London Wine Fair shows how fast wine businesses are adapting for future success
By Richard Siddle
Changing business models was very much the underlying theme at this week's London Wine Fair.
Time and again VINEX came across examples of how different wine companies are changing the way they work to keep themselves relevant and ultimately commercially successful in the ever changing and challenging global wine industry.
And there is no more competitive place to operate in than the UK wine trade.
In fact there were some large notable absences from this year's fair with some major wine companies making the decision that their business strategy means they do not have to exhibit at the industry's biggest fair.
Most have not said publicly why they were not there but it is clear that many of the major UK wine distributors that now hold their own large scale portfolio tastings see better value in those than going up against their competition at London Olympia. Liberty Wines, Enotria, Bibendum and Matthew Clark were amongst some of the major players not present.
This year's fair was also the first to be held after the UK's decision to leave the EU in last June's referendum and the subsequent near 20% drop in the value of sterling as a result.
The ramifications of that were there to see at this year’s show with companies already stretched by squeezed margins choosing to save their LWF investment for more pressing needs in their businesses.
Global changes
Those that were there, however, were in good, bullish mood. Particularly the larger global producers that still see the UK as a vitally important part of their international strategy.
Laurenz Mozer, the famed Austrian wine producer who was at the show to help launch his new Chinese wine range developed in partnership with Changyu, spoke for many when he said the UK was still in the top three or five most important markets in the world.
Laurent Delaunay, founder of French wine business, Badet Clément, which was introducing its new joint partnership with Australian wine importer Fourth Wave Wine to bring interesting New World wines to Europe, said the UK was still very much the testing ground, the market to determine how good your wines really are. It is the most demanding and rewarding at the same time and if you can please UK buyers and consumers then you know you have the right business plan, he stressed.
French wine giant, Castel, which was revealing its new strategy to breathe new life in to the rosé category, particularly from Provence with new bottle designs and imagery, said the UK provides both scale, and, with the right pricing, also good value as all its routes to market be it multiple grocery or premium on-trade are so well developed.
But what Moser, Badet Clément and Castel had in common was that they were there to show how they are changing as a business to keep on top of local and global trends.
Bulk to brand
That underlying theme shone through time and again. Mark Lansley, managing director of Broadland Wineries the bulk bottling to brand development business, said it was vital for its kind of business to be developing and expanding all the time. It was, for example, introducing nearly 60 new wines at the show demonstrating how it is now able to create exclusive wines and labels that are suitable for either a single independent cinema or a major multiple grocery chain.
But to do so, he said, means it has had to invest in people and, crucially, very different skills sets. It is adopting, he said, as “scientific” approach to how it builds brands as it has the technology involved in its state of the art bottling and packaging lines.
Particularly around consumer data trends and insights, both inside and outside the drinks industry, that can help them plot and decide what consumers are going to want to drink next.
Small and flexible
One of the big positives from this year’s fair was the diversity and number of smaller importers at the show. Matched by the number of smaller producers that were there trying to find a home in the UK for the first time.
The ease in which wine can now be bought and shipped around the world means it is now quite possible for a small wine producer, whose whole team you could get in the back of a London taxi, can now source and buy 100% of the wine it sells directly from producers.
That might be bringing in small bottle shipments or it might be collaborating with other importers or buying groups to bring in pallets at the time or containers of bulk wine to be bottled in market.
Nik Darlington, co-founder of Red Squirrel Wine which imports niche and interesting wines from around the world, believed its approach was arguably as effective, if not more so than the big national distributors.
It was far more able, for example, to be instantly reactive to new trends or changes than a major importer working on far longer lead times and complicated supply chain.
He and his team could spend more time out in wine producing countries cherry picking the right producers to work with in the right way.
Knowing there is a simple, but sophisticated shipping and logistics support system able to help him get those wines to market as efficiently as possible.
Impact of Brexit
One of the set piece events at this year’s London Wine Fair was a major debate on Brexit and the potential impact on the global wine industry. Miles Beale, chief executive of the Wine & Spirit Trade Association was able to set out how different countries around the world are likely to be treated differently due to the tariff systems run by the World Trade Organisation. With winners and losers along the way.
He said the best case scenario and its biggest achievement post Brexit would be if nothing changes at all. Meaning all the work it and other global trade associations and wine bodies are doing now behind the scenes feeding the “negotiators” with the right facts, figures and tools to help them come to trading deals that effectively means we can carry on as normal.
But Beale again pressed the point that whatever is decided when the UK formally leaves the EU at the end of March 2019 there will most likely be a “transitional period” where a lot of the nitty gritty around trade agreements and the physical shipping and movement of goods such as wine will be finalised.
The big concern, however, would be what systems and checks different countries would put in place in terms of the duty and other costs involved in doing business with each other. The scale of which when multiplied across all industries and imported goods is hard to fathom considering how frail even the current system is.
It will be fascinating to see how the UK and global wine industry adapts, changes and modifies itself in time for next year’s London Wine Fair.