Looking outside London

The renaissance of the London restaurant scene over the past decade or so has, if anything, only encouraged the ­impression that the capital dominates the UK wine sector. 

And it’s a preconception which is, to some extent, supported by the facts. The average spend on wine in London is 30% above the national average, according to drinks distributor Bibendum. Meanwhile, Australia-based ­research and consultancy company Wine Business Solutions (WBS) calculates that an average bottle of wine on a London restaurant wine list cost £48.00 ($80.45) in 2013 – compared to £30.00 to £33.00 in the rest of the UK. The London-centric nature of the UK wine market is in part dictated by simple ­demographics. Nearly 12% of the UK population lives there (7.4m out of 63m people) and, of the other significant conurbations, only Birmingham can muster a population of more than one million (1.1m).

Of the rest, the biggest cities are Leeds (750,000), Glasgow (590,000), Manchester (500,000), Liverpool and Edinburgh (both 470,000) and Bristol (400,000). Welsh capital Cardiff has a population of about 350,000, and Northern Ireland’s Belfast of just over 280,000.  

Investment outside London

Historically, the wine trade has tended to call London home, and even today, leading ­national suppliers such as Bibendum, Enotria and Liberty Wine are still based inside the M25.

Liberty’s business is split 50/50 between London and the rest of the UK, according to managing director David Gleave MW. But he adds: “Independent wine merchants are crucial for our business, with the independent off-trade making up approximately 30% of our trade split overall, increasing to 52% of our business outside London.”

Reflecting this, the company has made “significant investments” over the past year in its sales teams in the North of ­England and Scotland, and now holds portfolio ­tastings in Bristol and Manchester, supplementing existing events in London, Edinburgh and Dublin.

Turning to the big retailers – and especially­ the major multiples of Tesco, Asda, Sainsbury’s, Morrisons and Waitrose – you might imagine that, thanks to their near ubiquity, the opportunities they offer are uniform across the UK. But the situation is more complex. Waitrose remains strongly ­focused on the southern half of England, and regional players such as Booths can ­intrude into the big companies’ market share. “Some of the biggest volume players in the ­off-trade over-index outside of London – namely ­Morrisons and Asda – in terms of store footprint,” points out Melissa Yorke, grocery controller at Accolade Wines. “Both these retailers under-trade in wine versus total grocery, so this represents a huge opportunity for growth. In addition, these retailers are also growing their footprint in convenience ­retailing, including city centre stores – which means wine will continue to be made more accessible and readily and conveniently available.”

For restaurants, being based outside London can be both a blessing and a curse. “The cost of having a restaurant outside London is much more beneficial, and therefore we can offer wines at a better price,” observes Roger Jones, chef patron at The Harrow at Little Bedwyn, a Michelin-starred restaurant in rural Wiltshire. “We will certainly sell what I call top-quality wines more easily than a London restaurant with large mark-ups.”

But isolation means that, unlike Mayfair, there aren’t hundreds or even thousands of potential customers within walking distance of the restaurant. “It is essential for our business, being outside London in a tiny hamlet with no other attractions, to offer clients the choice – and without the choice of premium wines we would not survive,” Jones acknowledges.

It also makes trade support vital, he adds. “Companies such as Riedel have appreciated our benefits and are a sponsor of ours, as are Moët Hennessy UK, who have helped us to be able to pour Krug, Dom Pérignon, etc for the last 10 years by the glass. We have also worked closely with individual wineries such as Trimbach and Viña Tondonia to get the very best at The Harrow.”

London sets the pace

Nonetheless, the average list prices of wines in London and in the UK provinces have begun to converge in recent years, partly as a consequence of London restaurants contrac­ting their lists during the prolonged economic downturn. “No longer can you say that wine in restaurants in the south-east of England costs so very much more than in Northern Ireland, for example,” points out WBS principal Peter McAtamney.

And there is anecdotal evidence to suggest that regional consumers are beginning to trade up. “In recent months, we have seen that ­consumers in Scotland and the North of ­England are willing to pay more per bottle for their favourites, primarily when buying in the off-trade – key drivers have included Greywacke Marlborough Sauvignon Blanc and Willunga 100 McLaren Vale Grenache,” reports Gleave. “This is supported by Nielsen data which shows an increase in purchases of wine above RRP£8.00 a bottle.”

Regional pricing trends are accompanied by the diverse on-trade performances of producer countries in the various regions, McAtamney adds. “France, for example, has absolutely ­cornered high-end London restaurants, while Italy is generally stronger in the North,” he says. “New World wines are very much more popular­ in Northern Ireland than they are in the rest of the UK.” He adds that “Spain has ­cleverly found itself two audiences. One, in London, is excited by the new wines coming out of Spain’s emerging regions, whilst regional UK remains more attached to Rioja.”

At the lower end, WBS research has Chile as the cheapest supplier country, capturing ­market share in the regions as a result, but still lagging behind Italy and France in the number of sub-£20.00 listings. In London, meanwhile, McAtamney calculates that three-quarters of London listings under £20.00 come from France, Italy and Spain. These trends, he adds, have implications. “If London truly does set the fashion for the rest of the country, then ­Australia has a massive problem, as do New World wines more broadly. As food has become more sophisticated in the UK, European wines, to this point, have the upper hand.”

So where are the regional wine hotspots in the UK in 2014? Gleave reports particular promise in the metropolitan swathe of the north-west. Liberty’s total sales across Greater Manchester, Merseyside and Cheshire were up 39% in 2013, and he says of the region: “A ­geographically big, densely populated area with a burgeoning on-trade environment, [where] consumers are becoming more ­interested and engaged with wine.”

Meanwhile, Bibendum also earmarks the north-west, along with Scotland and the south-west of England, as being among the regions with the highest wine spend outside London. But having this information is all well and good – knowing how to exploit it is another thing ­entirely. “In order to make the most of opportunities in these hotspots, you need to understand the consumer: what they want to be drinking and where they will be drinking,” Bibendum Wine regional sales director Antony Rixon says.

Based on the premise that factors such as grape variety are key purchasing cues, Bibendum has used a range of data sources to identify geo-specific key indicators such as top five grape varieties and countries of origin,­ alongside a detailed breakdown of taste ­preferences and the eating-out scene. But the company acknowledges that it’s a constantly shifting picture. In 2014, Rixon believes there is a raft of further opportunities in the UK ­regions, including a number of new gastropubs and luxury establishments in the north-east – such as York’s Star Inn the City and Darlington’s Rockliffe Hall Hotel.

Choosing the best distribution partner to find and make the most of these opportunities is a complex question, reckons McAtamney of WBS. Bankruptcies and M&A activity have engineered a creeping consolidation of the importer base in the UK wine market since the economic crash of late 2008: WBS calculates that the top 30 importers now have 75% of all listings of brands claimed as exclusive in the on-trade – up from 66% in 2009.

McAtamney picks out the top national fine wine specialists – Enotria, Bibendum, Liberty etc – as having the soundest current model in that they “are in the best position to respond to a market that is becoming rapidly more sophisticated”. The other class of distributor performing strongly now, he adds, includes those who have invested in the supply chain, such as Boutinot, which according to WBS is the leading on-trade supplier of South African wine.

Regional variations apply here too. The ­relative remoteness from London of Scotland, and Devon and Cornwall, has­ enabled a number of strong distribution­ businesses to become established in both areas,­ where­­as in ­southern England the ­influence of ­London-based companies is stronger, and competition therefore fiercer. 

And, if finding the right business partner is vital, so is the fine print when it comes to negotiating an agreement. “Suppliers should ­always be wary of distributors who seek to start their own brands in competition with theirs, and should look to protect their brands accor­dingly through their distribution contract,” says McAtamney.

The best way to avoid this might be for the partners to pool their production expertise and market knowledge to create joint ­venture brands. McAtamney cites Boutinot’s tie-up with Spain’s Bodegas Borsao, which has yielded the UK restaurant sector’s third-most- listed wine brand (after Cloudy Bay and False Bay, another Boutinot brand, according to WBS figures). But however you do your business in the UK, wherever you conduct it and whoever you do it with, it’s a wine market that remains as intensely competitive as ever. “Competition is fierce everywhere,” agrees Gleave. “Outside the capital we are competing against local merchants as well as ­national suppliers, so ­offering quality, value and ­exceptional customer service is key.”

Regional hotspots

UK-wide drinks distribution business Bibendum has a dedicated Market Insights team tasked with analysing who the company’s customers are, what makes them different and – most importantly of all – what they want to drink. Using 30-plus data sources, this ­information is fed into Bibendum Prospect, an ­online consumer information resource.

“We can then analyse that data on as large or small a geographic area as required, from an entire UK region to one specific postcode,” says Bibendum Wine regional sales director Antony Rixon. In early 2014, Bibendum has identified three “hotspot cities” around the UK: Bristol, Glasgow and Manchester. Using insights into the consumers and their dining out habits in these areas, the company can help its on-trade customers to create tailored wine lists to match local preferences.

BRISTOL

Food scene in numbers:

• 343 pubs (13 in The Good Beer Guide)
• 342 restaurants (13 in The Good Food Guide)
• 214 cafés
• 46 fish and chip shops
• 14 AA four-star hotels
• 5 comedy clubs
• 2 yacht clubs
• 1 Michelin-starred restaurant

Top five grape varieties:

1. Sauvignon Blanc
2. Pinot Grigio
3. Cabernet Sauvignon
4. Tempranillo
5. Merlot

Top five wine-producing countries:

1. France (30%)
2. Australia (24%)
3. Italy (15%)
4. New Zealand (10%)
5. Spain (7%)

Top five wine trends in 2014:

1. Sustainability and ethical wines
2. Wine on tap (using wine kegs)
3. “Classics” such as Chablis and Rioja
4. Sherry, especially Fino and Manzanilla
5. Sweet red wines, such as Maury

Source: Bibendum analysis of postcodes BS1-8, BS10-11, BS13-16, BS32, BS36 and BS41
 

GLASGOW

Food scene in numbers:

• 190 pubs 
• (7 in The Good Beer Guide)
• 387 restaurants 
• (9 in The Good Food Guide)
• 133 cafés
• 26 night clubs
• 21 fish and chip shops
• 7 AA four-star hotels
• 4 casinos
• 2 juice bars

Top five grape varieties:

1. Pinot Grigio
2. Sauvignon Blanc
3. Merlot
4. Tempranillo
5. Chardonnay

Top five wine-producing countries:

1. France (25%)
2. Australia (17%)
3. Italy (15%)
4. Chile (12%)
5. Spain (10%)
    

Top five wine trends in 2014:

1. Malbec and meat, especially burgers
2. New wave Italian grapes such as Fiano, 
3. Grecanico, Frapatto
4. Picpoul: “the new Pinot Grigio”
5. Wine on tap (using wine kegs)
6. Sweeter styles from Moscato to Riesling

Source: Bibendum analysis of postcodes G1-3, G11-12 and G41
 

MANCHESTER

Food scene in numbers:

• 550 pubs (13 in The Good Beer Guide)
• 812 restaurants (12 in The Good Food Guide)
• 202 cafés
• 82 fish and chip shops
• 11 AA four-star hotels
• 2 five-star hotels
• 13 chocolatiers
• 5 juice bars

Top five grape varieties:

1. Pinot Grigio
2. Shiraz
3. Sauvignon Blanc
4. Merlot
5. Cabernet Sauvignon

Top five wine-producing countries:

1. Australia (23%)
2. France (22%)
3. Italy (14%)
4. Spain (12%)
5. Chile (10%)

Top five wine trends in 2014:

1. Champagne
2. Wine on tap (using wine kegs)
3. Fine wine for fine dining
4. New wave Italian grapes such as Fiano, 
5. Grecanico, Frapatto
6. Wine flights

Source: Bibendum analysis of all M postcodes
 

Regional variations

A glance at the UK map of restaurant wine pricing tells you two things. One: The average list price of wines in London is still much higher than in the rest of the country. And two: The variations in the provinces are much less pronounced than they were a few years ago. At the same time, average London list pricing has dropped noticeably as lists have become more streamlined. While the average London wine price was often more than double that of the provinces in 2009, the difference was closer to 50% by 2013.