Are New World wines continuing in the ascendant? Sonya Hook reports

Last year was another strong year for wine in the UK off-trade, with sales up 5%. And with France set to be overtaken by the US soon, wines from the New World are driving the category.
Consumers in the UK continue to prefer a taste of the new. Wines from the US and New Zealand grew the most in value over the 12 months to December 24 last year, while France and Germany were again the only two casualties, down 3% and 7% respectively.
According to The Grocer’s exclusive research from ACNielsen, New World producers accounted for six of the top ten countries supplying the UK, all of which saw an increase in off-trade sales last year, particularly the US and New Zealand, up 15% and 44% respectively.
New Zealand has just a small chunk of the UK wine market, but this is growing rapidly as consumers show their preference for brands and for fresher, crisp wines. Unlike the other producers New Zealand has also managed to hold on to high price points with UK consumers paying an average of £5.97 a bottle compared with the overall retail average of £3.79. A spokesman for the generic body in the UK, New Zealand Wine Growers, says: “We saw great results in 2005 from promotions, including one with independents. We had never worked with this sector as well as this before. Results were fantastic.”
Promotions in Sainsbury also helped to boost the category.
California also had a good 2005 and became widely recognised as a major force behind increased interest in rosé in the summer. The continued strength of US wine, of which California is the principal region, indicates it is close to taking second place from France.
Helen Wright, senior brand manager for California’s leading off-trade brand Blossom Hill, says: “Consumers are increasingly looking to the US to deliver quality wines. In the total light wine market, the future is just as positive, with New World wines leading the way.”
Australia continues as number one, driven by key brands Hardys (Constellation) and Jacob’s Creek (Pernod Ricard). Its growth jumped from 6% in 2004 to 9% in 2005.

Australia continues to capture the hearts of UK drinkers, but experts fear it is in danger of losing its image for diversity and flair. Mike Paul at importer Western Wines says: “The UK perception is that it is one bland style, which consumers like, but the huge surplus is distorting the way Australia is perceived. It is in fact producing more diverse styles than ever.”
France is maintaining its premium position as UK consumers seek wines at higher prices, but is struggling against the New World. Producers such as Boisset are trying to create brands before the New World does. Jean-François Mau of Bordeaux wine merchant Yvon Mau says: “France needs to produce international-style brands.”
California is going from strength to strength, led by Blossom Hill and Ernest & Julio Gallo, and drove the UK rosé boom last summer. “We are always looking at more opportunities and there are more in California,” says Jane Hunter, Gallo director of marketing. “We plan to educate the consumer about regions, to explain what Napa or Sonoma means.”
Italy’s wine industry is fragmented with few strong brands, although consumers identify with its regions. David Gleave, MD of importer Liberty Wines, says: “Many think it should go down the brand route.
“It could also benefit from linking with Italian brands in grocery. But Italy is one of the worst for marketing. It needs a good generic office.”
South Africa
Producers are still working to add value to South African wine, and Wines of South Africa continues to run its campaign to push the average bottle over £5. “In terms of cost, it can’t compete with Australia so needs to be a lot more premium,” says Mike Paul, MD of Western Wines. “The future is a lot more style but all the brands are under £5.”
The Spanish Wine Action Group, created last year, is working closely with Wines of Spain in the UK to push this message: Spain has modern, quality wines, the most interesting wines from the Old World. Wines from the Rioja region and sparkling Cavas did well last year, but the group also wants to educate British consumers about its other varieties.
Once the Volvo of wine - safe but lacklustre - Chilean wines now have more appeal. The £5- £10 category is strong thanks to better marketing and winemaking. Michael Cox, UK director, Wines of Chile, says: “Chile has gone from being a source of reliable, inexpensive red wine to a much more readily accepted source of diverse styles.”
Wines of Germany is promoting quality wines retailing at £3.49 and over. The UK perception that Germany produces just sweet Liebfraumilch styles is fading. Activity will be maximised as the FIFA World Cup draws near. The key brands for many years have been Black Tower and Blue Nun, both of which have been revamped to appeal to a younger drinker.
New Zealand
Last year’s vintage was the second-biggest ever. The key variety is Sauvignon Blanc followed by Chardonnay, Pinot Noir and Merlot. The country has enjoyed exceptional value growth and has the highest average price per bottle in the UK. New Zealand is the pioneer of the screw cap revolution, with 72% of its wines now sealed this way.
The Argentine wine sector suffers from comparison with dynamic Chile and lack of demand means it often doesn’t get the space it deserves. Main brands Argento and Inti are working on the image. “Argentine wine is not as high on the radar with off-trade retailers as we would like,” says Amelia Nolan, general manager of The Argento Wine Company.
Facts & Figures

n Australia continues to grow its UK market share and of the top ten countries now accounts for nearly a quarter of sales
n Italy and South Africa are battling for fourth place. Germany has slumped 7%

UK sales %
(£m) growth
Australia 1,008 9
France 761 -3
US 648 15
Italy 427 5
South Africa 401 2
Spain 284 7
Chile 266 3
Germany 177 -7
New Zealand 102 44
Argentina 63 8
Source: ACNielsen year to Dec 24 05