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FROM THE GRAPEVINE: OCTOBER 2019

FROM THE GRAPEVINE: OCTOBER 2019

Originally published in London Wine Fair's Grapevine: 031019

By Richard Siddle

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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.

“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.”

 

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.