Oz continues to dominate UK market
Australia remains clear of the pack despite rumblings of a shortage. Tim Atkin MW rounds up the major trends and developments in the top 10 wine-producing countries in the UK off-trade
Market share by value: 23.6%
Last year's rank: 1
Last year's market share: 24.3%
Sales value: £1.1 billion
Change on last year: +2.5%
Average bottle price: £4.36 (2007: £4.28)
Like a marathon runner approaching a finishing line, Australia may be getting a little short of puff, with a volume increase of less than 1% in the past 12 months, but it is still way ahead of the field. Its continued dominance of the UK market is nothing short of remarkable, given where it started from 20 years ago.
Worries about drought-affected shortages appear to have been wishful thinking on the part of its competitors.
Australia's market share is heavily dependent on brands, of course, particularly Hardys, Jacob's Creek, Wolf Blass, Lindemans and Banrock Station, all of which are in the top 10.
There is a degree of boredom
in the trade about the
sector - one retailer describes it as a "cash cow" - but I think the quality of its branded wines has improved
over the past two years and it is
back where it was 10 years ago.
But this may be the very moment when consumers start to look elsewhere. That's why the Australian Wine Bureau has been concentrating on
regionality - to get away from the idea that everything from Down Under is labelled South East Australia. It remains to be seen if consumers will buy into this.
Market share by value: 16.8%
Last year's rank: 2
Last year's market share: 17.8%
Sales value: £788 million
Change on last year: -1%
Average bottle price: £4.40 (2007: £4.22)
To the dismay of producers on the other side of the Channel, not to mention Francophiles in the UK, France's market share is still on the slide. The only consolation is that, as with the German situation, most of the losses seem to be at the bottom end, where cheap generics and own-labels are struggling.
The recently announced changes to the French appellation and vins de pays system may help
start a revival at the bottom end, making it easier for producers to blend across regions to achieve consistency and economies of scale, but it is questionable whether France needs to compete under £3.50 anyway, especially given that its average bottle price is now up to £4.40.
France's wines have never been better -
the quality of what it is producing between £5 and £10
is excellent. Producers such as the Plaimont co-operative, Gérard Bertrand, La Différence, Paul Mas, Dourthe, Blason de Bourgogne, La Châsse du Pape and Laurent Miquel are all making wines that compete with anything from outside France at the same price. France needs to
wait for the consumer to recognise the improvements it has made .
Market share by value: 16.3%
Last year's rank: 3
Last year's market share: 16.2%
Sales value: £767 million
Change on last year: +6%
Average bottle price: £4.13 (2007: £4.07)
The Italian immigrants who first planted Zinfandel may be spinning in their graves, but White Zinfandel, pink and sweet and popular as hell, continues to dominate the American market in the UK
with 16% of sales. Overall, blush wines from California account for one in
three US bottles drunk here.
The lack of diversity doesn't stop there. Two brands - Blossom Hill and Gallo - are responsible for 50% of the American wine sold in the UK. One can bemoan the poor to average quality of many of their offerings - Turning Leaf and the Gallo Sonoma wines are
exceptions - but you can't argue with their contribution to the figures. Volume and value are
and so is market share. The sad thing
we are only seeing glimpses of America's quality . Cycles Gladiator, Fetzer/Bonterra, J Lohr, Ironstone and Robert Mondavi are all decent mid-priced brands, while over-£10 wines from Saintsbury, Seghesio, La Crema and Morgan have reasonable distribution. But that's about the extent of American, nay Californian, wine in the off-trade. As long as retailers keep promoting pink wines - and the public keeps drinking them - it's hard to see the category developing more interest.
Market share by value: 11.3%
Last year's rank: 4
Last year's market share: 10.5%
Sales value: £532 million
Change on last year: +14%
Average bottle price: £3.69 (2007: £3.60)
If Pinot Grigio didn't exist, Italy would surely have invented it. (Come to think of it, there are rumours that some of what finds itself into bottles of the UK's fastest-growing wine style is Trebbiano.) Whatever the truth of the matter, the Pinot Grigio phenomenon just keeps on rolling. Sales have now reached just under 4 million cases, nearly 500,000 of which, remarkably, are pink.
The Italian wine sector should be doubly grateful to Pinot Grigio. The mean bottle price of this generally innocuous wine stands at £4.20; without it, Italy's overall average would be considerably lower than £3.69. Indeed, there are signs that some of the country's volume growth has come at the expense of France's bottom end.
Italy, like France, is not particularly strong in the branded sector, with only two supermarket exclusives and the not exactly world famous La Gioiosa, Canti and Fiordaliso in the top 50. But that hasn't halted its progress. Wines from the south, especially Sicily, are gaining in distribution, while the excellent 2004 vintage in Piedmont and Tuscany has done a great deal to create excitement at the top end.
Market share by value: 8.1%
Last year's rank: 5
Last year's market share: 8%
Sales value: £383 million
Change on last year: +6.5%
Average bottle price: £3.78 (2007: £3.80)
South Africa has done well to increase its market share. While it is tempting to ascribe this to the comparatively low price of many of its wines, sustained by a combination of cheap labour and a weak currency, this does not appear to be so. There has been a slight dip in the average bottle price, but Cape wines have more than held their own in a difficult market.
There has been a fair bit of criticism in the press about "green" flavours in South Africa's red, even if consumers don't appear to share these concerns . To its credit, Wines of South Africa has been pro active in trying to establish the source of the problem and hopes to announce preliminary findings by the time of Cape Wine, the biennial trade show, in September 2008.
South Africa's branded presence is strong , with
Kumala, First Cape and Namaqua in the top 15.
Kumala has been considerably higher than ninth spot in the past,
has been recruited to improve quality and early, pre-bottling samples are promising. With the marketing muscle of Constellation behind it, Kumala should start to recover some of its sales over
Market share by value: 7.3%
Last year's rank: 6
Last year's market share: 6.7%
Sales value: £344 million
Change on last year: +15.9%
Average bottle price: £3.85 (2007: £3.82)
has strengthened its market position in the UK on the back of a number of things: the impressive success of the Concha y Toro group (which represents 18% of the category across its Concha y Toro, Cono Sur, Isla Negra and Viña Maipo brands and has entered the list of the top
10 with its eponymous label), robust promotional activity and its long-standing value for money image.
The fear in some circles is that comparatively low prices are a potential weakness in image terms, but Chile is also doing well in the £7-£12 range, thanks to listings at Oddbins, Majestic, Marks & Spencer and The Wine Society (among others). The country now sells nearly 750,000 cases above £5 and is also far more than a one-trick pony brand-wise, with Valdivieso, Matetic, Porta, Viña Leyda and Errazuriz all doing well in the off-trade.
Chile also seems to have shaken off its reliable but dull image forever. The presence of good quality wines made from Pinot Noir, Syrah, Riesling, Gewürztraminer, Sauvignon Gris, Malbec and Carmenère (as well as Sauvignon Blanc, Chardonnay, Cabernet and Merlot) may even see it increase its market share in a difficult economic climate.
Good value may be seen as a strength if times get tough.
Market share by value: 6.8%
Last year's rank: 7
Last year's market share: 6.6%
Sales value: £321 million
Change on last year: +9.4%
Average bottle price: £4.02 (2007: £3.81)
If you leave aside Italy's Pinot Grigio-flavoured boom, Spain is the best-performing of the Old World countries in terms of value growth. Its success is based on two main factors: the enduring appeal of Rioja, a region which has managed to modernise many of its wine styles without alienating its more traditional consumers, and the strength of brands such as Campo Viejo, Berberana, Torres, Marqués de Griñon and Stork's Tower, all of which have had a good
Rioja may still dominate Spanish sales - the region now accounts for more than
one in three bottles sold in the UK - but Spain's popularity is increasingly based on diversity, especially Albariño (sold by Sainsbury's and Tesco under their Taste the Difference and Finest labels, respectively), Verdejo from Rueda and the reds of Campo de Borja, Calatayud, Ribera del Duero, Toro, Priorat and Navarra.
If you add
cava, neither of which is included in the statistics for still, light wines on which this report is based, there are even more reasons for optimism. After years of gentle decline,
sherry has stabilised, while sales of Spanish sparkling wine are up 9% on a
MAT basis. Add victory at Euro 2008 and Rafael Nadal's
Wimbledon triumph and it has been a good year for Spain.
Market share by value: 3.3%
Last year's rank: 9
Last year's market share: 2.9%
Sales value: £153 million
Change on last year: +18.9%
Average bottle price: £6.44 (2007: £6.09)
New Zealand prides itself on its green credentials, a colour which seems doubly appropriate at the moment. The land of the thin white cloud's competitors must look at its £6+ average bottle price with considerable jealousy, especially given the profitability of Marlborough Sauvignon Blanc.
New Zealand does well with other varieties, too, not least Pinot Noir, Pinot Gris, Chardonnay and Merlot (up 37% in the last year), but it is Sauvignon that continues to steer its bandwagon. Is New Zealand over-dependent on Sauvignon, which accounts for 71.6% of its sales? Possibly, although UK consumers show no sign of tiring of the style, or rather styles, and brands such as Oyster Bay, Montana, Nobilo,
Villa Maria, St Clair and South Bank continue to sell well.
If there is a slight worry for New Zealand, it is the size of the 2008 vintage ( up 39% on 2007). Should consumers decide to spend less on wine as a result of the credit crunch, they may look elsewhere (Chile, Hungary, South Africa) for their Sauvignon Blanc.
This could leave New Zealand with wine to sell and put downward pressure on prices. But at £6.44, there's considerable room for manoeuvre, as well as plenty of other wine styles to fall back on.
Market share by value: 3.1%
Last year's rank: 8
Last year's market share: 3.6%
Sales value: £147 million
Change on last year: -8.4%
Average bottle price: £2.80 (2007: £2.66)
On the face of it, the latest stats for Germany are like that old Status Quo song: "Down, down, deeper and down ."
With the cheapest average price by far (Italy at £3.69 is its closest companion in the bargain basement) and an ageing consumer base that remains stubbornly committed to sweet, sugary confections, Germany could be forgiven for saying auf wiedersehen to the UK market. After all, it is impossible to make money selling wine - even bad wine - at £2.80 a bottle.
silver linings to the dark clouds hanging over the German category? As it happens, there are a few: Black Tower, the country's biggest UK brand, has increased its market share
and has successfully diversified into drier whites and a red Dornfelder/Pinot Noir blend.
Germany is also performing well in the £4-£5 and £5+ price segment, suggesting
there is a market for drier styles, particularly Pinot Grigio, Pinot Noir, Silvaner and Riesling, which cater to a younger audience.
But as Hock and Liebfraumilch sales continue to tumble, German sales will fall with them. As far as Germany's market share is concerned, this trend hasn't reached the bottom yet. Those dry wines have a lot of ground to make up in the UK.
Market share by value: 1.4%
Last year's rank: 10
Last year's market share: 1.3%
Sales value: £65 million
Change on last year: +7.7%
Average bottle price: £3.89 (2007: £3.72)
Is Argentina finally starting to head in the right direction, after a decade of false starts? It would appear so.
South America's largest wine producing country has been much more successful in the US
than it has here to date, but that may be about to change.
The success of Tesco's range (especially its Finest Shiraz) and
the support of companies such as The Co-op, Laithwaite s, Majestic, Oddbins, Waitrose and Virgin Wines, not to mention the on going expansion of
The Gaucho Group (with its 11 Gaucho Grills and retail arm, Cavas de
Gaucho), are all positive signs, as is the excellent work of the generic office under James Forbes.
Malbec has established itself as the company's strongest varietal suit, but the diversity of what Argentina has to offer (not least as an alternative source of Pinot Grigio) and the comparatively cheap, US dollar-linked prices, are equally appealing to retailers, if not yet to the mass of UK consumers.
The country's brands, particularly Argento, Otra Vida, Santa Julia/Zuccardi, Finca Las Moras, Graffigna, Norton, Trapiche and Finca Flichmann are growing in importance and, crucially, distribution, while over £10 the likes of Clos de los Siete and Catena are selling respectable volumes.