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A display of wines from Apulia in the heel of Italy, at the London International Wine and Spirit Fair |
What the French have been told about us Brits
Can French wines compete in a market dominated by market research and promotions?
THE declincing market share of French wines sold in Britain provided one of the most interesting discussions at the London International Wine and Spirit Fair, held recently at the Excel Centre in Docklands.
Wine International researchers divided their figures in three ways. Out of 46 million adults in Britain, 23.5 million (51 per cent) drink wine at least once a month (those drinking less than this are disregarded).
Two out of three of these (15.7 million) drink French wines ‘at some time’. Of these, 30 per cent (4.7 million) say French wine is their first preference. 8.4 million (35.7 per cent of all wine drinkers) don’t drink French wines.
At present, British wine drinkers prefer Australian, North American and New Zealand wines, with declining shares for Latin America, South Africa, France and Germany. According to Wine International analysts, the task for the French is to recover lost market share among two main categories of wine drinker. These are described as ‘loyalists’ (who prefer them to any other country) and ‘trialists’ (who drink French wines but their first preference lies elsewhere).
The challenge for marketing experts is to keep the custom of loyalists whilst enticing more trialists to become loyalists.
French loyalists, surprisingly, are not as conservative as we might think. They welcome new and interesting grape varieties, tend to prefer wines with high alcohol content and don’t mind screw tops – a big change from last year.
French trialists, on the other hand, have more traditional expectations. They don’t expect French wines to change and, in the words of another speaker, probably recognise them as more complex and suitable for special occasions. The problem for the French, therefore, is that the British market is pulling in two different directions.
It’s worrying for French producers that one in three British wine drinkers haven’t had any French wines in the last six months.
Restaurants remain a bastion of French wines, most of them, other than pizza and pasta houses, sticking with France for their house wines. Special occasions, where Champagne has a huge advantage, are important. But there are even further complications.
Just under half the total volume of wine sold in Britain is on promotion, whether reduced in price or three for two (or even two for one) offers. The supermarkets and big wine chains predominate here. Yet members of the panel listening to Wine International were worried about this ‘spiralling’ trend. Promotions transfer an increasing proportion of the cost of a bottle from retailers to producers.
In other words, it is the makers of the wine (in line with other products) who pay for it to be promoted. A £6 bottle discounted by 25 per cent leaves the vineyard with less than £1.50 a bottle. This carries the risk of undermining the market by driving producers out of business.
The big retail chains are sometimes paying less for the wines than they cost to produce.
There are three issues here. Firstly, wine drinkers are getting much of their wine at artificially low prices. In the event of a downturn in world trade, many producers will be unable to continue, adding to economic instability.
Secondly, the increasing competitiveness of the promotions race suggests that the market is reaching its limits with wider implications for trade generally.
Finally, it highlights yet again the power of large business interests, along with their ability (and frequently willingness) to exploit or even abuse it.
This highlights the importance of the current investigation into supermarket power forced on the Office of Fair Trading by the growth of a few very large chains. It is a quandary facing the entire retail sector and through it, the world economy rather than just the wine industry. |
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