CH 6 - Hospitality Sector (free market)

Question 1

Hospitality sector (free market)

What is the hospitailty sector?
How big w/in wine trade?

Answer 1

• Made up of bars and restaurants, increasingly overlap as new concepts emerge
  
  • In UK hosp accts for 20% of sales by vol, but over 40% of sales by value - higher bottle prices

Question 2

Hospitality sector (free market)

What are the 2 kinds of bars, examples?
What kind of products best for?
Key attributes?

Answer 2

Specialist wine bars
§ Usually indep owned locations that focus on wine sales - can also sell other alc and some offer food to enhance exper
§ Usually sell from smaller prod, less known var/regions -> good RTM for small producers
§ Focus on high involvement cons -> knowledgeable, well trained staff
§ Do not usually offer well known brands -> can’t compete on price w/ larger bar chains
§ A few are large enough (Davey’s in UK) to have own label brand, others focus on travel (Vino Volo)

General bars
§ Offer limited wine selections, usually inexp/mid-P - less focus on wine
§ Offer known brands, var and regions
§ Can offer same wines as in retail - but high markup makes much ↑P -> many bars stock brands not avail in retail to avoid P comparisons
§ Same are themed (Irish, sports)
§ Good RTM for larger brands

Question 3

Hospitality sector (free market)

What are 3 kinds of restaurants?
Who appeal to?
Key attributes?

Answer 3

1. Non-destination restaurants
   § Meal isn’t the focus for the customer - secondary to other things (theater); often country-focused
   § Many are parts of chains
   § Wines need to appeal to wide range of cust -> usually inexp and well known brand, var, regions;
   § Wine often tied to country theme
2. Casual Dining restaurants
   § Offers quality food and wine w/o formality of fine dining
   § Tend to be indep owned or small chain
   § Mid- to prem price wines (vs non-dest restaurant); wines chosen for food pairing
   § Mix of well known wines w/ lesser known -> staff trained to help diners
   § In wine-prod countries - list dominated by local wines
3. Fine Dining restaurants
   § Meal is the focus of the experience - destination restaurant - Michelin starred
   § Food and wine pairings critical -> well trained somm;
   § tasting menus common
   § Often have large wine lists of prem/super-prem wines - producers seek to be on these lists
   § These rest often use brokers to acquire wines

Question 4

Summary strat perspective - retail and hospitality

What are 3 strategic considerations for producers in choosing retail/hospitality distribution?

Answer 4

1. Market positioning
   a. High vol/inexp wines best for general bars and non-dest rest
   b. Low vol/super-prem wines focus on specialty wine shops, fine dining and specialty bars
2. Distribution methods
   a. High vol wines often sold directly to retailers for efficiency
   b. Low vol wines - rely on brokers, distributors, agents to reach niche markets
3. Consumer prefs
   a. Specialist outlets attract high involvement consumers for unique exper
   b. General bars/casual dining target broader demos w/ accessible wines