It would be easy to look back on 2016 with jaundice views from a wine point of view, Brexit, trade fears, exchange rates and all. But I would prefer to look forward to 2017 with much more optimism. If you were a in-voter, waking up on June 24th wondering if we were going to go through the economic milling machine again and how much more of this we could take; then perhaps we can look back and say ‘do you know what it is really not that bad’.
Six months on and there is so much positive news around that it is difficult not to reflect that on the views for 2017.
September 2015 Mark Carney, Governor of The Bank of England and the press were widely reporting that deflation was about to set upon us. He was keen to ‘play down fears about outright deflation’ and the FT.com was reporting as late as May that factory gate pricing was still ‘stuck in deflation’. It was difficult not to feel as though a thick opaque fog was descending fast.
Now we have reports of inflation creeping back. I am not suggesting that we want rampant inflation, as in the 1970’s but the idea that we have some inflation and flexibility in pricing maybe a good thing. From a wine perspective we import 95% of the wine that we drink and with the exchange rate issues in the last 6 months then prices are under pressure to rise in the next few months. A little inflation helps businesses with necessary price increases and at the same time pay people a little more, which in turn helps being a little more motivated.
Maybe that is what is happening. Unemployment was down again this month at 4.8% in the period and weekly earnings excluding bonuses rose by 2.6%. According to the WSTA there are 170,000 people employed directly in wine and a further 100,000 in the supply chain. More employment, more people earning a little more and more people spending on wine. Every little helps as the slogan goes.
Consumer spending, trade and business investment all are reporting positive figures despite gloomy Brexit forecasts. The UK economy has grown for 15 consecutive quarters, the trade deficit has narrowed and exports increased, with investment rising also.
Gosh I am starting to feel positively bullish about prospects for the New Year, in fact I am going to open a bottle of wine to celebrate! Historically when the economy is going well, we tend to reward ourselves with amongst other things drinking a little more wine.
And then there is wine itself as a subject. We do finally seem to have cast of the shackles that wine is for a given elite; that wine tasting is only for a limited privileged few and that taste is the domain of just a few.
The rise of Prosecco is that very statement. Ordinary people looking for a celebratory sparkling wine without spending the earth, and not wanting to take on the more intricate, and in some case overblown, language and attitudes of the super premium Champagne sector. The Prosecco growth is not a branded push, but a conscious choice by consumers, who like the taste and find it affordable. Simple!
A further indication of that democratisation is what is appearing on the bookshelves. An old friend of mine published a book earlier this year ‘Your wine questions answered’ by Jerry Lockspeiser – 25 things wine drinkers most want to know. In the 90’s when he was growing his wine agency and supply business and I was a buyer for a supermarket we would spend long travelling hours wondering about the question as to how we might persuade the great British public to not be scared about wine and just to enjoy it, without getting wrapped up in the snobbery of it all. Jerry’s book is testament to how far we have come. We can ask those questions that seemed unaskable previously. Long may it continue and we can have that honest conversation about wine. Does it taste nice and can I afford it?
And it seems that consumers are answering that question firmly. They seem to be saying
“If I can understand that somebody has cared for the production of this wine and brought it to market, I enjoy the story and the taste then that is the wine for me.”
On trade volumes may be going down but value is going up and sharply – consumers are buying better quality wine. In the off-trade too the independent wine shops have not had such strong demand for 30 years or more.
The business community post Brexit seemed to be in shock; a sort of paralysis gripped us, and no doubt there have been lots of challenges. There still will be. Exchange rates and the uncertainty around them causes business no end of headaches, and that is set to continue into 2017, but ‘plus ca change ca change plus meme. Arguably business is now on its mettle not shrouded by the uneasy comfort of EU bureaucracy and it seems that we are grasping the opportunity.
Does it mean that things are not going to be tough? The tone in the business community that I meet has definitely changed in the last 3 months, with most wanting to put the macro-economics in its place and dealing with whatever their business needs to deal with, as opposed to worrying about ‘whatifs’ around political shenanigans. Of course tough challenges will come, but this renewed vigour means that we face the issues with honesty and figure out what the solutions might be.
So looking forward into 2017 then let’s bring some Christmas Cheer, enjoy the season and get down to business again in the New Year. Maybe that will include a bottle of wine or two, as opposed to 5 or 6, but that they will be better quality and more memorable and enjoyable because of it.
Happy Christmas to you and yours.
Alistair Morrell
Hospitality & Catering News, Wine Content Executive