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Wines & Vines

A look at the strong wine market sales in the UK

A look at the strong wine market sales in the UK – Statistical Data Included

Larry Walker

The British wine consumer is known for looking for “good value” wines. If the typical consumer pays more than [pound]5 for a bottle of wine, he or she expects exceptional quality. For many years, the English balked at going above that [pound]5 bar for California wines. The attitude was that California wines should be as cheap as Australian or Chilean bottlings.

However, the numbers tell us that there may be a California breakthrough at hand. John McLaren, who looks after California wines for Wine Institute in London, pointed out that the average retail price for U.S. wine (of which about 94% comes from California) in the UK has reached [pound]4.42, according to AC Nielsen figures. This number is topped only by New Zealand at [pound]5.51. While U.S. volume share is still low, the value share moved ahead of Germany in the retail market last year.

Bear in mind, with the average price pushing the [pound]5 price point, a lot of bottles of wine are selling well above that.

“The benefits for California are in gaining market share ahead of the world wine surplus, and in establishing brand equity as a hedge against price-cutting from other sectors,” McLaren said.

“Brand development, particularly at the Fetzer price level and above, gives California a firm foundation from which to deliver its diversity message. The danger, clearly, is in higher fixed costs at the everyday level, where South America, Eastern Europe and God knows where else, can enter the UK comfortably to ‘buy’ market share in the short-term,” McLaren pointed out, sounding a note of caution.

John Shafer owner of Shafer Vineyards in Napa, began exporting wine to the UK in 1982. “It was very difficult,” he recalled. “Everyone kept saying the prices were too high. Or, ‘Why aren’t you like the Australians?’ I said that we would rather be compared with Bordeaux.”

A Dramatic Change

Now, almost two decades later, Shafer said he sees a dramatic change in attitude. He is the chair of the Napa Valley Vintners Association International Committee, a group formed about 10 years ago to increase exports around the world. “We have made great strides. You can see our wines now priced at $30 and over. Part of the reason is the strong world economy, part of the reason is the wonderful vintages of the ’90s. For whatever reason, it’s good to be getting the recognition,” he added.

Doug Rogers, chief marketing officer for Brown-Forman (Fetzer, Bonterra) said that most of their wines sell for [pound]6 and up. “It is a tough market and it can be a humbling experience to go into a market and look at the California sector,” Rogers said. “But we have some ambitious plans for growth.”

The Bonterra line, made from organically-grown grapes, is helping drive Fetzer growth. “There is a great deal of awareness in the UK of the organic issue. It resonates with a lot of people,” he said. Bonterra wines, which include a new line of Rhone varieties, sell at [pound]8 to [pound]9 and up retail.

David Cox, regional director for Europe of Brown-Forman Wines International, said the UK has been a real success story for B-F during the last five years. “We’ve managed to position the main Fetzer Vineyards Premium Varietal range at a higher level than that which is seen in the USA. As a result, we consider ourselves to be the first premium California wine to really embrace the ‘middle ground’ price points that formed a gap in the UK, for California wine, at least, at between [pound]5 and [pound]8 per bottle.”

Cox, who is based in London, said Fetzer business in the UK and Ireland was at nearly half-a-million cases and growing in double digits. To explain such solid growth, he pointed to consistent brand support and innovative wine styles, including being prepared to change the U.S. style to suit the UK/European palate, as in the Unoaked Chardonnay, a Dry Gewurztraminer and a very successful Syrah Rose, introduced with the 1999 vintage.

According to Cox, the UK now represents some 40% of total production for Bonterra. “The British consumer who now embraces organic products sees the value in paying a little more for quality and pure flavor,” he said.

A Sparkling Success

One very successful premium California brand in the UK is Cuvee Napa sparkling wine. Jonathan Pey, export manager for Chateau and Estates (now part of the UDV empire), said that 40% to 45% of Mumm Cuvee Napa was exported, with the bulk of that going to the UK. “Almost all of that is sold in retail stores at around [pound]10.99, comparable to lesser-known French brands,” he said.

Pey said it was very difficult to get Cuvee Napa on restaurant or hotel wine lists. “It seems that most restaurants in the UK would prefer to pour a lousy French champagne to a first-rate sparkling wine from New Zealand or Australia or California,” he said.

Sutter Home has also done well in UK by bringing in wines that are available only in that market, such as Gewurztraminer and an Unoaked Chardonnay.

Helen Scott, a marketing manager for Sutter Home, said a strong con-sumer advertising campaign over the past two years has focused on the easy approachable style of Sutter Home wines, which has helped Sutter Home maintain a price range of between [pound]4.79 and [pound]5.79.

Russ Weis, a vice president for Mondavi’s international division, said, “England is probably the most exciting wine market in the world. In the UK, you are really playing in the big leagues. If you can sell wine in England, you can sell it anywhere.”

Weis admitted that selling wine in the UK was hard work. He believes that given a little education about California wines, more wine drinkers will come to it. “At the end of the day, we will live or die by how we appeal to younger drinkers,” he said.

“The Australians have done a heck of a job,” he said. “I think some of the Australian wines in the UK are better than most of the Australian wines in the U.S.”

The entire range of Mondavi wines are available in the UK, from the super-premium Napa bottlings to the California appellation wines from Woodbridge, Mondavi’s large winery in the Lodi region.

The Paul Masson carafes of red or white wine are very popular and priced at slightly under [pound]4. The same wine is sold in the U.S., labeled Burgundy and Chablis. Paul Masson is part of the Constellation (Canandaigua) basket of wines, which includes Inglenook Estate Cellars, a brand offering varietal wine from Central Valley vineyards at [pound]4.99 and Mystic Cliff that sells for about [pound]5.49. The pricing is designed to go head-to-head with Jacobs Creek and other Australian brands.

Doug Kahle, who looks after the New York-based company’s international portfolio, echoes other U.S. marketing gurus, frustrated in attempts to get Brits to “trade up” from the [pound]3.99 to [pound]5.99 price range.

“Most of the market is massed right there,” he said.

The View from London

In contrast to the sometimes gloomy outlook from the States, Susannah George of Berkmann Wine Cellars in London (Beringer, Meridian, Stag’s Leap Winery) is quite cheerful about the future of California wine.

“Beringer has seen considerable success in the specialist sector, in Oddbins and Majestic, and we hope to expand distribution and sales in the UK over the next few years,” she said.

In the long run, California’s best shot at increasing its volume market share may come from the “branded” wines segment. Mark Fells, the marketing manager at Percy Fox & Co. in London (Blossom Hill, Glen Ellen, Beaulieu), thinks so.

“California was one of the first and one of the best proponents of branding, and have brought wines to market under commercially recognizable banners. It is interesting that research suggests that consumers now use these brands as signposts to navigate their way into the (wine) category as a whole,” he said.

“Brands like Blossom Hill are at the forefront of bringing something different and approachable to the market at good value for money. For many, they represent an introduction to drinking wine,” he added. “Those big brand houses, often reviled by the purist, are in fact a good start point.”

Having established the starting point–one of every six bottles of U.S. wine sold in the UK is Blossom Hill–it now remains for Californians to convince thirsty Brits that they should look for higher quality from California.

Wine Institute in San Francisco reports that U.S. exports to the UK rose from 16,535,000 gallons in 1999 to 18,399,000 last year, a gain of 11%. In 1999, the value of California wine exports was $134,290,289 compared to $143,237,091 in 2000, a gain of 7%.

California Share of UK Market

2000 VOLUME SHARE % CHANGE VS. 1999

OF MARKET

France 23.4 -5.4

Australia 16.1 +24.6

Italy 13.5 +7.2

Germany 10.6 -2.5

Spain 7.9 +6.8

South Africa 6.8 +17.4

USA 6.4 +21.5

Chile 5.6 +2.6

France 23.6 -3.5

Australia 19.6 +24.2

Italy 11.8 +7.3

USA 7.7 +24.2

Germany 7.6 -5.0

Spain 7.3 +7.2

South Africa 6.8 +19.0

Chile 6.2 +7.2

(All Figures based on AC Neilsen Off-Trade sales.)

COPYRIGHT 2001 Hiaring Company

COPYRIGHT 2001 Gale Group