UK RETAIL INDEPENDENTS: A sence of place

30 July 2007 By db staff writer

“standfirst”>In the independent sector, UK shoppers are asking more questions about their wine and are spending more, following growing interest in food provenance. Fionnuala Synnott goes shopping

With a current market value of over £1.6 billion*, organic food is big business. Retailers have been quick to pick up on this trend with the likes of Tesco launching an organic box delivery scheme last year. Whole Foods, the world’s largest retailer of natural and organic foods and owner of Fresh & Wild, has recently invested millions in its UK flagship store in Kensington, threatening the middle classes’ supermarket of choice – Waitrose – a long-standing champion of organic and Fairtrade produce.

Although not everyone may want to (or be able to afford to) splash out on organic spaghetti, there is no doubt that UK consumers are more educated about food and are taking more interest in where their food comes from, as witnessed by the number of farmers’ markets that have sprung up of late. Whereas previously Britain was a country notorious for the low standard of its food – a nostalgia trip to the boarding school dining hall – nowadays, consumers think nothing of spending their hard-earned cash on premium food or restaurants.

Although consumers’ food spending patterns are not always mirrored in the wine category (the organic trend, for instance, does not appear to have translated significantly to wine), food trends can influence what wines consumers choose to buy. Patrick Sandeman, director, Lea and Sandeman, comments: “There is a correlation between the vastly increased interest in food and wine sales. People are prepared to spend significant amounts on food – this has had some bearing on how much people are prepared to spend on wine.”

Retailers, aware of this potential knock-on effect, are improving their wine offering, from Whole Foods, which has a large wine department (although not all the wines on sale are organic) as well as a small wine bar, to Selfridges’ Wonder Bar, or Fortnum & Mason, which has more than doubled the size of its wine department as part of a £24m refurbishment.

Anecdotal evidence from the independent sector also suggests that consumers interested in paying for quality food provenance may be prepared to do the same when it comes to wine. Lorne Gray, marketing controller, wines, John E Fells & Sons, says: “Although it is difficult to judge precisely how many, there is a growing band of people willing to pay for quality wine provenance.”

Growing curiosity
In the independent sector, there are signs that consumers are becoming more adventurous and trading across. Jamie Harrison, head of media and communications at Noel Young Wines, explains: “Nowadays, consumers want to be able to pick and choose. We offer mixed cases, both in-store and online, which are doing well. We are also offering more premium en primeur mixed cases such as Grange and Penfolds.”

According to Danny Cameron, wine and business consultant to Lewis & Cooper, the Yorkshire-based, premium hamper specialist, consumers are becoming “buying curious”. This is a positive development as it means that price is not always the most important factor when consumers are making the purchasing decision and gives the salesmen on the floor an opportunity to trade customers up. Cameron adds: “With sufficient hand sell and explanation, customers are enjoying being led to areas on the edge of their comfort zone such as premium estates in Lebanon. Customers want something interesting from California, Spain or Portugal while our sales of Bordeaux and Australian wine are receding.”

Rob Graves has noticed a similar trend at Harvey Nichols. “People are trying to find something that is a little different to what they are used to, such as boutique wines or wines that have more provenance. Indigenous Italian grape varieties and smaller French producers are proving popular.” Meanwhile, Lea and Sandeman is looking to offer more indigenous grape varietals and more growers’ Champagnes rather than branded wines.

According to Cameron, consumers are looking for an emotive reason to buy a wine. “Consumers like to have a story to tell when they serve the wine so they are interested in finding out whether the wine comes from a family-run winery, for instance, rather than knowing its carbon footprint.”

Trading up
Sales are rising in the independent sector, with reports that consumers are trading up. Alistair Viner, wine and spirits buyer, says Harrods shoppers have been trading up over the past three or four years. “Consumers are possibly buying less but are buying better. In our wine department, average unit spend has gone up from £22 three or four years ago to over £30 per unit nowadays.” Meanwhile, at Lea and Sandeman, Patrick Sandeman has “definitely seen” people trading up over the past 12 months. “Our retail business has grown dramatically and average spend has increased. Whereas before people were perhaps capping their spend at £10 now they are capping it at £15. Although, in general, people are still cautious about spending over £20.”

In the mainstream retail market, Tesco has added a fine wine range and is in the process of launching an en primeur service, which suggests that people are trading up. Fells’ Gray observes: “It is a positive development for everyone if people can see the merits of spending a little more on wine. Increasing interest in the en primeur market is opening up the wine sector and may encourage people to think about doing things such as laying down Port for anniversaries or for their godchildren. It is the injection that the market needs.”

At a time when the wine market is dominated by the multiple grocers, it is encouraging to see that sales in the independent sector, if not booming, are growing steadily. However, Cameron warns against becoming too complacent: “Wine is still seen as a commodity purchase. We need to find new ways for the consumer to find the value attached to spending a little bit more on quality wine.”

© db August 2007

 (* latest figures available from The Soil Association at the time of going to press)