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- Angela Mount
- 2018-11-06
The challenge to wine producers seeking success in the UK in the current tough climate – with Brexit looming, narrowing profit margins and increasing competition – is becoming even more difficult as retailers and restaurant groups rationalise their supply base, and look for the option of buying better and more from fewer suppliers.
This is the biggest question.
With an increasing amount of retailers, and on-trade groups, both bottling in the UK and also importing direct, what’s the best route to market?
Working via an importer will add overheads, but can secure major benefits. Producers need to understand the ‘add on’ margins, as we will explain in the next instalment of this series. Efficient administration is also vital, be it completing forms or hitting shipping deadlines.
Firstly, research how distributors work, and where their strengths lie. If you are looking for large volume distribution, then look to importers who have their main strength in the supermarkets, impulse and on-trade groups. Contacts are vital as more and more retailers move to direct purchasing. Or, if the relationship with a major buyer already exists, the direct option is a given, although there will be more pressure on administration to manage the relationship.
If you are looking for premium independents and the on-trade, then focus on importers who have the infrastructure to reach into those markets. As David Gleave (above), managing director of Liberty Wines, says: “What we can do is offer multichannel distribution, that’s our job, and involves getting to small accounts, who can’t ship direct, and helping their logistics.”
The three most important words are ‘value’, ‘research’ and ‘relationships’. Andrew Ingram, ex-buyer for Morrisons and now head buyer at Greene King, advises: “We work with importers, as long as they add value, work with us, and represent us with their producers, that they do their homework, and understand our business in detail, to support what we need, not what they want. That’s the key to a successful relationship be it direct or via a distributor.”
“Physically, supermarkets are very well set up for direct shipments, but smaller customers don’t have the infrastructure to manage shipment logistics, and don’t have the storage, as they will try to minimise stockholding. This particularly applies to the impulse sectors and small independents, so we do it for them. We need to be as mean and efficient as possible” - Kim Wilson (above), managing director, North South Wines
The off-trade, comprising supermarkets, convenience retail, and independents is worth £6.1m, accounting for 65% of total value and 85% of total volume. Of this, supermarkets hold a massive 73% of both market value and volume of the off-trade, the remainder being made up of discounters, convenience retail and the all-important independent sector.
The on-trade accounts for 35% of the market in terms of value, but only 15% in terms of volume, with a higher retail price point in the HORECA market.
The wine market is shrinking in terms of volume, with 8 million cases less than five years ago. However, spend is up 11%, proving that UK consumers are drinking less but better in both the on- and off-trade.
Part 1: Understanding the UK market is here
‘UK consumers are drinking less but better’
What’s happening now?
The UK wine market is worth £9.4bn, with annual sales of over 100 million 9-litre cases, but the wine market is shrinking in terms of volume, with 8 million cases less than five years ago. However, spend is up 11%, proving that UK consumers are drinking less but better in both on- and off-trade.TOP TIPS
- Understand the market structure, in terms of distributors and costs (see below).
- Understand that the style of wine that works in your home market may not be right for the UK (see the latest research on sensory perception).
- Benchmark and taste a variety of styles across the different categories, not just your own country.
- Listen to advice.
- Do your homework.
IMPORTER OR DIRECT?
This is the biggest question.With an increasing amount of retailers, and on-trade groups, both bottling in the UK and also importing direct, what’s the best route to market?
Working via an importer will add overheads, but can secure major benefits. Producers need to understand the ‘add on’ margins, as we will explain in the next instalment of this series. Efficient administration is also vital, be it completing forms or hitting shipping deadlines.
Firstly, research how distributors work, and where their strengths lie. If you are looking for large volume distribution, then look to importers who have their main strength in the supermarkets, impulse and on-trade groups. Contacts are vital as more and more retailers move to direct purchasing. Or, if the relationship with a major buyer already exists, the direct option is a given, although there will be more pressure on administration to manage the relationship.
If you are looking for premium independents and the on-trade, then focus on importers who have the infrastructure to reach into those markets. As David Gleave (above), managing director of Liberty Wines, says: “What we can do is offer multichannel distribution, that’s our job, and involves getting to small accounts, who can’t ship direct, and helping their logistics.”
The three most important words are ‘value’, ‘research’ and ‘relationships’. Andrew Ingram, ex-buyer for Morrisons and now head buyer at Greene King, advises: “We work with importers, as long as they add value, work with us, and represent us with their producers, that they do their homework, and understand our business in detail, to support what we need, not what they want. That’s the key to a successful relationship be it direct or via a distributor.”
‘We're not just a go-between'
What the buyers say
“As a business, we have to add value, we’re not just a go-between. We’re out in the trade all the time, we’re on top of trends, and we actively go to producers with ideas. Producers can’t understand all of that, as they are not here, that’s our job.“Physically, supermarkets are very well set up for direct shipments, but smaller customers don’t have the infrastructure to manage shipment logistics, and don’t have the storage, as they will try to minimise stockholding. This particularly applies to the impulse sectors and small independents, so we do it for them. We need to be as mean and efficient as possible” - Kim Wilson (above), managing director, North South Wines
“If you don’t have the right relationships, there is no point in blind emails. You will just be a nuisance” - David Gleave, Liberty Wines“I like to work directly with winemakers wherever possible to get the wines I really want. However, to work direct, from a producer’s perspective, you have to be absolutely on the ball, and understand not only our strategy, but your administrative and logistics process” - Mike James, Aldi
THE FACTS
The UK wine market is worth £9.4bn, with annual sales of over 100 million 9-litre cases.The off-trade, comprising supermarkets, convenience retail, and independents is worth £6.1m, accounting for 65% of total value and 85% of total volume. Of this, supermarkets hold a massive 73% of both market value and volume of the off-trade, the remainder being made up of discounters, convenience retail and the all-important independent sector.
The on-trade accounts for 35% of the market in terms of value, but only 15% in terms of volume, with a higher retail price point in the HORECA market.
The wine market is shrinking in terms of volume, with 8 million cases less than five years ago. However, spend is up 11%, proving that UK consumers are drinking less but better in both the on- and off-trade.
Part 1: Understanding the UK market is here
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