Rising prices, partnerships, adding value, and innovation were at the heart of Prowein 2018
By Richard Siddle
No matter how hard you plan and try and get around as many producers, suppliers and countries as you can across the chaotic three days of Prowein, you are always left with that feeling at the end of the show that you’ve only scratched the surface.
As you head for the exit you realise you have missed out on great wine producing countries completely, even whole continents go a begging.
Which is not too dissimilar to how wine buyers are having to recalibrate the world in face of the biggest wine shortage in wine since the early 1960s.
Having no wine to buy is not a good place to start for a global wine fair. The overall figures for the show claim it was another record year, but it did not feel like that on the trams heading to the show or in the aisles between stands.
Rather than be jammed in like sardines counting down the stops to the Messe showground, and then spend most of the day bobbing and weaving your way through the crowds, the show felt just that little bit quieter.
But with less wine to talk about in terms of actual new trading, it made for a very different kind of Prowein. It was arguably a more focused, professional and switched on fair because of it.
Rather than spend a 20 or 30 minute meeting discussing prices and availability, buyers and producers were able to cut to the quick and really drill down into far finer detail how they could make the most of the wine they do have.
Which, in turn, meant a far bigger focus on innovation than in recent Proweins. Producers were noticeably more bullish about showing off their new products, and more ambitious packaging and design formats.
Be it more sustainable, paper based, Tetra Paks, with in your face wraparound designs, or the latest in can, pouch technology.
Products that might ultimately end up as a supermarket exclusive or private label, but the fact producers were willing to share them at what was often just the concept stage showed the need to be seen to be pushing the envelope rather than licking and sealing it up for another year.
Adding value
Time and again the same words kept cropping up. Whilst last year the dominating tone of the event was around currency, consolidation, battening down the hatches and, of course, Brexit, this year’s show was completely different.
Instead producers and buyers alike wanted to talk about “adding value”, “doing things different”, even, “having some fun”. And not one word of Brexit across all three days.
Wherever you turned it was a similar story. KWV in South Africa was all about needing to come up with “fresh ideas” and “bringing new energy to the category” like its new Cuvée Rosé wine. Lanchester Wines were the ones wanting to “have more” fun, whilst Felix Solis was looking to create more “occasion based wines” with its 50cl bottle range.
“We have just got to keep innovating,” said Richard Cochrane, managing director of Felix Solis’ UK. Innovations that satisfy both its business needs and the needs of the consumer, he added.
Another reason certain halls might have felt a lot quieter this year was the fact buyers and producers were looking to build relationships rather than look for new ones. This was the year to maximise the relationships you have built up over the years to ensure not only your supplies and activity for 2018, but safeguarding your position for 2019.
“This is the year to keep your hand over the flame and not go off looking for new partners,” added Cochrane.
“Yes, our phone rings all the time with new opportunities, but this is the time to really nurture your relationships and look after people. How you work with them in a year when there is less wine will define how you work with them in the future. You have to look people in the eye and be straight with them,” he added.
Only way is up
When the conversation did turn to price, it was only going in one direction. Up. The world over wines are becoming more expensive to buy, be it by a few cents or more. It feels like the whole base line of the global wine industry has been put under a jack and hiked up a couple of notches, moving all the other price points up too.
From France to Italy to Spain to Chile to Australia, all the entry level price points are a notch or two up from where they were in 2016 and 2015.
What was once a £4 wine is now £4.50, £5 was up to £5.50, £7 to £8 and so on.
Which potentially is good news for everyone in the global wine supply, from the grower up. By producers being able to pay growers a little more it not only ties them into longer term contacts, but there is less incentive to look for a greener field elsewhere.
“We are seeing a lot more quality now,” said Mark Roberts at Lanchester Wines. “No-one is just talking about entry level pricing alone.”
Instead it is all about developing mini projects and ranges of wines that can start at an entry level, but also have a laddered approach to move up several price points. “People are talking about far more ambitious ideas than they have. Its exciting. It’s different.”
Which for Mark Lansley, managing director at Broadland Wineries, meant a far greater focus for businesses like his to invest in consumer and demographic data to ensure it is making, creating and developing the right kind of products for the right audience.
Whilst clearly the spot market still has an important role to play, it is not the year to be a business that lives and breathes by what they can find on the cheap.
Look at South Africa. For so long the go to country for major buyers to source their generic and cheap wines. Now there is simply not enough wine to feed that kind of market and with the ongoing drought likely to pull 2018 volumes down by a further chunk it is forcing buyers to move, adapt and think on their feet where they go for that kind of juice.
Andrew Shaw, group wine buyer for the Conviviality group, said that where it has been able to move supply for its big volume varietal wines, the big impact is coming from South Africa, due to “the price and volume correlation”.
“The whole of the bottom of the market has moved up,” he said. “South Africa is still the cheapest place to source wine, there just isn’t any. We are seeing a lot of inflation coming through in Spain at entry level which is actually healthy for the long term marketplace if we are going to drive the discounted products out.”
Shaw says the market is having to cope with what he called a “double whammy” effect of inflation, that stretches from 3% to 8% depending on the category, and a 10% decline in volumes.
“We have had two years of issues. One year was Brexit related, the other is volume related. We’re now likely to see a smaller European harvest going into 2018, and now into South Africa, so can’t see any other alternative than further inflation and continued pressure on price,” he explained.
Lansley also pointed to the huge influence that China and the US are now also having on pricing and volume dynamics. “China is sucking up Australian wine, whilst the US is taking its share of New Zealand Sauvignon Blanc and rosé. That in turn is moving prices up as demand in those countries goes up,” he stressed. There is just not the opportunity, he added, to buy “price point wine”. “Those that are buying on spot will be finding it very difficult.”
Reset year
The overwhelming feeling at Prowein was that 2018 will be seen as a reset year for the industry as a whole. Where the whole sector has been moved up and that any future talks about wine, availability and volumes will be done from the point where we are now. With little appetite or need for things to slump back to the low, unsustainable entry level pricing of before.