Shipping forecast: the growth of bulk wine

17 July, 2017

Bulk wine has always been the less glamorous side of the business – the elephant in the room that no one wants to talk about.

But the elephant is now getting too big for the industry to ignore it.

Globally, the portion of the wine market shipped in bulk (as opposed to bottle) has been growing rapidly over the past few years and, according to specialist bulk wine supplier Raphäel Michel, it now equates to around 80% of the total wine market.

A similar pattern has been emerging in the UK off-trade. Most of the wine we see on shelf in the UK has travelled to our shores in a container – probably via a combination of boat and lorry – and it is then bottled nearer to home, sometimes in Germany or the Netherlands, but increasingly in the UK itself.

Consultant winemaker and bulk wine expert Barry Dick MW points to Australian wine as a good example of how bulk wine became commonplace on UK supermarket shelves. He notes that since the 1990s Australia massively increased the use of bulk shipping to transport wine from its shores to the UK.

He says: “In 2008 only 29% of wine by volume was exported in bulk, but by 2012 the UK was Australia’s largest export market, with 34.4% of Australian total wine exports and 80% of that was in the bulk format.”

CHANGING THE IMAGE

One of the challenges is that along with its lack of glamour comes a perception of a lower quality, perhaps born from the early days of bulk wine shipping when quality standards were known to be a bit hit and miss.

It’s a perception that Raphäel Michel, which supplies quality bulk wines from a number of regions (including the Rhône Valley, Provence, Languedoc-Roussillon, Chile and Argentina) has worked hard to overcome.

On the one hand significant improvements have been made to flexitank materials over the years, which has led to a reduction in the incidence of oxidation and taint in bulk shipped wine, while, on the other hand, suppliers such as Raphäel Michel are upping their game in buying.

The company is proud of its customer-focused approach, whereby it carefully works on bespoke blends to meet clients’ needs. It has also invested heavily to achieve BRC and IFS accreditations, which it obtained in 2013. And, according to chief executive Guillaume Ryckwaert, these accreditations have been instrumental in attracting new clients.

CO-OPERATIVE CONTRACTS

This has all been part of Ryckwaert’s mission since he bought the company with its three employees in 2002. He now has a team of 50 who work together to create and blend wines for clients, as well as cellaring in barrels, preparing wines for bottling and organising the logistics of shipping.

The company has long-term contracts with 15 co-operatives and more than 3,000 suppliers. It ships to 12 countries and has seven vineyards of its own, mostly in France and including one in Chile.

He says: “By acquiring vineyards we are able to strengthen our existing links with growers and caves co-operatives in the Côtes

du Rhône.” Ryckwaert’s focus on quality isn’t limited to his clients. Staff travel out to the company’s fairly isolated HQ in Piolenc, in south eastern France, each day, and he looks after them well.

He says: “I saw that they were eating pizza and junk food at lunch and felt concerned about this, so I decided to invest in taking on a chef. He’s brilliant and he serves a three-course meal each day for staff and visitors.”

Nurturing the team is essential for Ryckwaert as the volume of work continues to increase.

“In 2002 our turnover was €7 million and today it is €80 million. Our aim is to continue this growth by 20%-30% year on year.

“Another aim is to grow our business internationally by developing other production zones around the world and to export to other countries.

“We have increased our turnover a lot because our customers know the quality is excellent and, most importantly, the service is reliable.

“People are realising that importing wine in bulk is more profitable so there are lots of companies developing bottling facilities in their own countries.”

Raphäel Michel is working hard to keep up with this and it has invested €50 million in improving and expanding its operations. In 2015 it created a new arm of the business – Oenotria Cluster – in Italy, which is a storage facility for New World wines. This enables Raphäel Michel to respond more quickly to any clients requesting wine from its New World partners – a shorter overland lorry journey to European clients instead of shipping it across from Chile.

INCREASING UK FOCUS

Looking ahead, one of the tasks that is high on Raphäel Michel’s agenda is to increase its focus on the UK market, and this is something Ryckwaert relishes.

“The UK today is around 5% of our global sales but when I talk about developing our business then the UK is at the top of our list. The UK import business is moving and I think bulk wine will play a bigger and bigger part, and we have been working to make sure we are ready to operate in the UK.

“Around 10-15 years ago bulk wine wasn’t even a thing, but now it is an industry. People think the world of wine is a craft world but it is mass market and huge volume. It is very profitable for us because we do big volumes. Competition is increasing but here in France our competitors are probably about two times smaller.

“We have invested and we are the only bulk wine company here which works under both the British Retail Consortium Global Standard for Food Safety and International Food Standards (IFS) certification. More and more of our customers ask whether we are BRC certified and when they find out we are they want to talk further. A lot of our competitors just aren’t big enough to get BRC.”

He adds that, despite the challenges that Brexit poses, the UK is still a target market for more business. “Brexit doesn’t worry us too much because there will still be a level playing field between us and our competitors. Currency is the main issue at the moment but it doesn’t change my focus on the UK. I can talk to clients about the currency problems and they understand this and we work on the price. We are going for the more premium end of bulk wine.”




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Reasons to be cheerful

I would like to think my outlook on things is generally optimistic. Perhaps that’s a natural consequence of working with something designed to give pleasure. But recently it has become increasingly difficult to ignore a creeping sense of negativity pervading the British wine trade.

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