UK On trade - A perfect storm in the UK on-trade

Wine is struggling for attention in a UK restaurant sector experiencing a ‘perfect storm’ of adverse trading conditions

There is no longer a simple decision regarding how to get food: go out or cook. Now, we have multiple other alternatives to throw in the mix: takeaway, ready-meals and meal-at-home kits to name just a few.

These elements are all affecting the UK on-trade, as discussed in Wine Intelligence’s recent report UK On-trade Trends 2018.

In short, the UK restaurant sector is experiencing a ‘perfect storm’ of adverse trading conditions.  Not only are restaurants in the UK met with significant outside competition these days, but they are also having to reassess their business model due to poor commercial conditions, partly driven by increased tax burdens and wage legislation.

In addition, some of these new establishments, especially ‘kitchen + delivery’ services that don’t provide a seating area, just food and delivery, are drawing investment capital away from more conventional restaurant concepts.  For example, according to The Guardian, Deliveroo is growing at the phenomenal speed of “25% month on month, in more than 70 countries worldwide.”

To top all this off, the uncertainty of Brexit is impacting both staff and imported products in the UK.  The large, non-UK workforce means restrictions on travel and eligibility may be a problem post-2019.  Not only are future prices uncertain, including prices for wine and a number of key food ingredients, but the effects of a weaker sterling and the difficulty of predicting the currency market sentiment are also being felt in the lead up to Brexit.

Restauranteurs are also reporting that wine is receiving less attention as gin, cocktails and craft beer are attracting more consumers.  Although wine remains the backbone of the alcoholic choice on offer in most food-led outlets, these other choices are more talked about and have grown in repertoire over the past year.

There is, however, a growing interest in alternative wines (from a low base) as organic and vegan products are increasing their exposure.  This exposure could be due not only to an increase in trade interest in natural wines, with several UK events now devoted to them, but also from restauranteurs responding to the mainstreaming of veganism with vegan offers meaning alternative wines are more easily available.

But consumers are still looking for wine in the on-trade, and willing to pay for it, seeking demonstrably higher quality wine across all price points, including house wine and icon products, where quality in this context is often interpreted as ‘better than I could get in a supermarket / off-licence.’  On-trade practitioners can interpret this as a need for small or unique producers, and those with compelling or interesting stories to drive their wine sales.

Overall, while the UK on-trade sector is experiencing a wave of challenging trading conditions, it is not all bad news for wine, as restaurateurs think outside the box on how to engage customers and provide them with both quality and alternative wines.

Along the lines with this trend, Wine Intelligence will be publishing a report on sustainable, organic, and lower-alcohol wines shortly.


Author: Courtney Abernathy