Independents have been hit with pre-Christmas price increases following the collapse of sterling against key currencies like the euro and the US dollar. But the worst is yet to come, reports Graham Holter
The message is invariably apologetic. Yes, we know what the prices are in the list we sent you. But sadly due to currency issues beyond our control, we have had no option but to increase them. Thank you for your understanding and support.
The increases, typically between 3% and 5%, are sometimes across the board, but have in some cases been calculated on a line-by-line basis. Sterling’s turmoil on the currency markets since the Brexit vote means few merchants are surprised by an uncustomary pre-Christmas hike. But given the scale of the pound’s capitulation in recent months – and bleak warnings about the currency’s prospects in 2017 – the bigger concern is how much prices could leap again in January and February.
As The Wine Merchant went to press, sterling was trading at £1.16 against the euro, compared to £1.27 six months earlier (and almost £1.32 in late May). Over the same period against the US dollar, its value fell from £1.43 to £1.30, taking in a pre-referendum spike of £1.48.
Against the Australian dollar the pound fell from around £1.87 to £1.70, though shrewd speculators would have caught a rate of £2.04 in the late spring. It’s a similar picture with the South African rand: today’s rate of £17.50 compares to around £22 back in April, and over £23 in May.
There’s been a certain amount of chatter recently about the make-up of the wine trade: how women are still marginalised and the old boys’ network still persists.
We decided to see if that actually holds true in the independent trade, where plenty of women entrepreneurs have made their mark. Two of the country’s most successful indies, Corks Out and Borough Wines, are female-led, and almost every issue of The Wine Merchant includes news of women setting up shop.
It turns out that just 11% of specialist independent wine retailers are female, a figure that only rise to 15% when you include businesses that are run jointly by men and women. That’s well below what’s reported for the retail sector as a whole.
Does that mean women are at an inherent disadvantage in the wine trade, or are in some way discouraged? It’s hard to find evidence for any kind of discrimination or prejudice, though obviously child care commitments can make life pretty difficult for working mums in any field of business.
Wine shops used to be insufferably clubby and blokey, and no doubt there are still places like this. But by and large there has been a significant effort to make them more appealing to women, and a lot of the credit for this needs to go to the female entrepreneurs who have spotted the problem and successfully corrected it.
It would be surprising – and a little embarrassing – if the 11% figure doesn’t increase over the next few years. Not because the wine trade should care about quotas or tokenism. But because the current state of affairs is unbalanced and, arguably, a little bizarre.
The UK could sustain another 200 independent wine shops, bringing the total to around 1,000, according to a major new study.
David Dodd, formerly of Wal-Mart and one of the UK’s most respected location planning managers, has divided the country into 19,500 districts and pinpointed the markets that mirror the characteristics of places where top-performing merchants already exist.
Forty of the top 200 locations on the list are in London, although the catchment area that tops the table is West Bridgford, Nottinghamshire, followed by Didsbury in Greater Manchester.
Fifteen locations in the West Midlands have been identified as fertile ground for new independents, including seven areas in Birmingham alone.
Scotland could sustain seven more merchants, the research suggests, while Wales and Northern Ireland should be able to accommodate two apiece – though only in Cardiff and Belfast.
Brighton, Bristol and Reading each has room for four new wine shops. But Cornwall looks to have reached saturation point and is not represented in the top 200.
The project was sponsored by Wine Intelligence and forms the basis of a new report which analyses the state of play in the independent wine trade.
Full report in the August edition of The Wine Merchant.
Anecdotally, it would seem that most – but certainly not all – wine merchants voted to remain in the European Union. So when we asked a selection of independents to comment on what business is likely to be like post-Brexit, the response was rather less enthusiastic than the one we’re hearing from the new Cabinet.
The most immediate threats are the impact on currency, and the economy generally: the wine trade depends on discretionary income and any market nervousness could be disastrous for our more marginal businesses. And yet there could be opportunities too, some independents predict, particularly if booze cruises come to an end, and New World wines manage to circumnavigate what some critics regard as EU protectionism.
Issue 49 of The Wine Merchant, where the Brexit fallout is analysed, comes with our Top 100 Winners Supplement, containing profiles of all the successful wines in this year’s competition. The digital version is here – congratulations again to all those who made the cut in a year when the competition hit a record entry level.
You could probably run a pretty impressive wine shop purely specialising in wines from New Zealand, Australia, Brazil, Hungary and Virginia.
The new issue of The Wine Merchant should whet the appetite of any merchant with an interest in any of those categories.
Wines of Brasil and New Zealand Winegrowers are launching two fantastic competitions to win trips to their vineyards – full details inside.
We also take a look at what Hungary is now offering, and it’s light years away from the stuff we tended to avoid 10 to 20 years ago. The Hungarians are really getting to grips with their native varieties and the wines our small group of indies tasted last month got glowing reviews.
Virginia, meanwhile, goes on making increasingly impressive Bordeaux blends as well as stunning Viognier, Cab Franc and Petit Verdot (to name just three of its hallmark varietals) and is expressing its terroir in a way that’s more European than North American, but without slavishly following an Old World template.
As for Australia … we all know it fell off its perch a while ago. But the best stuff is pretty damn impressive and there are independents who do great business with its wines. Just as England’s cricketers and rugby players will tell you: never underestimate the Aussies. They like nothing so much as winning.