How the UK's wine future is as a trendsetter not volume sales driver

You’ve been watching too much of the G20 summit?

Thankyou, you give me too much credibility to think that, the reality is more spending time listening closely to how the world of wine now views the UK. Regardless of Brexit and what all that might mean in terms of future trading arrangements, the UK is now being seen in a very different light by most major wine producing countries that it was three, five and most definitely 10 years ago. 


How do you mean? 

If you think about it major producers in Chile, Australia and South Africa are going to be catching whatever cold is coming out of the UK a lot faster than we get to see it right under our noses. 

They have been the first to feel the fall out from the big seismic changes that we are now seeing in how our major supermarkets are behaving and the impact of the slow, but sustained and strategically vital switch in power away from the grocery giants to the discounters. Aldi and Lidl might only even now only hold 12% of the market, but their influence on how the rest of the grocery (and wine) industry is behaving is total. 


That’s a bit dramatic isn’t it?

What we often forget about the quite, unassuming, cheap and cheerful image of the discounters is they are, in fact, global retail juggernauts. They may act like minnows, but in reality they are big Great Whites circling the world, slowly dominating where they operate. It means they can operate small buying teams, compared to the big supermarkets, as they are backed up by the huge buying power of their central office. They have a fraction of the operating costs as they have tiny ranges, very limited stocks and are not bogged down by pleasing shareholders every quarter.


But what’s all this got to do with wine?
What Aldi and Lidl have done is send shockwaves around the traditional grocers who simply do not currently have the infrastructure to respond. They need big property empires to drive the volume and value sales their shareholders demand. They need big ranges to attract hordes of family shoppers and they also now need to run state of the art online and home delivery operations to satisfy changing shopping behaviour. All of which the discounters don’t need to worry about. 

As a result it has seen massive changes to the way the average supermarket wine aisle is now run. For producers and distributors it means buying decisions based, to coin a phrase, “for the few, not the many”.


So the rest of the wine world has felt the after wave of that?
Not so much the after wave, but global wine producers were hit with all this months before we saw the impact on shelf. Suddenly guaranteed volumes of wine from what might have been their biggest export market are no longer there anymore. It has forced them to change their export strategies and look at the UK through very different eyes. Yes, it might mean pushing more wines in to the independent merchant and on-trade sectors, but for big volume, co-operative based wines from Old World classic regions that has not been a realistic option. Most big branded wines can’t play in those sectors either. 


What are you hearing on the ground then? 

Well, it has been interesting to talk to major producers, co-operatives and negociants over the last year and hear how their tone has changed when they talk about the UK. It’s a subtle difference, but, yes, you will still hear them enthusiastically describe the UK as being a “trendsetter” a “key benchmark” a “shop window” for the rest of the world. That has always been the case. But the big difference now is it’s not then followed up with talk of how their sales are increasing and what big plans they have for the future in the UK. What’s more their export managers are spending less time in the UK and concentrating on bigger, more profitable markets around the world. 

So we’re becoming a strategic hub?
It’s not probably going to be the sales line used by the government’s UK Trade and Investment team, but for large parts of the wine industry, then, yes. The UK is still going to ship and sell a lot of high volume wine, it’s just the number of producers that will benefit is going be greatly diminished.  


And the good news? 

There’s also plenty of that going round too. The supermarket channel may have become increasingly difficult to crack, but it has resulted in far more interest from wine producers to sell their wines in different channels and to help fuel the growth in small independent distributors selling to niche independent and fine wine merchants, wine bars, and a vast and diverse restaurant and gastro pub scene. The type of agenda-setting outlets and operators that will become the UK’s increasingly premium wine image to broadcast around the rest of the world.  

* This article was first published on Grapevine, produced for the London Wine Fair.