Prowein shows how quickly the world of wine is having to find new markets, and ways to do business
By Richard Siddle
With a record 58,500 people from 130 countries visiting 6,500 exhibitors it was hard enough just walking around this year’s Prowein, never mind get on top of what is happening in the world of wine.
With only three days to play with it’s hard to peel back just a little of the outer skin of Planet Prowein. But what was clear, regardless of what brought you to the fair, this melting pot of wine business has just got a lot more intense, a touch more competitive and even harder to stand out from the masses.
There was certainly a more serious mood at this year’s show. Less of the PR and flag waving, but a steely determination to rattle through meetings and get some business done.
There might have been a lot of wine available to taste, but there was far less to actually buy, hence the need to be on completely on top what you were doing, who you were talking to and where you were doing business.
The 10% drop plus in the total global wine harvest this year has put increased pressure on all areas of the supply chain. The talk by the bratwurst stands and the bars of the old town of Dusseldorf was of key shortages of grape varieties all over the world.
One leading UK importer jokingly asked if I could find him 1 million litres of Argentine Malbec by the end of the day.
Clearly the grape shortage is a short term problem and can be rectified to some extent by a strong 2017 harvest, but it could not have come at a worse time for most of the major wine producing countries who have been hit by currency shortfalls on the back of the political upheaval in the Northern Hemisphere.
This was the first Prowein where the spectre of Brexit lay heavily on proceedings. This is not just a UK problem, but a global issue considering how important the UK market is to so many wine countries and their producers, and the knock-on effect that then has on other wine markets around the world. The UK, after all, sits in the top three to five export markets for most of the mature wine producing markets.
Currency hits of 20% and more are having to be factored in to producer plans for 2017 and 2018 at least. Hits not all are going to be willing to take in the future.
Hits that could get worse before they get better with producers also concerned about the fallout from the forthcoming elections in France and Germany and subsequent impact on the value of the euro.
Whilst the UK will continue to be a key market, British importers, distributors and retailers are going to have to work a lot harder to find the wine they want at the price producers are willing to sell it for.
Until the full extent of the Brexit process is understood the UK is likely to become, literally, more of a shop window to the rest of the word. Still very important to be there, but being used far more strategically than in the past for particular projects, as producers look to free up capacity to service more profitable, more maturing markets.
It might, though, take some time for that wake up call to sink in amongst the bigger dominant UK players. Even though Prowein revealed research that producers surveyed at the show saw the UK as scoring high on the risk factor and low on attractiveness of doing business there.
Year of change
But if you looked and listened carefully enough Prowein 2017 will be seen in years to come as the year that new lines were drawn in the sand and fresh strategies were drawn up.
Particularly in paying far more attention to really helping new and emerging markets, to grow that in the past were pushed on the back burner to keep up with demand from leading markets like the UK and northern Europe.
Time and again producers spoke of fresh opportunities in Eastern Europe with strong growth in key areas such as Moldova, Slovenia, Slovakia and Poland. Russia is also now seen as being on the comeback trail.
Interestingly Prowein’s own research found that producers were particularly bullish about the economic opportunities in Russia, Hong Kong, Poland, South Korea, Brazil, China and the Scandinavian countries.
But were less enamoured by the prospects in the UK, France, Italy, Austria, and Belgium.
Countries deemed to have high attractiveness and low risk are Poland, Australia, Japan, Canada and the Scandinavian countries. Those that are high in attractiveness, but also high in risk are Russia, Brazil, China and Hong Kong.
But encouragingly two thirds of all buyers at Protein are looking to introduce new countries to their ranges and not just go fishing where they have always bought wine. Which is just as well as 90% of the exhibitors are looking to expand the number of countries they service by 2020.
That relationship is likely to become more direct with buyers increasingly looking to cut importers, agents and distributors out of the loop and work with the producer. Which in turn will push further requirements on to producers to be able to handle direct enquiries and logistics.
In a nutshell:
*Wineries and major producers are going to have to become more flexible, more diverse in the way they do business and not just rely on the normal way of doing things.
*Buyers, be they importers or the end retailer, have different needs and ways of selling wine and want to work with producers that can supply them wine in different formats and price structures. Some on long term deals, others on a tactical basis.
*Wine is now far more of a multi-channel business and the best producers will be the ones that can service major grocers and big direct to consumer websites with bespoke contracts, exclusive labels, bottled in market wines, whilst also having the capability to service more specialist, premium, independent retail and on-trade customers.
*If you are a traditional bottle only wine producer, then you need to think about operating more in the contract and bulk markets, if only to drive more cash flow and flexibility through the business.