Some of you may already have heard of Wine Stars, a new competition that will be launched at the London International Wine Fair later this month.
Anything that helps worthy producers of wine find the right channels to sell their wine has to be applauded. I hope it succeeds, and the caliber of the people involved gives it a very good chance of being a worthwhile venture.
I particularly like the way that the competition is setting out to encourage innovation, which is something the wine industry is short on. Look at the wine aisles: all the products look exactly the same (except to us, as category experts). They taste alarmingly similar, too.
But I admit to being slightly confused by what Wine Stars sets out to achieve when it promises ‘guaranteed listings’ and ‘huge sales opportunity’. Is it promising more than it can deliver, by failing to segment the wine market in the UK in an appropriate fashion?
The reason many producers struggle to sell their wine in the UK is because there is a mismatch between the scale of production and the shape of the retail market.
There are tens of thousands of wine producers across the world, and in particular in Europe, operating on a small scale – say under 25 hectares of vines. This is generally a good scale to make wine – family properties – for quality purposes. But it leads to an extremely fragmented, dispersed production base with insufficient scale to justify proper marketing/sales work and insufficient wine to supply large retailers.
The route to market in the UK is quite segmented. Most wine (around 75% by volume) is sold by supermarkets. Most of this is sold to people who aren’t terribly interested in wine. They are extremely price conscious, and the bulk of the wine sold will be at £5 or under. If you are a small producer, you’ll probably be too expensive to play here in addition to having insufficient volume.
Think about it: £5 retail price points can only be hit if the producer is getting just under 1 Euro ex cellars per bottle. If you are a small producer selling your wine for 4 Euros ex cellar (this is not terribly expensive), by the time your wine is on a supermarket shelf it will be at least £10, and is unlikely to sell much even if you get a listing. Remember, also that you’ll be taking a margin hit during promotions, and for some wines off-promotion sales are glacially slow.
So for these producers, supermarkets aren’t going to be a solution. And name a supermarket that is expanding its current producer base at the moment?
This means that a staggeringly large number of producers are facing a very congested route to market via independent wine shops and restaurants. These outlets already have their pick of a lot of very interesting wines, and many of them actively scout talent themselves. They also know what sells.
And then there are producers who sell for extremely high prices and have to allocate because of the demand. If you make exceptional wine and people realise this, then you can tear up the rule book. You can have horrible label design. You can be technical to the point of oscurity on your back label, and even do without a back label altogether. You can ignore social media, and have zero marketing budget. People will come to you. But it’s not a model I’d suggest for all wine producers.
I’m also confused by the criteria that Wine Stars will be using to judge wines.
Take two wines. One is a really nice but expensive Chablis made in small volumes. The other is a just-drinkable, very cheap Chablis. I know which I’d rather drink, but one is a really strong commercial proposition, while the other might not be. How would Wine Stars judge these wines?
Putting it another way, there’s a big market for very cheap wines, and a small one for more expensive ones. You just need to be realistic. Quality is not some universal property; it’s fitness for purpose. A neutral, drinkable supermarket Pinot Grigio at £3.99 is good quality: it is fit for purpose. It has a place on the shelf, and meets the expectations of those who buy it. Change it for a Pinot Grigio with lots of flavour and personality at £7.99 – a ‘better’ wine - and you’ll lose your customers. They simply won’t be interested: they never spend that much on a bottle and they’ll shop elsewhere.
Then there’s label design. I was speaking to a supermarket buyer the other day. He told me that they’d redesigned the labels on a white Bordeaux to make them look more modern and appealing, emphasizing the Sauvignon Blanc name. Sales went down. So they switched back to a very old fashioned and frankly dull label with a picture of a Chateau and a much more traditional feel. Sales went back up.
So, good luck, Wine Stars. We’ll be watching with interest.