To Export or Not?

To export or not? Should UK winemakers bother?

I wrote this post this morning, then shelved it while I got on with my day. At lunchtime I listened to Jancis Robinson being interviewed on the BBC Food Programme on Radio 4 - talking about the evolution of the UK wine trade over her 40 year career. In particular some of the issues I raise below. 

Having worked in the London wine trade as well as the provincial retail trade of the UK I have been at the sharp end of selling imported wine into the UK market. A notoriously competitive and cut-throat (as far as the wine trade goes) market to break into, as any producer from France, Italy, Australia, New Zealand, etc. will tell you, it is also THE market in which to have an international presence. Maybe the London trade is kidding itself that its importance is still top-ranked. Maybe the UK is waning in importance, as the price wars and dominance of an ever-dwindling number of national retailers takes hold. Even if we are on the wane, the UK consumer still gets through a huge volume of wine each year from all over the world. We are used to a massive choice of wines and we are fickle with our affections. One year Australia is the darling, only to be replaced by Chile or Argentina the next. As a whole we are not fussy either, White Zinfandel and other sickly sweet roses from warmer climes are ever popular and are bought on price rather than taste. We expect our local corner shop or "Offie" (retail shop for alcohol to be bought and consumed “off” the premises) to have everything from Blossom Hill to Kiwi Sauvignon Blanc to cheap claret, even a dusty bottle or two of Moet & Chandon, on the shelves. When we do our supermarket shopping we want good deals on our favourite wines and we expect the same wide range of choice.

Majestic have maintained their position in the face of competition
from the supermarkets, but at what cost to the range on offer?

This is the key difference between the UK market and that of countries producing high volumes of their own wine. Go to a wine shop or restaurant in Auckland and you will find the list dominated by domestically produced products. Eat out in Napa Valley and you will be hard pushed to find much choice beyond California; a list with wines from Sonoma Valley or even Oregon is adventurous. In France you will not find much available from outside the region you are in. The possible exception being Champagne, where even the Champenois will concede that bubbles cannot be drunk with everything.*

Supermarkets and their stranglehold on the UK trade

So, in the UK we have this luxury of choice, but it can turn around and bite us on the bum. The relentless discounting sees the smaller producers pushed out by the big guys who can use their economies of scale and large volumes to take a smaller margin to fund the ubiquitous “deals”. Don't be fooled into thinking that the retailer is cutting their margin to fund these great prices. Oh, no. It is the producer who takes the hit in the hope that once people have tried the wine at a discount they will come back and buy more at full price. It works on some people – those who actually have taste-buds and choose based on what they like. But the vast majority of the UK wine-buying public will simply move on to the next deal being offered. It is a never ending cycle of discounting that leads to a ever-decreasing number of wines able to fit into the pricing model.

One of the national chains that is no more

So, how does this affect the domestic wine production industry? We are currently in a luxurious position. There is a limited supply (note the 2012 vintage production figures at about 10% of normal) and a growing demand. We can practically name our price and then have to allocate stock to satisfy the different sales streams. This scenario cannot last forever. The planting of the classic three sparkling varieties continues each year and, although there is a delay before these vines produce any wine ready for sale, we do need to think about what we do once we have saturated the UK domestic market for English Sparkling Wine.

Who funds this massive discount? And who benefits in the long-run?

Five intrepid producers recently got back from Prowein, the international wine fair held in Dusseldorf each year. English Wine Producers, the marketing organisation for English wine took a stand and called for its members to take the plunge. I was there with Hattingley Valley and can report that it was a huge success for all involved. Starting at 9am on the Sunday morning we did not stop entertaining visitors to our stand until close of play on the Tuesday afternoon. The Scandinavians, Germans, Chinese, Italians, Dutch, Texans and Canadians were all beating a path to our door. German national television interviewed the owner of the winery for the equivalent of the BBC Breakfast Show. 

This is, as far as I can see, the solution for ESW – to prevent ourselves falling victim to the price wars of the UK market once supply exceeds demand – we can develop export markets to help sustain demand and therefore prices. It takes more work – delivering pallets 60 miles up the motorway to London is easier and cheaper than shipping wine to Toronto or Stockholm but relying on the fickle British consumer is short-sighted.

It is not often I agree with Stephen Skelton MW but his dire warnings about sustaining demand do not ring hollow. Rather than accepting it as an inevitability, however, there is a big wide world out there just waiting to be introduced to the deliciousness that is English Sparkling Wine.

*There are, of course, exceptions to every rule, I know that there are shops and restaurants the world over who do offer a wide choice, but it is definitely not the norm, in my albeit limited experience.