultimate goal is to be able to ship anywhere in the world within 72 hours. This is all part of a global strategy to have 2 billion customers by 2036 and sales that would make it the fifth biggest economy by GDP, behind the US, China, Japan and the EU. It already wants its international business to account for 40% of its turnover within 10 years.

What’s it doing to achieve that?

It has already started building up an international network of largely automated distribution hubs that will each be able to supply up to 1,000 cities within three years. It now has five such hubs in Dubai, Hangzhou, Kuala Lumpur, Liege and Moscow, each kitted out with the latest in smart warehouses, fully automated assembly lines and self-driving robots. It is already shipping to 30 cities around the world within a five day delivery window. All of which is possible because it has built the world’s fastest cloud-based streaming processing platform that allows it to manage and analyse online transactions to a scale unimaginable before. Its servers, for example, are said to currently store 1,000 petabytes of data (one petabyte is one million gigabytes). It’s even set up its own cloud computing arm and has two data centres in the UK offering business its specialist data analytics, storage and machine learning services

My word, now I see what you mean?

Exactly. It’s time we all started to watch and learn what the major Chinese online giants are doing both at home and overseas. We have already discussed on Grapevine how Alibaba’s distribution network allows a Chinese customer anywhere in the country to buy a bottle direct from a vineyard say in France, Italy or Spain and have it shipped direct to their door within a few days. It’s simply using the same model to start shipping products from China to us.

So what does this mean for the average wine business in the UK?

If Alibaba is true to its word then there is no reason why you couldn’t be sourcing wine, not just to sell to the well-heeled middle classes in the UK, but the Chinese market too. Its distribution hubs are being designed to work both ways. Bring Chinese products to the world, and open up the world to Chinese consumers. Alibaba’s e-commerce platforms like Tmall are already being used by retailers and brands from all over the word (up 169% in 2017) to create their own ‘online shop’ and sell direct to China. So don’t say you weren’t warned.

Why we all need to watch what Tesco does with Jack's?

Really? Another wannabe discount retail brand? What is there to watch?

Well, yes on the face of it not a lot other than another example of our once great, world leading, multiple retailers ripping up the past to simply follow the trading strategy of a much weaker retail competitor. Can we really imagine a Tesco in its 80's or 90's pomp, under the leadership of Lord MacLaurin or Sir Terry Leahy, setting up a standalone discount retail chain to compete with the German chains Aldi and Lidl? Retailers that still only have a combined share of just over 13% of the market, which is still less than half of what Tesco (27.4%, Kantar) tots up every year.

Exactly, so why should we get so excited about it?

Dig a little deeper into those figures and you can see why Tesco - and the other Big Four multiple supermarkets - are tying themselves in knots in a bid to find an answer to the year-in-year-out growth of the German discounters. Over the last decade Aldi and Lidl have been directly responsible for taking £7 billion in sales away from Tesco, Asda, Sainsbury's and Morrisons combined. At its peak £32 in every £100 spent in a supermarket went to Tesco, now it's down to £27.40. The launch of Jack's comes at a time when finding even half a percent in growth has proved hard for the major supermarkets. They are bogged down with their own head-to-head competition, rising import and food costs, huge increases in their property rents, rates rises and a lop-sided wage structure that does not have the growth levels in the business to support it. Shareholders and investors are nervous and restless. The analyst peanut gallery is firing on all cylinders and the Big Four are struggling to come up with the answers.

And Jack's is the route back to salvation?

Hardly. But there is a sense of if you can't beat them join them. Jack's is not just a nod to the discounters, it is Aldi and Lidl re-invented with a few more union jacks and PR clarion calls to British producers thrown in along the way. Even then its British first strategy is already very much part of the German discounters' DNA - Aldi says it spends £100m with British suppliers a week. It's also hardly going to get retailers from all over the world rushing to suburban Britain to see what amazing innovations Tesco is introducing at Jack's. But what it has done has got the financial and business chattering classes taking about Tesco in a mostly positive light again. It is helping to drive an effective PR message out to the shopping public that Tesco can do more than just match the discounters on price it can potentially beat them at their own game. Even if the reality is somewhat less dramatic than that. We are only talking about two stores here and the hardly hold on to your seats promise that there will be 10 to 15 more over the six months. There are independent c-store retailers with a more ambitious growth strategy than that.

So what does it mean then?

What Jack's has already done is help reset the retail conversation. It has once again, just in case producers had any thoughts of grandeur, put price firmly back at the top of the agenda. We live, as we know, in uncertain times with the prospect of Brexit, deal or no deal, only six months away. With Jack's, Tesco is hoping to re-confirm its position as the pace and agenda setter of the grocery retail sector. The worry for all those that supply it, and the other major grocers, is that it is doing so with such a low price driven strategy. We also have to consider that Tesco's chief executive, Dave Lewis, has a long held promise to the City that, even in these rough trading conditions, that the group will earn between 3.5p and 4p of operating profit for every £1 that a customer spends with it by 2020. To reach those kind of figures will require even more streamlining, cost cutting and breakthrough measures such as Jack's and its proposed partnership with Carrefour to co-source close to 20,000 products for its respective stores.

So where does wine fit into all that?

It may not be flagged up in the trading statements, but have no doubt that wine is very much one of the central categories that can help all this happen. Wine attracts the right kind of customer. Just look at how Lidl and Aldi have made wine such a hero category to draw in well heeled customers that help push up average basket spends and draw those billions of pounds in sales away from the Big Four. Aldi, for example, announced this week that it has sold 6.2m bottles of wine online since it launched its fledgling e-commerce site in 2016. But whilst the discounters appear to have aspirations to aim higher with wine, the message from Tesco HQ is that it wants to be the “cheapest in town”. Which for Jack's means selling its cheapest wine (above 10% abv) at £3.15, the same as Lidl, or £3.69 at Aldi. Or about 30p-40p of wine after VAT. Yes, Jack's might be tiny in the overall scheme of things, but it shows how Tesco is thinking, and what rocks their boat, which, in turn, will have a knock-on effect to all major retailers and their suppliers. If you want to do business with them, work out what the discounters are doing, how you can make a difference, help save them money, cut costs, and work up from there.

• This article was published in Grapevine on October 4 that I produce for The London Wine Fair.

Why subscriptions are the future of retailing

Really? That doesn't sound very radical?

Hang on. Give me a chance. Often the best retail solutions are the most obvious, the easiest for consumers to understand and for operators to deliver. Yes, retail subscription models have been around for as long as we have been collecting the latest instalment of the Encyclopædia Britannica. But in recent years they have become a far more sophisticated retail model designed to build a loyal customer database that is willing to spend money with you on a regular basis. Thus providing a constant stream of almost guaranteed cash flow that means you don't have to rely on getting shoppers into your store, or users onto your website.

But hasn't that always been the case with a subscription offer?

Yes, but traditionally a lot of subscriptions we have signed up for have been for more mundane “have to have” services and goods. Like our utility bills, council tax, TV licence, or for insurance, health or tax payments. But over the last 10 years we have become used to voluntarily signing up to subscription models in order to get access to the latest, must have services, goods, content, music or film.

So what's changed?

It all comes down to the explosion in downstreaming services that did not exist five to 10 years ago. For years we've been used to paying for the TV we want to watch thanks to Sky and its premium services for sports, movies or drama. Now there are a whole raft of subscription sites for every kind of entertainment. First there was music thanks to iTunes, that has morphed into services like Spotify. Now Netflix and Amazon Prime have brought the equivalent of the local DVD shop into the comfort of our homes. All of which have been made possible by the breakthroughs in technology that have been able to create and deliver these downloadable services, be it via an iPod, iPad, smartphone or digital television.

Interesting. What else?

These technical advances have, in turn, transformed the way we now expect, and are happy, to spend our money. Look back 10 years ago at what direct debits you had. Now we are quite prepared to spend £100 a month to Sky for all its TV and broadband services. Phone tariffs are no longer about just making or receiving calls and texts, we're quite willing to spend £30 to £50 a month to have the right handset and amount of data we need to download what we want, where we want. Noticeably, the monthly subscriptions for the likes of Netflix, Amazon Prime, Spotify and Apple Music are all around the £10 level. After all what's another £10 a month? In the US the subscription e-commerce market has grown over 100% a year for the last five years.

So what's this got to do with wine?

Everything. Consumers now expect to be able to sign up to specialised, personalised subscription services that meet their personal needs and food and drink has become one of the fastest growing sectors for subscription offers. So much so that the big supermarket chains are now just as fearful about the rise of new meal-kit delivery subscription sites like HelloFresh (the Financial Times' fastest growing company in Europe in 2017) and Blue Apron as they are the rise of Aldi and Lidl. They are fast taking away market share from well heeled 25-45 year olds who are looking to pay premium prices for good quality, fresh ingredients that can be delivered to their homes. Services that take away the hassle of weekly shopping, and also allow you to cook quick, fresh, healthy and quality meals at home. The UK's delivery subscription market is now worth over £2bn a year with users citing convenience (45%) and value for money (60%) as the two key reasons for signing up (Whistl).

Sounds like they're also making consumers pretty lazy?

Lazy in that they now expect everything they want to be available to them, to their door, or wherever they happen to be. But it's also making them extremely demanding and hard to please. The recent Whistl report found one in five Brits now refuse to shop with retailers that don't offer a subscription model. The arrival of Uber and Deliveroo in our lives, means we now expect there to be an app for every sort of service that is available direct from our smartphone. Need petrol for the car? There's a van that will come to your car and fill it up for you. So why bother going to a shop to buy wine, however pretty and engaging it is and well informed its staff are, when you can just get a case or bottle delivered whenever and wherever you want?

OK fair enough, you can see why traditional retailers should be worried.

Subscription retailing is now a retail channel in its own right. We might not be able to physically see it, but it is operating like a virtual, parallel retail universe gobbling ever bigger shares of our disposable income. The rich and famous have for years been able to use concierge subscription services to keep them fed, watered and pampered, but now we all have access to our very own concierge-type services through the wonders of our smartphone. We just need to know which apps to use.

And finally?

Subscription models also make commercial sense. Once you can convince someone to sign up they are often too lazy to cancel. Just look at how many gym memberships you have versus the amount of time you go to a gym. Many a subscription retailer will still keep collecting people's money whether they use their services or not. Now wine has not quite managed to pull that stunt off yet, but it's surely open season for those operators capable of drawing customers in, getting them engaged and watching those monthly direct debits come in.

Why consumers want more than low prices to keep them loyal

You sure? Don't believe everything your retail consultant mates tell you.

Well, clearly we all like a good deal and it's always going to be an important part of any buying decision, but if you keep going back to your customer base with just another discount, followed by another, then people will stop buying and disengage with the offers you are sending out. Take Gap. If you sign up to its customer newsletter, you will receive an email every day offering some sort of discount. Customers wait for the 40% or 50% offer to come along before ever spending anything, and even then the numbers drop away quite quickly.

But surely it all comes down to price in the end?

You would be surprised. In a retail industry dominated by the everyday low pricing strategies of the German discounters, price has become less powerful on its own as a way of keeping your customers loyal. Shoppers now expect your prices to be as low as they can. To keep them loyal you have to offer them something else. It's why the majority of retail loyalty cards are no longer just about generating points to get direct discounts. They've subtly changed in recent years to be much more about how a specific retailer can help customers in other areas of their everyday spending.

How do you mean?

Just look at the loyalty schemes you are a part of. Tesco Clubcard, for example, offers you vouchers to spend in restaurants, a trip to the cinema, family days out and other experiences to enjoy. It's not just a way to get money off your next grocery bill. Sainsbury's noticeably gave up its own loyalty programme in favour of Nectar that allows you to spend your points across a number of services or non-competing retailers.

You got any figures to back all this up?

Absolutely. Recent research by Forrester shows that 59% of people want something extra other than price discounts from a loyalty scheme. They want rewards and services not available to others. Get that offer right and 69% of loyalty members will spend more with you and recommend your products and services to their peers. But it's not just about what they get, but how they get it. Fifty six per cent of loyalty customers see good service, like a dedicated customer line, or delivery benefits, as key to that relationship.

Interesting. What else?

Arguably the most disruptive influence on how we all now subconsciously judge a retailer's loyalty offer has come with Amazon Prime. Being an Amazon Prime member does not give you any more money off its products. No, it is all about making your life easier. Ordering products with just one click. Faster, more flexible ways to pay for your goods and then how, where and when you have them delivered. The chance to watch more films, access exclusive programmes (even Jeremy Clarkson), download your favourite music and then share it with friends and family. Being an Amazon Prime member is more of a lifestyle choice than simply a glorified alternative to collecting Green Shield stamps. As those retail consultants say, the trick is to be a loyalty company, not a company with a loyalty programme.

Yes, but the wine industry relies enormously on discounting to get people to buy more wine.

It does and has got into a right pickle as a result. It has created generation after generation of wine drinkers who think price first when deciding what wine to buy. It's why there are so few brands to connect with consumers on anything but a transactional level. But it does not need to be this way. Look at how smaller wine merchants or connected restaurants are becoming so successful. They rely far less on the prices they are charging, or their money off promotions to build a consumer base, but instead get a far more meaningful connection with tastings, events, dinners or winemaker talks.

But how do we make wine promotions more meaningful?

Again it is all about knowing who you are selling your wine too and pushing the right offer to the most suitable customer. Don't just send out a mailer with the same promotions to all your registered customers. Spend the time to break down your lists and then target specific customer groups with the wines they are most likely to buy. Most of all make your offers mobile, and digitally savvy enough that they can be used on smartphones. It might sound like common sense, but too often merchants, retailers or restaurants push the same offers to all customers and wonder why they are not picked up.

So what's the answer?

Well, ideally we would not be thinking about promotions at all. But all the other steps you can take to gain the trust, build the loyalty of your customers. How can you reward them in a way that makes them feel better? It could be providing them with more information about what you sell in ways they can relate to. It might be offering them better delivery options, incentives for recommending their wines to their friends. How you are going to use their data to get them more wines they like, be it online, in-store or a combination of the two. But in the end it all comes down to balance. We all like a good offer, but now we want it to come with bells, whistles and other personal benefits.

* This article was first published as part of the Grapevine views, insights and analysis newsletter produced for the London Wine Fair.  

How we will all get used to the power of our own voice in 2018

That’s a bit rich coming from you. How do you mean?
Happy New Year to you too. To answer that you only have to look at what was one of the biggest selling consumer devices this Christmas. Self-dubbed “intelligent personal assistants” like Amazon’s Alexa, or Google’s Voice, are literally allowing people to use the power of their own voice. These devices are set to be become as prevalent and normal in our daily lives as downloading music on Spotify or running our lives through an iPhone. The likes of Amazon Alexa and Echo not only respond to our demands to play a radio station, look up train times, or switch our cooker on at a certain time of the day, they will increasingly be able to listen, learn and adapt to our personal way of talking and thinking so that its algorithms are more in tune with what we want. As machine learning becomes more sophisticated, cloud-based devices, like Alexa, will become more intelligent, powerful and useful.

Yes, but do we really want to be barking out orders to faceless machines?
You might have said the same thing about asking Google to do everything for you. IT research body, Gartner, estimates by the end of 2018, 30% of all web browsing globally will not be done on a screen, but by voice. Particularly as more voice activated devices become the norm in cars, self-service machines and other areas of business. Radiocentre, the UK industry body for commercial radio, predicts 40% of households will have an Amazon Echo device by next year, up from 9% in 2017. The pick-up in the US will be even faster with Gartner predicting 75% of US households will have a voice device by 2020, up from 7% now. Samsung has revealed this week that all its products will be voice controlled by 2020.
 
It all sounds a bit like Big Brother to me?
Well, you’d better get used to it, particularly if you don’t want to be left behind when such devices become mainstream. It is why major grocery brands are switching their advertising revenues more towards voice-based search to ensure their products are picked up by Alexa-style devices and the algorithms they use to recommend brands to their users.
What are the implications for the wine industry?
They present a major new challenge to the over complicated and duplicated category of wine. Already FMCG brands in major grocery categories are having to look at how well known their brands really are. How easy is it for consumers to remember and say their names? How many top selling products are actually just bought on impulse when recognised down a supermarket aisle? To be relevant to these digital assistants, brands need to be instantly known to users and, most of all, trusted.

What else?
You can see why searching for products by voice throws up major concerns for a category like wine that is driven by price, discounts and deals than real brand loyalty and awareness. Chances are it will be grape varieties, countries or regions that Alexa devices will have to interpret and recommend wines for. With so much duplication down the wine aisle it could be disastrous for many of our biggest selling brands unless they can find new ways to be remembered by their customers.

What does this mean for retailers?
Voice activation is potentially good news for major retailers as customers are likely to defer to own label lines when they can’t remember the name of the Pinot Grigio or Prosecco brand they drank last. But arguably less good news for all those retailer, here today, gone tomorrow exclusive brands that rely just on their price and positioning to be sold in-store.

OK, carry on...
But the major challenge to retailers comes from the likes of Amazon and Google that have invested so much in leading the way on voice assistant technology. Not only are they making and selling the devices, it makes them potentially more relevant and more powerful than traditional retailers. We can expect Amazon, in particular, to roll out huge swathes of its own branded products that consumers will trust to buy through voice. It’s already happening. In the US 15% of Alexa owners use them to buy products on Amazon. Its own basic battery brand now outsells major names such as Duracell and Energiser.

So what can wine businesses do?
They need to look at ways they can be relevant in a world controlled by voice rather than screen search. Become known and trusted as the brand, or the business, that knows everything and anything you want to know about what to do with wine. Can you be the brand synonymous with advice on what food to pair with wine? Become the go to brand for a particular country, region or grape variety. Brands will be able to work with the likes of Alexa to become seen as experts in their particular field. Drinks companies like Scottish craft beer business, Bellfield Brewery, are already working with Alexa to provide a range of messages that tell its back story, or let users know the nearest place where they can buy its beer.

So there’s a lot to be getting on with?
Indeed and not all of it needs to have anything to do with voice control now. Wine businesses need to start that journey by becoming more trusted, more relevant to their customers than just being a simple wine brand, retailer or merchant. The more layers you can add now to what your brand stands for, what services and expertise you can provide, the better placed you are to give power to your own voice when you need to.

* This was first published as part of the Grapevine views and insights newsletter I produce for the London Wine Fair. 
 

Why wine has to find a way to free itself from the shackles of the multiple grocery sector

This all sounds rather grown up, what do you mean shackles? Isn’t over 80% of wine sold in grocery retailing?

Yes, it is and probably more when you factor in c-stores and online. Which is all well and good when the dynamics of grocery retail are all swimming in the right direction for the benefit of all. But in recent years the driving factors within the grocery sector have changed. They have been turned upside down to become an unhealthy imbalance of power between the big supermarket chains, beholden to their share prices, and the privately owned German discounters that have no investors to please and can play a completely different game, backed by the strength of their global retail networks. Throw in the spectre of Amazon, that can afford to run a retail empire based on never seemingly having to make a profit, and you have a trading environment that is uneconomic for even the biggest FMCG brands, never mind the impracticalities of the wine retail model.

Phew! That's a lot to get off your chest. But why is wine at such a disadvantage in the current retail environment?

Wine businesses supplying the retail sector are no longer in control. They’re being forced to make decisions about where and how they sell their wine which they know to be unsustainable in the long term, but unavoidable in the current retail climate. That’s if they want to continue to have their products on shelf, and cash flowing down their supply chain. The knock-on effect of that means the wine industry as a whole is like a boat in the wash of a retail super tanker being thrown this way and that.

So what’s the big fix?

It’s not one answer, but a multitude of things. The big issue the wine industry has versus other packaged goods, including beers and spirits, is you can’t just turn a tap on to produce more wine when the market needs it. But that does not change how major retailers source, buy and sell wine. Wine is seen as even more of a commodity than it ever has been. Used to drive not just footfall to retailers’ stores, but full on stampedes with people queuing up at dawn to get their hands on £3.99 German discount-sourced bottles of Prosecco.

So what can we do?

The biggest change has to come from within the Big Four supermarkets themselves. They need to regain their confidence and start acting like the world leading chains they were once famous for being. For at least the last five years they have stopped driving their own agenda in the interests of their shoppers, but have been fixated on copying and following the retail strategies of the German discounters they are simply not equipped to compete toe to toe with. There has been a serious lack of leadership and direction from the supermarket sector. Just look back 10 years ago and the chief executives of the Big Four grocers were leading business figures in their own right. Everyone knew what each of the supermarkets stood for. But where are the Justin Kings, Terry Leahys, Allan Leightons or Lord MacLaurins of the current generation of retail leaders? What has made matters worse is the discounters, that have this magical power over the Big Four, have a policy of not talking to the City or the media and explaining what their retail strategy actually is.

Anything else?

Tesco is getting its act together again. Chief executive, Dave Lewis’s turnaround strategy is starting to make a real difference to not just the company’s bottom line but the confidence of the wider grocery industry. The wine sector could be about to benefit from those changes. Last week’s announcement that Tesco is to move its commercial strategy and development director, Robert Cooke, to head up its BWS division, is arguably one of the industry’s most significant news of the year. The fact you’ve probably not heard of him is potentially a good thing. The wine department is going to be led by a senior Tesco executive with direct contact and relationships with the board. He is not a wine trade professional beamed in from outside the company. Let’s hope he uses his influence with the board, he was formerly Tesco’s commercial operations director, to drive a sustainable, profitable wine strategy that goes back to mutually benefiting its suppliers and customers.

What steps should the industry be implementing?

We have talked recently about the steps wine companies are taking to take more control of their futures. This has to continue and become more widespread. Be it consolidating and growing their buying power; investing in technology, data and insights to make themselves more relevant; adapting their financial model to cope with a post Brexit future; focusing on innovations, new products, packaging and formats that provides solutions for retailers and customers to benefit from.

And finally?

Wine businesses can also be braver and actually say no to the buying demands of the supermarkets and discounters. No-one is forcing anyone to sell wine that is uneconomic. There are now many ways to drive your wine business forward, and different growing channels to sell your wine too. The current multiple grocery retail environment makes making those changes even more of a necessity than ever before.

Could bigger formats and gifting be the saviour for wine brands?

You sure? That’s a lot of gifts to go around.

Calm down. One step at a time. But, whisper it gently, things are a-changing down the local supermarket wine aisle. The wall of wine is slowly being broken down into more distinct areas, where we are no longer just confronted with row after row of exactly the same sized bottle of wine.

You must be going to different stores than me.

Well, it’s not everywhere, but if you know where to look then there are some very interesting changes taking place. Each of the major multiples all have their trial stores where they bring us freshly made coffee and ironed newspapers long before the rest of us get to see them. It is in those stores where you are seeing new additions to the wine aisle. Particularly different formats, bigger sizes, magnums, and where limited edition gift packs are being used to make shopping the wine aisle a bit more of an experience.

What’s bringing all this about?

It won’t be the first trend that starts in the on-trade and ends up in our supermarkets. Flick through any on-trade report worth its salt in the last couple of years and sales of bigger sized bottles, particularly magnums, are giving Prosecco a run for its money. Which is good news all round, as bigger formats should, in theory, mean better margins. The recession may have made us all far more cost conscious consumers, but as the boom in sparkling wine has shown us, we are also far keener to find ways to give ourselves a treat, and share new experiences. Splashing out on a bigger sized bottle of wine ticks both those boxes.

What about gifting?

Well, unless you are constantly celebrating something we are not buying these bigger sizes just to drink at home. Instead they are being seen as the ideal alternative, but ultimately super safe gifting option. Ideal for a memorable wedding present, or to add a bit of theatre and drama to a dinner party.

What does this mean for brands and the wider wine trade?

It could potentially shake up what’s being sourced elsewhere down the wine aisle. For the last 10 years it has been the rise of the super varietal that has driven supermarket sales. Shoppers may not know their Nuits-St-Georges from their Walker Bays, but they know which grape variety they like. It has created a Premier League of grape varieties that now rule the world.

So where does gifting and new formats fit in to that?

If they continue to grow as they are now, it does tip the scales a little back towards all those producers and suppliers that have invested so much in developing wine brands. Proper brands with real values that don’t just introduce a Pinot Gris to keep the chattering classes happy. They now have the opportunity to develop well designed, positioned and beautifully executed larger formats and gifting options for their brands. New packs and bottles that crucially move them up the pricing ladder.

Sounds interesting, anything else?

For the brands that get it right it potentially moves at least part of their business out of the wine aisle completely. They could now become very relevant to those more premium shoppers looking for new ideas for their occasion-driven shopping missions. The opportunity to engage with higher spending consumers in a completely different way. It also gives them the chance to be sold in different retail environments, like at airports or in premium department stores. It would mean rather than look for a mention in one of the weekly national wine columns - rare for a mainstream wine brand in any case - it will become far more exciting to be featured as part of the gifting ideas sections that pad out women’s lifestyle and luxury magazines.

Who’s doing this well?

Well of course nothing is really new. If a wine brand really knows how to succeed in the gifting arena then they only have to look over to the Champagne brands as they have relied on gifting boxes and larger formats for decades.

What other ‘gifts’ have you got for us?

Well, for the more premium supermarket wine brands it offers the chance for salvation. The opportunity to escape the sword of Damocles that stands above any brand on a multiple fixture. Super size yourself, get out of the rat race, trade up, find a pretty box to put yourself in and the world can look a very different place. 

* This is part of the latest Grapevine news and views review produced for the London Wine Fair. You can sign up and subscribe to receive Grapevine here.

Why everyday pricing is no longer possible or expected by consumers

You’ve been reading too many wine supermarket press releases.

I doubt that. I think they’ve stopped sending them out. But just look at the numbers. We as a nation are now prepared, if not happy, to buy an average bottle of wine that is closer to £6 than £5 for the first time. OK that move to £5.56 at the turn of the year might be all down to inflationary pressures, including the 15% drop in value of sterling, but it means the average bottle price is up 19p a bottle in the last two years, and that's not even factoring in the latest duty hike in March.

But surely price is always the first thing any wine buyer looks at - for trade and consumer?

It certainly used to be, and is still a hugely significant deciding factor, but our overall relationship with “price” per se is changing. At least it has since June 23, 2016. That decision to leave the EU also set in motion a series of economic pressures that have resulted in grocery inflation now sitting at 3.2% and overall inflation not far behind at a four-year high of 2.9%. The impact of that on the average shopper is the equivalent of having to do an extra seven shops a year or £133 per household, says Kantar Worldpanel. So, yes, on the one hand consumers are still very sensitive about the individual price of any given product on the shelf. But when we realise prices are going up across the board (butter by 20p, tinned salmon up 14%, plus similar hikes on clothing, energy, or even computer games) then it’s the collective impact that becomes the issue, rather than the individual cost of a bottle of wine. 

OK, tell me more?

You only have to look at the national newspaper headlines over the last fortnight to see how our collective attitude towards “price” is having to change due to Brexit. For the first time families will have felt the direct backlash of a weak pound by having to pay more for their annual holiday and seen how far your pound goes when travelling abroad.

This is all getting a bit political. Thought we were here to talk about wine.

Bear with me. You don’t need to spend too much time on social media to see how divisive the whole Brexit issue has become. But equally we know as a country we voted to leave the EU, better or worse. A fact demonstrated in a YouGov poll last week that found three out of five people who voted to leave regard "significant damage to the British economy to be a price worth paying" for Brexit. What’s more 39% of the nearly 5,000 people surveyed said it would be worth losing their job, or having a family member lose theirs, in order to leave the EU. So if prices are going up then that’s a cost we are prepared to pay.

That’s all very interesting but what does it mean for us all in the wine trade?

Well, it’s important we understand the consumer we are trying to sell to and there’s no doubting we are all living and working in a very different retail environment to just over a year ago. But there are also long standing factors at play here, regardless of Brexit. We have talked before about having to serve the post-recession consumer that has never been more price aware or sensitive. But at the same time you only have to look at the boom in Prosecco to see how even price conscious consumers are happy to treat themselves - on a regular basis.

If that’s the case why are Aldi and Lidl continuing to do so well?

They are indeed, but look closely at their figures and it’s not just all about saving money that has made Aldi and Lidl the darlings of the high street. It has had great success with its premium own-label wines and has found selling wine at £15 plus a bottle has all been part of its strategy to attract more middle class shoppers through its doors.And the multiples?It’s also where the big supermarkets are succeeding. It is their collective sales of premium own-label, up 13.9%, that is driving the grocery market compared to branded growth of just 0.9%. The fact supermarket own brand lines now have a record 51% share of grocery spend shows how we have all become value conscious consumers.

So in a nutshell?

We might all in an ideal world like to still have our cake and eat it, otherwise known as everyday low pricing. But in these unforeseen pre-Brexit days, we are now far more understanding that unforeseen economic and political factors mean we are going to have pay a bit more for our daily bread - including an above average bottle of wine.

* This is part of Grapevine newsletter that I produce on a fortnightly basis for the London Wine Fair. You can subscribe to receive a free copy here.

Running stores could be the next big thing for wine suppliers and producers

Come again? Wouldn’t that be robbing Peter to pay Paul?

Well, that depends on who the Peter and Paul are in the equation. If you mean are we going to be seeing a Matthew Clark or Gallo-themed wine shop on the high street any time soon then probably not. At least not for now. But behind the scenes careful thought is being given as to how wine distributors and producers can get closer to the market by being part of either their own retail operations or working alongside partners in the industry.

How do you mean?

A lot of this activity is taking place already, but under the guise of wine vans and pop-up bars at food and drink festivals, and sporting events around the country. Not a week goes by without news of another wine business running their own pop-up. Be it a wine generic like Vins de Bordeaux running its recent Bordeaux Butterfly Bar at London’s Broadgate Circus. We've even seen big high street names like Aldi and Tesco run their own wine-themed retail pop-up shops. Get it right and you can become a consumer and tourist attraction in your own right. Take Campo Viejo’s well established annual Spanish fiesta and its recent five-day wine and food experience, ‘Fiesta de Color’ near London Waterloo. 

What about wine distributors?

Going direct to the consumer is already big business for some major wine distributors. Conviviality even has its own division, Conviviality Trading, that looks after its own events and sampling campaigns. Its Peppermint businesses, for example, is a dedicated outdoor bar event operator managing over 40 events a year. The Wondering Wine Company, which started life at Bibendum, its also now covering 40 plus consumer and sporting events a year selling Conviviality drinks through its fleet of vintage vans and has had a go at running its own pop-up retail store.

What else?

As traditional wine importers become brand developers and owners in their own right then running their own retail - or event - concept is a great way to first trial, develop and then seed those brands with consumers. Copestick Murray, which usually has to rely on its retail partners to sell its wines, is currently promoting its iHeart wine range with a summer tour of festivals and events in its new branded camper van. Buckingham Schenk is running a pop up bar for the Viñalba Argentine wine brand in London this October. Look hard enough and there are plenty of other examples of wine importers doing the same.

So where’s the high street retail angle?

Ah, good question. Yes, the vast majority of this activity has currently been targeted campaigns, mainly at outdoor events, for short periods of time. Restaurants might have evolved out of pop-ups, but wine merchants or retails stores haven’t. But that could well change as distributors look to take more control of their destiny. They might be in charge of sourcing their own wine, but they have no control over how their wines are sold.

OK, sounds interesting.

Major drinks distributors are already providing lots of commercial support to help bars and restaurant groups build their wines sales and manage their drinks lists. It would not be a big leap of faith to turn that support into funding a restaurant, bar or wine merchant to open a retail site (or two, or three) where they would have a lion share of the wines being sold there.

Are you just making this up?

Heaven forbid! But you only have to do a bit of lateral thinking to look at the amount of time being spent by traditional wine distributors on setting up these pop-up bars and events to make you question what the ultimate objective is here. Particularly when you could argue such initiatives are a big distraction from the day job of servicing their customers and getting the right wines to them on time.

So what is going on?

All of this pop-up and events activity is doing one thing. Bringing wine businesses and producers in direct contact with consumers. It is cutting out the middle man. It is allowing them for the first time to get their hands on real, raw consumer data it can use to better understand the business they are in. They don’t have to rely purely on Nielsen, CGA or IRI sales data. They can see and hear with their own eyes and ears how consumers behave when buying not just any wine, but their wine. That’s worth trudging around muddy fields in the summer for. Or better still having a retail store you have a stake in and let the sales data do the work for you.

How the UK's wine future is as a trendsetter not volume sales driver

You’ve been watching too much of the G20 summit?

Thankyou, you give me too much credibility to think that, the reality is more spending time listening closely to how the world of wine now views the UK. Regardless of Brexit and what all that might mean in terms of future trading arrangements, the UK is now being seen in a very different light by most major wine producing countries that it was three, five and most definitely 10 years ago. 

How do you mean? 

If you think about it major producers in Chile, Australia and South Africa are going to be catching whatever cold is coming out of the UK a lot faster than we get to see it right under our noses. 

They have been the first to feel the fall out from the big seismic changes that we are now seeing in how our major supermarkets are behaving and the impact of the slow, but sustained and strategically vital switch in power away from the grocery giants to the discounters. Aldi and Lidl might only even now only hold 12% of the market, but their influence on how the rest of the grocery (and wine) industry is behaving is total. 

That’s a bit dramatic isn’t it?

What we often forget about the quite, unassuming, cheap and cheerful image of the discounters is they are, in fact, global retail juggernauts. They may act like minnows, but in reality they are big Great Whites circling the world, slowly dominating where they operate. It means they can operate small buying teams, compared to the big supermarkets, as they are backed up by the huge buying power of their central office. They have a fraction of the operating costs as they have tiny ranges, very limited stocks and are not bogged down by pleasing shareholders every quarter.

But what’s all this got to do with wine?
What Aldi and Lidl have done is send shockwaves around the traditional grocers who simply do not currently have the infrastructure to respond. They need big property empires to drive the volume and value sales their shareholders demand. They need big ranges to attract hordes of family shoppers and they also now need to run state of the art online and home delivery operations to satisfy changing shopping behaviour. All of which the discounters don’t need to worry about. 

As a result it has seen massive changes to the way the average supermarket wine aisle is now run. For producers and distributors it means buying decisions based, to coin a phrase, “for the few, not the many”.

So the rest of the wine world has felt the after wave of that?
Not so much the after wave, but global wine producers were hit with all this months before we saw the impact on shelf. Suddenly guaranteed volumes of wine from what might have been their biggest export market are no longer there anymore. It has forced them to change their export strategies and look at the UK through very different eyes. Yes, it might mean pushing more wines in to the independent merchant and on-trade sectors, but for big volume, co-operative based wines from Old World classic regions that has not been a realistic option. Most big branded wines can’t play in those sectors either. 

What are you hearing on the ground then? 

Well, it has been interesting to talk to major producers, co-operatives and negociants over the last year and hear how their tone has changed when they talk about the UK. It’s a subtle difference, but, yes, you will still hear them enthusiastically describe the UK as being a “trendsetter” a “key benchmark” a “shop window” for the rest of the world. That has always been the case. But the big difference now is it’s not then followed up with talk of how their sales are increasing and what big plans they have for the future in the UK. What’s more their export managers are spending less time in the UK and concentrating on bigger, more profitable markets around the world. 

So we’re becoming a strategic hub?
It’s not probably going to be the sales line used by the government’s UK Trade and Investment team, but for large parts of the wine industry, then, yes. The UK is still going to ship and sell a lot of high volume wine, it’s just the number of producers that will benefit is going be greatly diminished.  

And the good news? 

There’s also plenty of that going round too. The supermarket channel may have become increasingly difficult to crack, but it has resulted in far more interest from wine producers to sell their wines in different channels and to help fuel the growth in small independent distributors selling to niche independent and fine wine merchants, wine bars, and a vast and diverse restaurant and gastro pub scene. The type of agenda-setting outlets and operators that will become the UK’s increasingly premium wine image to broadcast around the rest of the world.  

* This article was first published on Grapevine, produced for the London Wine Fair.