You may not realise it but some of the wines that you have on your list are shipped in 25,000 litre tankers from its country of origin and bottled in the U.K. or other European country. This has been a trend for at least the last 10 years or more in the wine industry.
Legally every bottle of wine has to have a bottler attributed to it for traceability reasons. So the way that you identify a bottled in UK product is to look at the fine print often on the back label and it will say something like Bottled in UK at W…. & a collection of numbers.
‘Wine tanks are often shipped on rail’The definition of bulk wine is ‘shipped in containers above 2 litres or above’, so it does include 3 litre Bag-in-Box (B-i-B). Nonetheless shipments of wine in bulk have gone nuts in the last few years. It now accounts for 38.6% of all global wine exports, over 400million 9 litre cases, which is a staggering amount of wine by anyone’s measure. And the largest market for them is the U.K. with an estimated 62% of wines sold now being bottled elsewhere than their country of origin.
The top 10 countries that are significant in shipping and bottling in the UK are listed in the table below.
(source Wine by Numbers Il Corriere Vinicolo May 2016)The value of 6 out of 10 countries is going backwards by significant amount equalling minus 6.5% in total, whilst volume remains static. And this is not unique to the UK, the other big European bottler is Germany and their value is decreasing by a similar 6.3% amount. It means that the quality of the wines is likely to be dropping also.
‘Storing wine in barrels – the more glamorous way’So the reason to ask the question is for Hospitality and Catering Management across the board to, in turn, ask the question of themselves. What is the quality that we are putting on our wine lists and serving our customers?
It’s a big question because it is both quantifiable and unquantifiable. I am not electing in either direction, but it is fair to say that the bulk wine market is primarily about entry and mid price level wines. The bottling lines across Europe are excellent facilities these days, who have top-rated quality procedures and bottle good wine. But there is a difference between technical and aesthetic quality.
Technical quality is absolutely measurable and can be done in a laboratory. The taste test is whether it tastes ok to drink i.e. doesn’t have obvious faults. Whereas the aesthetic quality is the preverbial slippery fish – beauty is in the eye of the beholder and is ultimately subjective.
The prime reason that brand owners and companies decide to bottle closer to the market is price. Bear in mind that shipping a flexi tank or stainless steel tank with 25k litres contains 2&½ times more volume that bottled wine in the same container space. So shipping a huge amount of volume allows for much leverage of cost. Add to that the high level buying power of the bottlers in this country for labels, glass and cardboard and put that together with the wine. It makes for a compelling commercial proposition especially when faced with the intense competition of the UK market.
Let’s face it, if, as an outlet operator you are offered Marlborough Sauvignon at £6.04 per bottle trade price against £9.00 bottled in NZ (and I have seen both in a list in the last few days) which are you going to choose?
There is the conundrum. Is there a discernable quality difference? Is your customer prepared to pay for that difference? We are all chasing the approval of our customers and we want them to be so delighted that they tell all their friends and come back.
The general direction of the market is for better quality, spend a little more but buy less. If you look at the Australian statistics, bottled in Australia exported to the UK wine (Wine Australia 2016) is plus 20% in the last year. Quality in this context seems to mean more bottled at source, estate production, more attention to the detail.
The wine market is extremely turbulent currently and there will be price increases as we forecast in this column for French wines some weeks ago, the question is what suits your customers more – price or quality? Or better still where is the balance for your business of price and quality. The story it tells and the entertainment factor is critical in order to maximise the return on your wine list.
Alistair Morrell
Hospitality & Catering News, Wine Content Executive