The rise of the wine brands: the modern retailing environment

Part 6
The modern retailing environment

Wine, in its traditional guise, doesn’t sit well with the modern retail environment. At its heart, wine is an agricultural product, not a manufactured one. And with wine, small is usually better. To the big retailer, this is a bad thing. The way the modern multi-outlet branded/franchised shop is configured, continuity of supply and economies of scale are hugely important. You don’t get this with wine: vintage variation – at times a frustrating reality, but one which adds an extra level of interest – and typically the limited production of each producer mean that wine is not an easy product to deal with. It usually comes in small parcels, and the production level changes each year.

Modern retailing is big business. There is no longer any room for small players, unless they can find some niche too small to interest the multiples. To survive in the modern retailing environment you need to be big, highly visible, and with lots of outlets. Effective marketing in this modern environment is an expensive business and you can only really make use of it if you are a big player. This automatically rules out almost all estate wines, leaving the floor open to the brands.

Consider the lot of a wine producer looking to break into the UK market. With 75% of wine sales in the UK going through supermarkets, you might want to target them first. So you approach the supermarket buyers. If you are from a relatively unfashionable country like Portugal, you’ll probably be talking to a 22 year old junior buyer fresh out of college who has, perhaps, two slots to fill at a Ł3.99–4.99 price point. They want serious volumes, a fresh, fruity style, and the cheaper the better. If you are from Australia, you may have better luck, but the volumes required will be huge and the price points will be very keen. Even at the higher price points, the continuity of supply and volume issues favour the branders very heavily. If you are selling wine from recognized appellations such as Chablis or St Emilion, then the buyers will be looking for the best Chablis at the entry-level price point for this wine, effectively ruling out the estate wines here also. A supermarket would much rather have a vaguely palatable Chablis at Ł5.99 – which will fly out of the door – than a really good one at Ł8.99. That’s life.

If you are producing an estate wine, then these considerations mean you’ll probably be restricted to the specialist wine merchants and high street chains. The commercial pressure towards the creation of more branded wines, even from the classical wine producing countries, is therefore huge. The tragedy is that there is little room left in the market for the genuine article: wines made by small, family-owned producers. Big companies rarely make interesting wine, because they are dealing with large volumes and they have to pitch their style to appeal to the average drinker. They can’t afford to take risks by making wines with ‘edges’. The result? All widely commercially available wines are beginning to taste the same.

The illusion of choice
Supermarkets and other multiple outlets don’t like dealing with the diversity and complexity of wine, but they are quite attached to the ‘idea’ of diversity. So typically they will stock hundreds of different lines, giving the shopper the impression of a broad portfolio of wines. The problem here is that this diversity is actually an illusory one. The wines are almost always industrially produced, in large quantities, and to a formula. It makes life a little easier for the supermarket critics, because they can effectively do their job just by picking wines more-or-less at random. But while customers now experience far less risk of picking a bad bottle, they also have far less chance of picking a wine that is at all interesting. The buyers are convinced that all the punters want are modern, clean, fruity wines without too much acid or tannin, but will they grow bored with the homogeneity of style? Encouragingly, I’ve had non-wine-geek friends confide in me that they are troubled by the way that wines all seem to taste the same these days.

My hope is that the buyers and the wine drinking public will come to their senses and see that while uniform (high) quality is desirable, a uniformity of style is disastrous. Branded wines, with their manufactured, processed character and lack of connection with the soil can’t be the way forward. Worst of all, their growing dominance of the marketplace threatens the very existence of the genuine article, estate wines.