Suppliers urge UK to take advantage of wine shortage
The global wine shortage has provided the trade with an opportunity to end an unsustainable culture of working with miniscule margins, according to leading suppliers.
Frost, hail and drought have led to the biggest wine harvest shortfall in 60 years, with Italy, France, Spain, Chile and South Africa all hit.
Bernard Fontannaz, managing director of Origin Wine, told DRN: “It creates an interesting dynamic. The market is changing. It was not sustainable.
“It gives the opportunity to get the customer to look at wine again. Change can be positive. The short term is not pleasant, but I am very positive for the medium term, more than I have ever been. Now we can start discussions in a more balanced way. It’s a blessing in disguise. It’s a turning point.
“The shortage rebalances the discussion, but it also gives an opportunity to reassess and focus on what matters. It will be a difficult year, with drastic supply pressure and price increases, but if you do the heavy lifting now you will emerge better. The consumer and the retailer are starting to realise that wine is an agricultural product. It’s good for people to understand there’s a limitation.
“Partnerships become more of a key element. The key for us is to focus on what matters and develop medium-term partnerships [with buyers]. If you don’t have a vision, a medium-term plan, you will struggle to fill your shelf.”
Forty per cent of Origin’s wine goes to the UK and it remains the supplier’s biggest market. “It’s a question of sustainability,” said Fontannaz. “We can now have meaningful discussions about which markets and partners are aligned with our sustainable strategy.
“The UK market has to be careful. If it becomes less sustainable, people [producers] will consider other markets, which you don’t want. If we can develop sustainable workings then we can all win.”
RJ Botha, winemaker at Kleine Zalze, said: “Europe had a bad harvest, so a lot of people are coming to South Africa looking for wine. We are going to look after our current customers first. But there’s a definite price increase on South African wine.
“There’s a lot of talk about this drought and where our prices are going. For the long-term, it’s going to be good for South Africa as a country.
“We lost 9,000ha of vines last year, because the guys aren’t making money. We have to make sure these guys are getting the money. Everybody takes their cut. By the time it gets to the bottom end there’s almost nothing left, so we have to make sure we look after those guys.”
Andrew Steel, director at Connoisseur Estates, added: “Everyone will hopefully realise we can’t get by flogging cheap wines with no margin. That has to change.
“When people start offering deals such as Prosecco at £20 a case, that barely covers the tax, it’s not good for anyone. The public have to understand they can’t get the wines they have been getting at the prices they have been getting, because the two biggest suppliers [Palmer & Harvey and Conviviality] have gone bust.
“There cannot be price stagnation. People are getting price increases in other sectors.
“There’s a realisation that you have got to say no to certain business. No one has been sheltered from the problems of the last two years. But it has got to change and we are nicely positioned to move forward with it.”