When does it make sense to bottle wine at source or in the market?

It must have been through some gritted teeth that wine producers took to social media recently to congratulate fellow producer, RR Wine in Chile, for having produced what is being billed as “the best wine in the world”.

There is nothing particularly unusual in that until you realise the wine that has been picked up by TV stations, national newspapers, websites and blogs around the world was not some four figure beauty from Bordeaux, but a rather less glamorous Chilean Malbec on sale in Asda in the UK for £4.37.

The “Best Wine in the World” tag was a slight exaggeration, but the wine, La Moneda Reserva Malbec, Central Valley, Chile 2015, did come top in the prestigious Decanter World Wine Awards for the best single varietal wine for under £15. 

It was not just a great achievement for RR Wine, but also arguably a breakthrough moment for the global bulk wine industry. Here is a wine that had been made in Chile, but shipped in bulk and bottled in the UK, walking away with one of the biggest accolades in wine and winning global media coverage as a result. 

Now everyone in the bulk wine market is fully aware of the enormous steps that have been taken in recent years in protecting, assuring and, in a lot of cases, re-assuring, buyers about the quality of wine that is being shipped in bulk and bottled in the market where it is going to be sold. 

The fact a bulk wine on sale for less than £5 has won a global award is not necessarily that surprising. But how far up the pricing ladder will this award convince buyers and importers that it is possible to look at bulk wine not just for your mass market, mass consumer, middle price wines, but the source for more premium wines? 

 

Is the price right?

Is there a price limit for bringing wine in bulk before you switch to asking for it in bottle? If there have been such quality control improvements then is there a need for bottled at source wines at all?

That could be pushing things a little too far for the moment. But the issue of when to ship in bulk or bottle has caught the imagination of suppliers, importers and buyers this week. 

 Robin Copestick thinks anything above £7 is probably best bottled at source

Robin Copestick thinks anything above £7 is probably best bottled at source

 

For Robin Copestick, managing director of Copestick Murray, that sources and ships a number of wines for major retailers and national on-trade accounts in to the UK, the situation is pretty straightforward.

“Anything New World under £7 retail is probably worth bulk shipping,” he told VINEX. “Once the retail price is over £7 the saving is marginal and the increased stock holding required means we lean towards bottling at source.”

Barry Dick MW, a wine consultant who has built up a strong reputation sourcing quality bulk wine for both the UK’s major supermarkets and major wine companies such as Accolade and even wrote his Master of Wine dissertation subject on the issue, also believes £7 is the key cut off point. 

He said: “As a rough guide wines above £7 retail are not usually sold in sufficient quantities to make bulk shipment a consideration. Below this nominal figure then it will depend on the distribution of a brand. Any brands with a volume over two or three containers per annum (a standard Flexitank containers has a 25,000 litre capacity) most brand owners would look to bulk ship and bottle close to the market.”

It often, added Copestick, comes down to the bigger commitment you have to make when shipping in bulk. A commitment that can be harder to make for more expensive wines. 

Copestick explained: “Obviously saving around £0.50 per case for wine in volume is attractive but you have to buy 24,000 litres in bulk as opposed to a few pallets if you buy the finished product. For wines in volume it is relatively easy to sell 5,500 cases of six at once, but this is very difficult once the wine is over £7 retail.”

 

Wider issues

 

For Mark Lansley, managing director of Broadland Wineries, that runs its own third party bottling facility in the UK as well as shipping bulk wine to help create its own brands for the on and off-trades, it is a complex issue. 

He said: “The retail price point alone would not automatically tell me where it should be bottled. There are more factors than just the retail selling price.”

Instead he would look at factors such as:

·  A New World wine would be more likely to be UK bottled than the Old World because the transport cost benefits are greater. It also offers greater flexibility in terms of packing in to multiple SKUs and different packaging formats. 

·  What are the likely annual sales of the wine. A high volume wine is more likely to be UK bottled for the same cost saving reasons.

·  The importance of in-country bottling to the brand owner. For example, if a brand owner has an under-used bottling plant in Italy and sells small quantities of niche wines to 50 countries, he is unlikely to want to bottle in UK, explained Lansley.

He added: “We bottle at our facility here in the UK unless volumes are currently small. So less than 25,000 litres a year.  Or the wine cannot be bottled outside the country of origin for regulatory reasons.” 

 

Better value in bulk

 Catherine Monahan of Daemon & Genius

Catherine Monahan of Daemon & Genius

 

Catherine Monahan helps create brands through her design agency, Daemon & Genius, for, amongst others, Lanchester Wines’ new wine development business, Vintrigue. It is increasingly look to source wines from smaller family wineries that can be shipped to the UK to to create bespoke brands from what they term “boutique bulk wine”. 

She said: “I’d say the quality/value/cost ratio option point hangs around A$1.75/ €1.15/ US$1.29 per litre up to A$3.50 (AUD)/ €2.30 euros/US$2.59 per litre. At this point, you can bring in lovely boutique wine in bulk from family wineries, bottle them and then get them on the shelf for the same as the big brands from say Australia.”

She added: “Wines above A$3.85/ €2.55/ US$2.87 I would bottle at source. If they have been barrel aged, moving them about in flexi tanks can sometimes have an impact. Also, when the wine is much more expensive the bottling production costs are less of a factor.”

That said she believes there is a great opportunity for bottlers to invest in slightly higher priced bulk wine, in smaller quantities, as it offering both buyers and consumers better value and quality wine. “You can then bottle family wineries' wines with their label on in the UK,” she added.

It can be hard to know, she added, how wine bottled in market behaves after six months or more in the bottle. “It would be interesting to see a study done on the same wine bottled at source versus one bottled in the UK after six months. Sometimes wines, particularly reds take a bit of time to settle and can taste better six months later. But invariably the wine will sell out within a month through a major grocer.”

 

Issues of quality

 

For Barry Dick there are still issues to be addressed regarding quality when deciding to ship in bulk or bottle at source. He explained: “There are pro’s and con’s on both sides. Wines can be shipped using the protection of the 25kl thermal mass rather than a more vulnerable position in a 75cL bottle in a hot container. Temperature fluctuations can have a much greater and faster effect in the small volume of 75l versus a big volume of 25kl, which together provides good thermal protection. 

He added: “The quality of the single use Flexitanks has increased extraordinarily over the last 10 years. The technology of the material used to transport 25kL of wine in the deep sea journey has also moved pace quickly in this time. I

“In the course of my MW dissertation I discovered there was a certain industry bias against bulk shipment and bottling in country of distribution. I suspect that a lot of this bias is based on the technology from the outset of the bulk shipping model. I have no doubt that today, when done well, bulk shipping commercial wines and bottling in the country of distribution can achieve parity of quality compared to bottling in country of production with subsequent shipment. The downsides are a fractured process and responsibility that requires careful planning, contractual agreement, management and expertise at both ends of the operation.”

All of which goes to show how varied and complex the bulk wine market has become. There is no one size fits all option with different businesses using bulk wine, shipping and bottling for different reasons. 

There are even those using it to walk away with the best wine awards in the world. 

* This is an edited version of an article that first appeared on Vinex.market.