Fighting the wine trade’s corner – on two fronts

Wine prices would increase by an average of 30p a bottle if the full impact of the pound’s collapse since the Brexit referendum was passed on, according to the Wine & Spirit Trade Association.

Chief executive Miles Beale says the currency situation has “fundamentally affected” wine retailers and calculates it would take a 10% cut in excise duty in the March 8 Budget to balance out the effects of the pound’s slide since the summer.

The Wine Merchant issue 55The WSTA is calling on the Chancellor to reduce wine and spirit duty by 2% which he claims is the “very least” the government could do to alleviate pressure on the drinks industry. Beale is urging wine merchants to write to their MPs to argue the case for lower duty, which he says could also deliver higher returns for the Exchequer, based on the experience of 2015 when spirits duty was cut and wine duty frozen.

The WSTA is in talks with counterparts in Europe and around the world to draft trade agreements to give politicians ready-made solutions to the challenges they will face after Brexit.

“The UK government can’t start these negotiations immediately, but we absolutely can,” Beale says. He predicts relations with non-EU wine producers could improve after Brexit.

The full interview with Miles Beale appears in the February edition of The Wine Merchant.

Good news – your customers are getting more wine savvy

The number of consumers taking wine courses is continuing to soar, according to figures from the WSET.

Students from outside the wine trade account for around 30% of the 17,000 WSET exams taken in the UK each year. Their numbers increased by 55% last year and figures for the first three months of the current academic year – September to November – show that the momentum is being maintained.

The stats make encouraging reading for the independent trade, which arguably benefits the most from an educated customer base. Some merchants – including Loki in Birmingham, Hennings in Sussex and JN Wine in Northern Ireland – are WSET educators.

The Wine Merchant issue 54Graham Cox of the WSET says: “We’re appearing at more consumer events and our social media is much more engaging.

“I would also say that our network of providers is better spread and better geared up to deliver. I think if you went back five years, a consumer trying to find a course wouldn’t have been exposed to the marketing, and may have struggled to find something in their area.”

The Local Wine School network, another WSET provider, now operates from 40 locations around the UK. Student numbers grew by about 40% to just under 2,000 in 2015-16, with the trade-consumer split estimated at 50-50.

This story appears in the January 2017 issue of The Wine Merchant.

It’s not just Marmite that’s more expensive

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.

The Wine Merchant issue 52
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.

Continue reading

Saturation point is a long way off

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.

The Wine Merchant issue 50Fifteen 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.

Are you a shop? A wine bar? A café? Maybe all three …

The proportion of specialist independent wine merchants selling wine for consumption on the premises has jumped by 24% over the past year.

This year’s Wine Merchant reader survey found that 28.4% of retailers now offer wine for on-premise consumption, compared to 22.9% in the 2015 poll.
The survey found that 4.5% of respondents have started selling wine in this way in the past 12 months.

The trend towardThe Wine Merchant issue 46s a hybrid wine shop/wine bar model has been taking hold among independents in recent years, but the survey results make it clear that the concept does not work for everybody, often due to space constraints or a lack of enthusiasm for the extra work involved.

Indeed more than half of respondents insist that they have no plans for on-premise sales – though this figure has dropped markedly since last year’s survey.

Food is also playing an increasingly important role in independents’ businesses, with four in 10 now selling food of some description, up by 13% on last year’s figure.

The number of respondents saying they have no plans to offer food of any kind has fallen sharply to just under 45%.

• More survey coverage appears in the April edition.