I’m a great fan of gut feel, but with stomachs full of good food and minds empty of good news, I thought it worth turning to statistics to cloud my crystal ball.
The long term news on demand is that wine is winning, but against quite a headwind. Between 1995 and 2009, British households increased their spending on wine by 60%, spirits by 42% and reduced beer spend by 26%. This is despite tax on wine growing from 36% to 45% while spirit tax dropped from 52% to 47% and beer went from 15% to 14%. The bad news is that the nation peaked in booze buying in 2004, since when wine has lost 4% of sales, spirits 9% and beer 29%. Almost half of the British household off-license spend on alcohol is now spent on wine, that’s about £135M a week and puts us 20th in the world for wine consumption per head.
Supply of English wine against these numbers will never be the challenge, even at the rate of growth in productive acreage of 47% and total yield growth of 137%. However, the issue will be in the two classic challenges: price and consistency. We know that we have a price challenge and the Great British consumer has shown an incredible propensity to value quantity over quality at the nearest whiff of financial challenge. Interestingly, it is the foreign holiday and restaurant/hotel expenditure that dropped fastest from 2009 to 2010, not booze and fags.
I think, though, it is consistent volume and quality against like for like wines that is our greatest challenge. We all know of the historical baggage we carry from wines grown for volume and made in garden sheds. News of the international medals being claimed by these shores has reached the ears of the UK wine cognoscenti, but not the supermarket baskets.
Is that a surprise, though, when we are not only producing relatively expensive wines, but our yield per hectare is more volatile than a Korean leader.
Over the last 10 years, yield per hectare has changed by more than 50% (up or down) on four occasions and by less than 25% only twice. This means that it is not possible for our industry to maintain a consistent share of wallet, mouth or recognition from one year to the next.
With 40% of English grapes being capable of replicating champagne, even such inconsistent volumes should not prevent a growth in shelf space (bottle aging helps to even out supply too). However, sparkling is not the majority of wine drunk and we need to capture our share of the rest of that market.
At West Street Vineyard, we have adopted the approach of selling wines from across England and Wales (nowhere else) and selling them on-licence by the glass and bottle as well as off-licence. We think that this will establish a community that enjoys and buys English wine through boom and bust and despite the price of Chilean Chardonnay. Proof will be in the pudding roll on 2012…..
West Street Vineyard