In for a penny, in for a pound
An article in the UK trade magazine, Off Licence News, on 20 April by Martin Green is worth a read. it’s headed, “Australian wine on trade-up mission”.
The guts of the article is about getting higher prices for Australian wine. Several producers’ representatives contributed to the article and are quoted.
Simon Thorpe MW, managing director at Negociants: “There is very little profit through the supply chain at the UK average price point.”
Thorpe talks about encouraging consumers to trade up and benefit from the diversity that Australia offers. It’s understandable, and the sentiment is fine, but is it realistic? What the trade and wine folk want is often very different from what the consumers want in style and price.
Julian Dyer, UK general manager at Australian Vintage: “One aspect of premiumisation is around consumer interest, and the other aspect is for the future of the wine industry.”
Dyer’s opinions are not that much different from Thorpe’s: he wants the average price per bottle of Australian wine – currently running at £5.15 ($8.90) – ¬increased.
Lisa Tovey, senior brand manager at Pernod Ricard: “The average price per bottle in the category is continuing to decline. This is clearly not sustainable for producers and we believe there is a big opportunity to drive value back into the Australian category. We continue to maintain our long-term value strategy, with a higher than average price of £5.81, ahead of the Australian average of £5.15.”
Lovely touch of “mine is bigger than yours” from Ms Tovey, but one can’t expect company people to think further than their companies and their own careers, and the more the corporate bum is kissed, the better. It will be interesting to see the results of Pernod Ricard’s price increases, which are going through now.
Thorpe comes back into the article, saying Negociants is selling lots of wine to the really fine wine scene in London. OK, maybe, but in pure figures the UK population is 65.2 million and the population of London 8.7 million. Do we need to go into the number of expense accounts, international visitors and ultra-wealthy in London compared with the rest of the country? If Thorpe and others can’t hack the London fine wine scene there’s no hope for them.
Katarina Luciakova, brand manager for Robert Oatley at Hatch Mansfield: “Although there has been a dip in Australian wine figures, we don’t see this as a long-term trend.”
Adrian Atkinson, European market manager at Wakefield [Taylor’s] Wines: “Markets are cyclical. I’m really positive for the UK. Perhaps the premium opportunity is being dampened slightly by Brexit and recent consolidation of ranges, but if one delves deeper into the export stats one sees the continued growth of higher value wines in the UK, but offset by sharp declines in the lower priced bulk wine exports.”
TKR would like some examples of cyclical wine markets. It’s an overused statement that is really waffle.
Atkinson quotes some Wine Australia export figures, which look good. He makes an interesting point about a newer generation of consumers coming to Australian wine. He could well be right, but we need more back-up to fully embrace his statement. He urges retailers to refresh their Australian offerings to the UK consumer. Yes, that would be good. Yes, Australia has untold numbers of wines that are interesting and exciting, but will the UK consumer pay the price? A few will, but TKR predicts volume will drop dramatically.
Luciakova says as Australian wine holds the top spot in the UK, consumers have confidence in it. She questions whether the easy-to-understand labels and the familiar varieties are holding back progress. “The safe choice might not exactly represent the dynamism and innovation that is happening across the region, such as improving quality of the wines, use of unusual varieties or development of lesser-known regions.”
The quality of Australian wines is in the main high. Unusual varieties is a longer discussion, but think on the fact that many of those unusual varieties have vast plantings in Europe. If one becomes popular, why pay twice as much for an Australian example?
It was disappointing to read Laura Jewell, the UK boss of Wine Australia, to quoting stats relating to the imports of unusual varieties:
• Touriga nacional: plus 575 per cent
• Fiano: plus 273 per cent
• Vermentino: plus 185 per cent
• Sangiovese: plus 396 per cent
TKR would like to see the actual case amounts. Even with the boastful percentage increases, we predict they would amount to bugger all. The article is full of a lot of toss about these varieties before it returns to a sentence of sense:
“Atkinson urges the trade not to get too carried away with weird and wonderful varieties.”
He reckons there is a lot more to be got out of the mainstream varieties. Thorpe agrees:
“There’s a move to show all this diversity and the funky stuff. But there is also a lot of wine that is not necessarily funky that is particularly good value. There is all this pressure but also all this opportunity. That’s the greatness of Australia.”
There’s more, but it is the OLN article, so we urge you to go read it in full there.