Time to reflect and act on the enormous changes taking place in bulk wine
By Richard Siddle
It is often hard to be able to fully appreciate how much the sector you work in has changed when you are in it, day in day out tackling the various challenges week by week. But if it is often a usual exercise to stop and step outside our bubble and reflect on not only how you and your business have changed to cope with different times, but how the sector as a whole has had to adapt and move just to go forward.
The bulk wine industry is no different. In fact the pace of change taking place within the bulk wine sector is arguably so fast this is an exercise we should be doing on a yearly rather than five or 10 year cycle.
Bulk wine has gone from hushed conversations between producers and buyers and wine importers at industry events and dinners, to become arguably one of the most important driving forces and influences on the entire wine industry.
The amount of bulk wine now being shipped around the world compared to just five years ago is staggering. It has transformed the fortunes of New World countries in particular with Australia, South Africa and Chile leading the way. Over four-fifths, for example, of all wine being shipped from Australia to the UK is now being sent in bulk. Over half of South Africa’s wine exports are in bulk. Chile’s enormous growth in China in the last few years has largely come on the back of its demand for Chilean bulk wine.
The swing towards bulk wine has been so fast and decisive in some countries that there are now steps being made to slow down the global industry’s reliance on bulk wine as it is resulting in lost jobs in bottling, packaging and manufacturing in those wine producing countries.
But it might be hard battle to win. The genie, as it were, is out of the bottle. The wine industry’s overall perception of bulk wine has also changed dramatically. It has moved in step with the huge improvements that have been made in the safety, the technology, the quality and price point of wine that is now arguably better served by being shipped and then bottled in a seller’s market.
It is sign of how mature and sophisticated the bulk wine industry has become that buyers of all types of wine, outside the most premium and fine wines, are now looking closely at what bulk wine can offer.
It is changing the way that traditional wine importers, suppliers and distributors can operate. Most significantly the huge improvements in the quality of bulk wine now available on the global market, means wine suppliers no longer have to be just simply agents for other people’s wines.
They can become brand creators, brand builders and trend setters themselves. They can now buy and use wine they have sourced and blended themselves to be economically and efficiently shipped and bottled in their domestic market.
It means wine suppliers no longer have to follow the agency route, reliant on the quality and export strategy of the wine producers they work with.
They can, to coin a phrase, take back control of their own supply chain. Or in most cases grasp control of their own supply chain for the first time.
The timing could not be better as wholesalers and suppliers grapple with one of the most disruptive trading and economic conditions in recent memory, fuelled by the political uncertainty both in the United States and across Europe.
Last week VINEX spoke to Scottish drinks wholesaler and wine supplier, Inverarity Morton, about how it is now using bulk wine far more to go direct and create its own wine brands to sell. It opens up so many more possibilities for how their business can grow and develop, says wine buyer, Toby Sigouin. The quality of bulk wine at much higher price points means it is now able to get closer to not only wine producers by making wine directly with them, but also their own customers.
You can now go to them, he adds, with stories and wines that you have personally created yourself, wines that potentially have so much more energy and passion behind them than if you were acting as a third party supplier. The fact they are produced using bulk wine, bottled by Greencroft Bottling, is not relevant or important to Inverarity Morton’s customer or the end consumer.
We are seeing a similar picture emerge in the independent merchant, wine bar and restaurant scene. Particularly when looking to source exclusive, quality, but value wines at competitive house wine-style prices. Wine merchants are coming together far more to form buying associations where they can club together to source quality, value juice that can be shipped for them to bottle, and label differently for their different stores and wholesale businesses.
Larger distributors are able to do the same on a bigger scale when it comes to the actual buying, shipping and bottling. But again it is giving them much more of a personal story and approach when going in to talk to their customers about offering them exclusive wines, that offer quality, consistency and at the right price point.
We have seen it for a number of years with the major supermarkets who have taken the branded wine producers on by creating their own tertiary, exclusive brands for themselves. Sainsbury's in the UK, for example, has just flexed its muscles by taking out Casillero del Diablo and putting in its own brand Camino del Angel, reportedly sourced through bulk wine.
Wherever you sit in the bulk wine supply chain it is worth reflecting on the most important issues, challenges and opportunities that directly effect you and assessing how well you are doing to address them against your competition. If you don't the chances are they will.