How do you reflect on 2024 going into next year - what have been the big moments for you as a business over the last 12 months?
Customer evolution and consumer diversification. August 2023 duty changes took an impact and couple that with living costs increases, it was no surprise consumers had a different standpoint when choosing their wines.
In the off-trade we saw six of the top 10 wine countries decline in volume (July 23 to June 24) whilst the on-trade was even more bleak with only South Africa increasing volume in the top 10. It was no surprise that every top 10 country in both the on and off-trade saw the average bottle price increase.
It meant sales were harder to come by, but those customers who were more dynamic and willing to change did create new trading sectors to support customer retention.
El Don is an example of the sort of new product development that GM Drinks works with its producer partners to create for different channels of the market
For the first time we saw different habits at different price points. Those buying £6 bottles of wine and below were looking to reduce their basket spend, those buying £6 to £9 were looking to brand switch to keep a consistent spend, and those spending over £9 were happy to stay brand and product loyal.
It has meant certain months have been baffling in terms of sales. We have had slow months which we expected to be better, and then usually slower months have been surprisingly good. Overall, though, there has been a decline with most wine companies no longer seeing organic growth.
Where were you in terms of achieving your commercial goals and targets?
Like-for-like started well in Q1, but volume didn’t match the same expectations through Q2 and Q3. New product developed helped recoup some lost sales and market downturns.
What were the key reasons for those figures?
Generally people having less money to shop. This is relevant to consumers as well as businesses. We have seen some customers be down on footfall with people, on average, spending less.
What are your thoughts going into 2025 and what you see as the big opportunities you can build on from this year?
We see much of the same. Like-for-like sales are going to be harder, especially with the crazy changes to duty bands from February 2025. Watching and following consumer trends and demands will be even more important.
There are a lot of concerns over the big changes in duty rates happening in February - how do you reflect on those changes and what impact they will have you and the business?
The market needs to act smart. We don’t need a wine list or shelf with a bunch of low ABV wines which will have an impact on consumer confusion. But it means offering value for money and price point will become vitally more important.
What specific steps are you putting in place to handle the extra administration and complexity of the multiple duty rates?
Why spend more time on focusing on the problems when more time can be given to the solutions. Duty has become a daily administration routine and topic of conversation.
Will you be actively looking to source lower ABV wines and if so what specific ABVs are you looking for?
One of the lower ABV wines that GM Drinks is bringing to the market
Yes, and they have started very well.
What style of wine at lower ABVs would you consider listing in terms of how they are made - spinning come vs other dealcoholising methods?
The important point is having the best wine at the finish line. I probably prefer vacuum over spinning to retain more key tasting notes, but fundamentally it starts with a great base that can be seen at the end.
Do you see any risks to the overall wine category if we see more lower ABV and questionable quality wines in the UK market?
If the process works, what’s to say we wont see in the future a ‘premium lower ABV’ wine sector? Unfortunately, for regions with a well-established long history of heritage this won’t be an area they can be involved with, but then again, consumers will still want to drink their oak- driven Rioja wines at 13.5%.
Do you also see opportunities and ways in which you can help and support customers with these changes - if so how?
Indomita, one of Chile's biggest producers, is one of GM Drinks key South American partners
We have to be flexible and understand what works for one customer might be very different from the next. Buyers habits are always changing. Do all wines at the lower end of the market need to be lower in ABV and do all wines at the high end need to be full strength? Opportunities will be greater, but so will failures.
There is also the issue around increased Extended Packaging Responsibilities - what impact do you expect them to have and how are you planning for them?
This can only be truly experienced once England, Scotland and Wales become aligned on glass. Without it, it’s a non-starter. However the net result is like everything else - the consumer will end up paying more. This is not the route we need right now.
What other major plans do you have for next year in terms of wines, ranges, events, tastings and activity in the trade?
We have new exciting projects. If something is working we will be looking at what changes need to be made to keep it there. That was not the case before. We now need to be a lot smarter if we want successful wines to remain so.
* You can find out more about GM Drinks at its website here.
