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Fizz does the Bizz

Sparkling wines are growing faster in the UK than light wines and they are even closing the gap
on Champagne. The challenge is to develop some premium brands along the way, says Robyn Lewis

In the good old days it used to be that eating out in a restaurant was solely for A Big Occasion. One of the appetiser choices on the leatherette-bound menu would quite often be a glass of orange juice. The main courses would always include a steak diane (yes, I am a child of the 1970s). Champagne would be consumed only if the occasion was a) your 21st birthday b) your sister’s 21st birthday or c) a wedding anniversary of significance. No one touched any sparkling wine that wasn’t from Champagne lest they be seen as naff and tasteless.

The times, they are a-changing as they say. These days we eat out several times a week rather than several times a year, for no other good reason than it’s the beginning of another dreary week, it’s the middle of another dreary week or it’s the end of what’s been another dreary week. Corks are popped on bottles of fizz at home as frequently as in a restaurant and the choice is increasingly as likely to be a bottle of Australian sparkling or even (whisper it) an English fizz. The statistics certainly back this claim up. ACNielsen (MAT GB offs to December 2005) puts the UK sparkling wine market as growing by 8% by both volume and value, which is ahead of both light wine (growing at just 4%) and Champagne (up 3% over the same period). Most of this growth, as the statistics demonstrate, is coming from the multiple grocer sector, which has an 80% share of the sparkling market, up 11% by volume and value.

Results from analysts at TNS Worldpanel show that growth is being driven by English
and Australian wines (23% and 10% share of value respectively). The category continues to be dominated by Spanish and Italian wines, though these are losing value – Spain is down to a 25% share of value from 27% last year, while Italy is down to some 22% from nearly 24% the previous year (all 52 w/e 01/01/06). The price per litre is also showing a drop across the board, reflecting, perhaps, that growth has either come from the increasing popularity of non-Champagne fizz or from an increasing rate of purchase from those already converted. Either way, it is good news for producers.

As for the mighty multiples, in this category it is Tesco that continues to dominate here as elsewhere, with a quarter of the market share (52 w/e 01/01/06). Asda enjoys a further 20%, an impressive increase of 18% year on year, with the Co-op and Iceland posting similar growth, though from a smaller market share base (6% and 3% respectively). Morrisons, with a 9% share of the category by value, has seen a serious decline year on year, down some 17%.

This concentration in the off-trade, however, is of some cause for concern as far as long-term growth is considered. The reliance on discounting and the volume end of the market can not only make sustainable value growth a Herculean task but can also harm the emergence and development of brands.

Champagne challenge

“In terms of future off-trade growth the category has to compete against heavy discounting by Champagne brands and in light of this producers should concentrate on brand development and avoid discounting – it’s a mug’s game,” says Caroline Stockley, marketing manager, English Wines Group. “It can only lead to an irreversible decline in category value, both actual and perceived. Unusually for a wine company our on-/off-trade split is about 80/20 and we are happy with that as we do expect the on-trade to fuel growth going forward, as more top-end restaurants and bars stock
the wine.”

English sparklers have, in fact, managed to promote a high-end profile, through good results in blind tastings against Champagnes and through the high profile of brands like Nyetimber (famously preferred by the Queen). “English sparkling wines have the unique position of offering Champagne style and quality – unlike New World fizz and cava, which are different in style – but at lower price points than Champagne,” claims Stockley. “We also have a point of difference in that it is English. This is appealing to consumers who are already looking for home-grown and locally produced food and drink. This message is communicated via efficient use of PR and it is a consistent message in all our marketing materials.” Another road the English Wines Group has taken is to encourage the use of its sparkling wines on the cocktail scene. “We are all for it! Especially in English cocktails like Pimm’s Royale or English Fizz and Strawberry Liqueur,” she confirms.

Another English producer. Ridgeview Estate, is also looking to the on-trade for growth. “We sell just 10% of our wines through the on-trade but we will be encouraging sales in this area in the coming year,” explains Mike Roberts, winemaker and director. “At the moment by-the-glass sales of our Ridgeview Merret are doing very well in one outlet in particular where it is served instead of a Champagne. It also encourages the diner to buy a bottle after they’ve tried

it and so the restaurateur increases the value of the bill.”

Gianni Martini, president of  Fratelli Martini Secondo Luigi Spa too thinks by-the-glass is a huge opportunity for the category, ”Because today there are very good methods of keeping the wine fresh available, we are able to maintain the quality of the product and avoid waste.” he says. “Thus the on-trade has the opportunity to grow sales in this way, which should increase sparkling wine  consumption.”

For others it is still the off-trade that represents the majority of sales and the most opportunity. Cava, for example, has always been strong in this area – holding some 53% volume share of the total off-trade sparkling wine market (ACNielsen MAT to December 2005), an increase of almost 5% on the previous year. The number-one brand, with 9% value share of the total sparkling market is Freixenet, according to Jill Taylor, assistant brand manager at the company. “Growth continues to be driven by the off-trade with in-home drinking still increasing,” she says. “Consumers are more and more becoming educated regarding different sparkling wines and are motivated to purchase because they enjoy particular wines rather than simply by comparing the price point to Champagnes. Consequently, sparkling wine is increasingly consumed on a more everyday basis.”

Premium cava

As true as this statement might be (and certainly anecdotal evidence would seem to back it up) the challenge for cava, as for other sparkling wines in the off-trade, is how to compete at a more premium level in order to increase
value. “The category suppliers have to increase consumer education to understand sparkling wines in their own right rather than as an alternative to Champagne,” says Taylor. “Value growth
can be achieved through development of more premium cava lines, which give the consumer a ‘real’ alternative to Champagne, proving that cava competes at quality levels above that of a heavily promoted own label. We introduced a Vintage Brut cava in 2004 and that is performing very well in the premium sector, proving that there is positive consumer acceptance at this level.”

Rival cava brand Codorníu also has offerings at a more premium level, but admits that pushing the category in this direction remains a challenge. “Developing the category up the price points is one of our biggest challenges for the future,” comments Bill Breen, managing director of Codorníu UK/Ireland. “We need to show consumers that cava remains excellent value as an alternative to Champagne even at this level. We have super-premium Codorníu SKUs in Spain, selling on or around Champagne prices. We have to give retailers in the UK the confidence to try these and then the thresholds may start to blur a little. This will take time however.”

New recruits

Increasing value above entry and own-label level also requires some level of brand strength, as both the above cava brands have shown. Fortuitously then the growth in the sparkling wine sector has not gone unnoticed by some of the bigger light wine brands, who have added sparkling wine products to their brand portfolio. Jacob’s Creek has been particularly successful with its sparkling offerings, as has French brand Piat d’Or and Californian Blossom Hill.

Jenny Wallace, brand manager at Piat d’Or says, “The sparkling wine category is continuing to enjoy healthy growth, as is clear from the Nielsen results. Our wider brand values – that Piat is an approachable, easy to drink and accessible French wine – fits as well into a sparkling wine offering as a still one. Piat d’Or sparkling was created for consumers and chosen by them – we put all the proposed blends through a robust blind consumer tasting panel made up of 150 consumers and
the chosen wine has been very, very successful for us. Consumers are increasingly buying sparkling wine through the off-trade not just for celebrations but for Friday nights in as well, and in the on-trade we have run a recent PR campaign using cocktail recipes created by Diageo mixologist Craig Edney using Piat d’Or.”

A simultaneous focus on the on- and off-trades has also been successful for Blossom Hill, which launched a sparkling white and a sparkling rosé onto the market in October 2005 through both the off-trade and wholesalers. “This makes it accessible for publicans to sell through their outlets as well as to off-trade customers,” says senior brand manger, Helen Wright. “We have now also secured a listing with Carlsberg that will drive more trial in this area. Our ongoing monitoring of consumer trends and tastes highlighted the popularity of sparkling wines and the demand for a Blossom Hill version. The UK wine market is such a cluttered environment and often causes confusion for consumers. A strong brand like ours can be easily recognised by both existing devotees of the brand and by prospective consumers when they are looking for some fizz to enjoy life’s little celebrations.”

Popping corks for life’s smaller celebrations?  Whatever next – steak diane disappearing without trace from the nation’s menus? Surely not. 

What consumers really think …

How much do average consumers really know about sparkling wine styles and brands? According to The Champagne and Sparkling Wine Survey 2006, commissioned by Drinks Insight, awareness isn’t high, which represents a huge opportunity for individual sparkling producers – or even for a generic campaign.
• 15% of consumers can’t name any sparkling wine brands at all
• 10% of consumers think that cava is a brand name
• 1% think that Pimmsand Babycham are sparkling wines
The full findings of this research are available in The Champagne and Sparkling Wine Survey 2006. To order tel: +44 (0) 20 7803 2444 or email:
info@drinksinsight.com

db  April 2006

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