An article in the Guardian yesterday reported on how last year Brits drank a record 4 million bottles of English sparkling wine a year (aside: actually, I should probably call this British or British sparkling wine because there are a few vineyards in Wales, but it’s hard for anyone who has experienced the horror of ‘British Wine”, which is the very cheap wine made from grape juice concentrate, to accept using the terms ‘British’ and ‘Wine’ in the same sentence).
This is a remarkable achievement, but the news was tempered by a slight reality check this morning when I read a tweet by respected consultant and industry commentator Justin Howard-Sneyd where he pointed out that with sales only growing 6% a year, we face a glut, considering that in the big 2018 vintage 15.6 million bottles were produced, and these will hit the market in a few years’ time.
Is Justin right? Should we be worried? And what can be done?
First of all, he’s right: a lot of vines have gone into the ground over recent years, and this has and will lead to an increased level of production. Most of these new vineyards will be planted with sparkling wine in mind. But, the surge of 2018 was exceptional (it was a rare thing for the UK: a large yielding year) and we still get large variations (the 15.6 million bottles in 2018 followed 5.9 million in frost-hit 2017). Bob Lindo of Camel Valley pointed out in the same thread that one in three years tends to be frost affected to some extent. Justin’s response was that taking this variation into account, annual production per year from now onwards will be around 8-10 million bottles, and soon this volume will begin to hit the market each year (there’s usually a three year delay between production and release).
The concern is that a glut of unsold wine will cause financial hardship to producers, distressed sales, and reduced prices. This is a vicious circle and, somewhat counterintuitively, lower prices could dent the image of UK sparkling, reducing its appeal, and make it harder to sell.
Some point out that the UK consumes roughly 25 million bottles of Champagne a year, and that English sparkling is priced similarly to Champagne, so we just need people to shift from Champagne to Brit fizz. But it isn’t that simple. For one thing, much of the Champagne retailed here is sold at a discount (you can sometimes find examples for as low as £12 if you hunt around) and people who buy these wines are unlikely to spend £25 on a bottle of Britain’s finest.
Clearly, supply and demand are intrinsic to pricing, and ultimately profitability.
The answer for UK sparkling wine is collective canniness. The success of the Champagne region is not simply accidental. It rests on is a lot of strategy, regulation, and understanding of the marketplace. The CIVC work hard to control production, and – most importantly – the amount of wine released to the market each year. The goal is to match supply and demand in such a way that prices remain firm. It’s never possible to be in complete control, but the way Champagne is structured, with the vast majority of wines being non vintage, makes this sort of approach reasonably effective.
I think it would help the UK sparkling wine industry if it moved to a similar, predominantly non-vintage model. This would help to buffer vintage variation, which is significant in the UK. It would also allow vintage to be a premium product, opening up a new pricing stratum. If we had an industry body like the CIVC, they could look at demand and match that year’s production with demand. This is tricky to do in a situation where new vineyards are still being planted, and we’d have to be wary of the unintended consequences of any potential rules, but left to itself, the market doesn’t do that well with agricultural produce where there’s large annual production variation and a time-lag between production and sales. And of course, there’s a time lag between new plantings and production, and vines are still going into the ground here (another 400 hectares were planted in 2018, bringing vineyard area to 2900 ha). We are not a mature region with fixed vineyard area like Champagne is.
Exports are also important. A lot of work is already ongoing in this area, and I think that with increasing volumes, markets outside the UK could soak up much of the extra production. I’m not saying it’s easy to export, but there is untapped potential in many target markets, sparkling wine generally is growing, and when I’ve travelled I’ve sensed a lot of curiosity about what’s going on in the UK wine scene.
There’s also marketing and brand building. There are two kinds of brand equity for UK sparkling. First, there’s the brand of UK sparkling itself (this has been complicated because ‘English sparkling’ has some brand equity and it’s not straightforward to transfer this to ‘UK sparkling’ or ‘British sparkling’ – why can’t we just pretend to the world that Wales is part of England? [ducks]). Then there’s the brand equity of the various houses such as Nyetimber, Ridgeview, Gusbourne, Hambledon and so on. Both are important, and as with Champagne, the growth of both producer and region brand equity benefits all players in some way. Brand building through skilled marketing efforts is vital in growing demand and keeping prices stable as more wine is produced.
So, Justin’s concerns are legitimate, but there are things that can be done. It will be interesting to see how things progress. You can’t grow a market without wine to sell, and so the market growth can’t come before the increased production volumes. Knowing more wine is coming gives time for people to plan, but it’s important this time isn’t wasted.