- English sparkling wine production to rise from one to five million bottles
- Pricing is key to success
- Demand exceeds supply
- It is like a lamb surrounded by wolves
- 1% of sparkling wine sold in the UK is English
An international symposium on Champagne and sparkling wine attracted growers, producers, commentators and industry observers from France and Old and New World sparkling wine producing areas this week. The two-day event, the third International Sparkling Wine Symposium (ISWS), was staged at Denbie’s Wine Estate in Surrey and attracted a range of industry participants, from sommeliers, glass and closure manufacturers and wine producers from France, America, Italy and Australia as well as England.
The ‘home team’ was represented in a session on the second day entitled ‘Balancing the need for profit, premium image and volume’ which used English sparkling wine as a case study with a panel made up of: Frazer Thompson, CEO of Chapel Down Group; Ian Kellett, managing director, Hambledon Vineyard; and journalist Dr Jamie Goode. The session was moderated by wine consultant Mike Paul.
In introducing the discussion, Paul gave an overview to the many foreign and domestic participants who may have been unfamiliar with the domestic product. He said: “I am excited to be involved with English wine sector, it really is exciting. Pricing is the most difficult element to get right and we are talking about the sustainability of the current pricing level.
“In price positioning, you might describe English sparkling wine as small but perfectly formed. There is a lot of Champagne in UK selling below the price of English sparkling wine, which itself has been going up in value in recent years so it is difficult to find English sparkling wine under £20 and the average is £25.”
As well as cheaper Champagne, English sparkling wine is up against Prosecco at £12 and Cava lower still, he says. He went on to describe reasons for the success of English Sparling Wine, both at home and abroad. So how has English sparkling wine achieved this price level?
“In no particular order,” he cited that there is a “perceived quality” in the target market and a “scarcity” where demand far exceeds supply. There is a push for local products, and the English ‘tag’ drives demand both here and abroad. There is also a novelty in the product backed by generic promotions.
A quintupling of supply
Frazer Thompson took the microphone next to put his position on the market, starting with the challenge afforded by the likely rising production of English sparkling wine from one to five million bottles or more.
“The UK is selling some one million bottles of English sparkling wine. If that is to quintuple, the question is to how to maintain quality over the next ten years? With new producers coming in, how can we maintain quality without overt regulation? One thing that has driven demand is the great media fascination with the story of English sparkling wine,” he said.
There is a remarkable concentration of pricing that I think is unsustainable. I think we’ve got a brunch of brands that are embryonic and must sort themselves out. Price lays an enormous part in the position. If planting is to go from one million bottles to five million and on from there, how is pricing going to be maintained at around £25 to £30 a bottle because every plan I see suggest this is what the price will be.
“Most of what we sell is vintage wine. Most of what is being planted is the three Champagne varieties. I have a slight worry that a lot of those plans will not come to fruition. There has to be segmentation. I don’t believe there is a role in the market for five million bottles of English sparkling wine in the market at £25 to £30. I just don’t see it economically and I don’t see how it can be sustained.
“Over the next ten years there will be change. I think we have got to look at the realism around the yields and consistencies of the grapes. We’re still learning. We must plant the best sites. There are some dreadful sites growing vines.”
The industry must be realistic about sales and talk about exports. Sparkling wine has a long way to go across the world.
He says: “We are facing challenges. However, I have absolutely no doubt English sparkling wine can sell five million bottles. It’s great, it’s English, it’s got great soft benefits as a social glue. It’s less formal that Champagne. We have got to engage more with the off-trade and think you’ll find that the Off-trade will need much more evidence of marketing support and ‘dollars’ than they are currently seeing. There is no question there is room for English sparkling wine priced at £35 – £40 a bottle but there will be a rump between £15 and £20.”
In a final rallying call to the English producers, he concluded: “Stick with it guys.” Later, in the Q&A, Thompson said, in terms of sparkling wine, “the UK is not an island,” to great amusement.
On the spot
Ian Kellett is happy with a potential turnover of five million bottles for English sparkling wine in the future but is of the opinion that the market will resolve to have a large range of prices.
He says: “Hambledon is the oldest vineyard in the UK. It was planted in 1952. I have spent the last ten years making a sparkling wine vineyard instead of a still wine vineyard because that is where I believe the future should be for English wine given our climate.”
In terms of history “we owe a considerable debt to the Mosses at Nyetimber” but he wanted to look more to the future prospects.
He says: “We have spent between £8 million to £10 million while not yet selling a product to see a better future for our business. Drinkers are increasing their volume and it is clear that the world needs more good quality sparkling wine. Where is it going to come from? Champagne is limited by its appellation, notwithstanding the increased plantations they have put in place.”
Capital must be deployed and brands developed over the years to raise domestic consumption from its current one percent of the sparkling market. This is especially important in the light of the financial woes afflicting much of the Champagne region which is creating significant price increases in the face of the worst financial recession in a century. “This is bequeathing the English sparkling wine a tremendous opportunity,” he considers.
Kellett is also of the opinion that while currently there is little or no spot price activity in English grapes, he can see a time in the 2020s where there will be a significant trade. When a farmer realises he can earn £120 per tonne for white or £1,500 a tonne for grapes, a switch will take place.
Like a lamb
Wine journalist Dr Jamie Goode chose to start his presentation with a striking agricultural simile: “English sparkling wine is like a beautiful soft baby lamb gambolling around a meadow. The creature is surrounded by the big, bad wolf of economic realities and difficulties.
“English sparkling wine has wonderful brand equity. English sparkling wine is a brand itself. How does it protect this brand equity? This lamb is in a dangerous place with five million bottles in the pipeline you have got be build demand to match that. If you do not build demand, you will face a weakening of prices. Utter disaster. If the price of English sparkling wine decreases, demand will not increase as its brand equity will collapse as it not seen as a valuable, precious thing. It absolutely mustn’t be seen as something that is good value of money.”
He reiterated that quality of English sparkling wine is good and generally reliable that “delivers on taste and quality”. He then posed the question as to whether there ought to be a standards body established to regulate the quality of the product.
Turning to the question as to market segmentation, he dismissed the idea of geographical divisions. He says: “Producers are more important than terroir in England. Does Sussex taste different from Essex and Kent? I do not think that is not the case. Producer imprint is going to be stronger than any terroir, unless you are talking about single vineyards where terroir can be important. Segmentation based on geography to create a tiering of quality levels in English sparkling wine would be a mistake,” he says.
“It is best to keep the message simple for the majority of consumers. We are very familiar with English sparkling wine. For us it has been around forever. Most people out there, this is a very new category and they haven’t tasted English sparkling wine. While you are producing one million bottles, you are servicing a niche. Sell five million and you will have to sell to ‘normal’ people, not wine geeks.”
His message to the producers was upbeat: “English sparkling wine rocks!”