Learning from Lidl: Tips from the off-trade

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Drinks: Drinks
Other: Business, Service

On-trade and off-trade aren’t the polar opposites they might seem. Former Somerfield buyer Angela Mount tells you why it might pay to get in touch with your inner Aldi


On-trade and off-trade: are they really the yin and yang of the wine industry, or, in fact, two sectors of the business, running more or less in parallel?

Take current trends, for instance. Several supermarkets may claim to have brought now familiar wine styles like prosecco, Albariño, Picpoul, Malbec and Fiano to the general public. But time and time again, trends that develop in the off-trade are born in the on-trade.

And while practitioners on both sides maintain that neither understands the demands of the other, there are, in fact, as Andrew Bewes, managing director of Hallgarten Druitt & Novum Wines puts it, ‘massive synergies between the two’.

Let’s take structure. The on-trade is split broadly into two parts: the premium white tablecloth restaurants, with highly trained wine staff or sommeliers, with high-value, low-volume sales; and the more casual dining restaurants, that rely on their general front-of-house team, but may have no specialists.

The direct comparison in the off-trade is obvious. ‘Top-end restaurants are like the independents and specialists,’ says Bewes. ‘Hands-on, wine expert-led, who are able to drive sales via enthusiasm and passion for the product.’

That said, the bulk of the restaurant industry caters for the standard wine consumer, who wants little more than an enjoyable night out. This is very similar to the supermarket experience in terms of how a venue can engage with them and what they can realistically sell to them.

With no specialists FOH there is (as in the supermarkets) far more reliance on merchandising and positioning – whether that’s on-shelf or on a wine list, stand-out appeal, and, particularly, the ease of making a purchase.

Let’s move one step on. If the basic parameters of retailing within the two sectors are similar – ease of selection, price, style, but also, crucially, signposts, reassurance and providing information to a largely confused customer base – then the basic skill sets and learnings required for the buyers, restaurant managers or sommeliers are similar as well.

Yet the basic messages often get lost – perhaps because the on-trade is so fragmented. Research consultancy CGA Strategy estimates that there are over 130,000 on-trade outlets, fragmented into 66 different outlet ‘types’, which would suggest that it is hard to find a single solution.

But I would contend that there are, in fact, some clear guidelines which apply across the board; lessons, if you like, that the on-trade can learn from the way the off-trade does its business.

As an ex-supermarket buyer, now working with producers, restaurants and independents, I still base my advice on ‘the five Ps of retailing’ (see box on the right) – though adapted slightly for the needs of the on-trade.


People
It’s not about the wines you personally like, it’s about what your customers want.

THE FIVE P’S OF RETAILING
PEOPLE Understand your customer base, and get the best people on your team.
PRODUCT Make it relevant to your customer base, make it special; it’s about what they want, not what you like.
PRICING Understand your market, maximise the opportunities. Look at pricing from a cost, profit and sales perspective.
POSITIONING Showcase wines and bring them to prominence on your wine list; it’s about offering reassurance via your list.
PROMOTION Bring focus to new and quirky wines. Encourage trial, build trust.

‘As a sommelier, it’s easy to get seduced by wines that excite you, and grab your interest,’ says Tobias Gorn, ex-sommelier for Tamarind restaurant and now tasting manager at The Whisky Shop. ‘There are so many exciting and quirky wines out there, that there is the danger of going with what we like and would like to sell, rather than what our customer base is looking for.’

Choosing wine in a restaurant is scary for many confused customers.
And this, crucially, is no different from the equally confused shoppers in supermarkets.

‘We really need to understand that most of the people who come to our restaurants buy their wine in supermarkets,’ says Gergely Barsi Szabó, sommelier at Bread Street Kitchen in London. ‘As sommeliers, too many of us live in our own little bubble, drinking great wines, and forgetting about the reality of life.

‘I’ve learnt a great deal by going to supermarkets and seeing what people are buying and getting to understand their scope. They come to restaurants for a night out, not an evening of wine education, and we need to realise that more, and not play to our own tune’.


Product
Every wine has to have a reason to be included on the list.

The basis of any restaurant wine offer is the range. Once again, with the exception of the very top restaurants, this needs to be accessible, understandable and easy to browse.

In the same way that supermarkets are rationalising, we are seeing an increasing number of restaurants focusing on smaller, more targeted selections on their list. It’s a far harder task working out a small, concise list, plugging all the key gaps, but removing duplication. This demands great skill and customer focus but it makes the consumer journey easier.

Get the balance between innovation and safety.
Patrick McGrath MW, managing director of importers Hatch Mansfield, feels that restaurants can learn a lot here from what the off-trade do.

‘Good off-trade operators in independents and supermarkets have a clear, trading-up ladder for their customers,’ he says. ‘Selecting a wine in a restaurant is a stressful experience for most, especially when in the company of guests.

‘What’s crucial is a balance between new, quirky wines, and the safety of well-known names, be they premium soft brands, or generics, including Chablis, Sancerre and Rioja’.

Help to guide but don’t dictate customer choice.
There need to be enough safe options on a list to reduce the fear of choosing, and to provide reassurance. The majority of guests dining out have come for leisure, not for wine training.

Robinsons’ Noel Reid puts it very clearly: ‘We need to build our customers’ trust in our range, at every stage. We need to give them a great experience, which will encourage them to try other things.’

Work in synergy with the kitchen.
Food and wine matching has come of age, and is a real focus on most lists today. However, as one sommelier admitted to me: ‘For a long time, we did our thing, the chef did his, and then we put the two together. But we need to work more holistically, with the chef, and our suppliers need to understand that.’

Chris Staines, executive head chef at restaurant Allium in Bath, and former Michelin-starred chef of the Mandarin Oriental has taken it one stage further.

‘My style of cuisine has a strong Asian influence, although this is only part of the menu,’ he says. ‘I am impressed by wine suppliers who research our menu, and my style of cooking first, and base their proposals on wines that will sit naturally with this type of cuisine – it shows that they have done their homework, and understand our requirements, our clientele, and how they can add value to the dining experience.’


off trade tips

Pricing and Wine List Layout
The pricing structure for a wine list is inherently no different from that of a retail offer, only in a more concise format: building blocks, with an easy ladder to make the customer journey simpler and less stressful. Regardless of whether on- or off-trade, the majority of customers, except in top-end restaurants, will still look for value.

Avoid price ascending order layout.
‘Opt instead for style guides,’ says Neil Bruce, ex-wine consultant to numerous restaurants, including Carluccio’s, and now head of wine for Fuller’s. This helps hide the cheapest wines and encourages selection by style.

Work on cash margins, rather than GP margins, at the higher end.
‘Stock will be turned into cash at a far higher rate,’ says David Gleave MW, MD of Liberty Wines.

Stay competitive and be aware of what your competitors are doing.
‘I always Google and check what other restaurants are doing, but also local retailers,’ says Roger Jones, owner of Michelin-starred restaurant The Harrow at Little Bedwyn. ‘We then offer a better deal, and build our reputation for offering fantastic wines at value-for-money prices.’

Balance the cost and selling structure of the list.
Sell ‘safe’ and well-known wines for a premium, and provide attractive pricing at lower margins for lesser known and quirky wines that you want to get established.

‘Invest margin in top-end wines, and the esoteric ones,’ says Gleave, ‘then the wines will start to move, rather than gather dust.’

Keep up to date with vintages and seasonal trends.
‘Off-trade retailers work at a faster pace and react more quickly to market trends,’ says Tom Wallis, sales director UK and Ireland for Accolade Wines. ‘Many restaurants only publish one list per year, and can’t adapt to innovation and changes.’

With more and more restaurants printing lists in-house, regular updates are becoming easier. Incorrect vintages on a wine list portray a ‘we don’t care’ attitude.


Positioning, Promotion and Communication
Make the wine list friendly and approachable.
‘Don’t scare your customers,’ declares Ian Waddington, group wine buyer for Gordon Ramsay Holdings. ‘Make it easy for them; they are out to enjoy themselves, not to worry about which wine to choose.’

Wine list tasting notes are the equivalent of retailer on-shelf barkers.
Make them simple, unique, and compelling, avoiding any technical or ‘wine anorak’ terms. If there isn’t a sommelier on hand, this is the way to sell the story and the passion behind the wines. Even the sommeliers I spoke to agreed that many customers feel intimidated and don’t like to ask for their advice. This is no different from customers shopping in independent retailers.

Wines by the glass – focus on the new and/or unusual.
By-the-glass is to the on-trade what promotional offers are for retailers: a way of catching the customer’s eye. Increase your selection of BTG offers, and it gives the consumer the opportunity to try and then trade up.

‘I don’t focus on well-known wines for my BTG selection,’ says Barsi Szabó. ‘If customers want Pinot Grigio, they’ll buy a bottle. By the glass is where I introduce the lesser-known and quirky wines to our guests – it reduces the risk of trial, and will then encourage repeat purchase.’

Moving forward.
With the exception of top-end restaurants, everything points to a further consolidation of wine ranges: shorter, sharper, easier wine lists and fewer suppliers who have a better relationship with their customers and can help put together lists that encourage trade up and experimentation.

Sound familiar? It should do… it’s what’s happening in off-trade retail. The consumer is at the heart of both sectors of our industry, and trades across both. Maybe it’s time for the on- and off-trades to take off their blinkers and learn from the other side, too.


Keep your eyes peeled for a second feature by Angela Mount on how to hone your negotiating skills. She will also be speaking at Imbibe Live at Olympia, London on 4 and 5 July.

About Author

Angela Mount

Angela Mount is the former head of wine-buying for Somerfield supermarkets and now works as a writer and consultant for restaurants, hotels and independent retailers.

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