The wine market’s extremes are getting more extreme. Late last month Yellow Tail owner Casella Wines plunged to a AU$5.5 million [£2.9 million] loss, against a background of contraction in the Australian industry and US tariffs. Yet a few days earlier at Sotheby’s New York, an 1870 magnum of Château Lafite fetched $200,000. The opposite ends of wine’s price range have always inhabited different worlds – and I’m even less likely to bid for Victorian claret than I am to open a Jammy Red Roo (Tesco, £8.50). The difference is that the damage being done lower down the market will affect us all.
This does not appear to have dawned fully on parts of the wine trade, and indeed it’s something that well-heeled drinkers may feel able to ignore. But “premiumisation” – persuading consumers to trade up – can only take the trade so far.
Sales of volume wine brands in the UK, and even more so the US, have been falling for several years. Last year’s Silicon Valley Bank US Wine Industry report found that in 2024, revenue for the bottom quarter of wineries dropped 16% – against growth for the top quarter of 22%. France has seen a similar pattern, with volume wines bearing the brunt of last year’s 7.5% haemorrhaging of domestic red sales. Meanwhile wines over €20 have gained market share there.
The answer suggested by this divergence of fortunes is of course premiumisation, the mantra of consultants for a decade. Numerous surveys have claimed that consumers are “drinking less, but better” – perhaps borne out by the broad outlines of the recent UK wine market, flat in terms of value with volume gradually dropping. A market survey last December by IMARC Group found that various premium wines were the main drivers of growth in the UK market.
Never mind the impression in London of £30 natural wines flying off the shelves of boutique stores.Last month saw the launch of an Italian “spotlight” in the Wine Society’s new fine wine offer. The Society launched its fine wine strategy last autumn, hiring a dedicated fine wine buyer, Alex Turnbull. I am an unabashed Wine Society fan, and they continue to provide remarkable value right across their price range. Nevertheless, it’s clear from this where they see future growth coming from.
Meanwhile at a masterclass last month, Adam Guy, Laurent-Perrier UK’s MD, was clear about the company’s positioning. “Champagne has to be an accessible luxury,” he said, but he conceded that Laurent-Perrier’s brand focus over the past decade has moved towards higher-end, premium products.
There are two problems here. First, premiumisation’s price effect is magnified by inflation – and we’ve seen a real impact across the board over the past four years. In the current round of spring press tastings for the supermarkets and other outlets, it has been striking how little there is that’s drinkable under £10. At independents the trend is starker: a survey a year ago by The Wine Merchant magazine found that their average bottle price (still wine) was £16.91 – up 14% on the previous year.
In restaurants, the spike is more jarring still. At dinner last weekend in a mid-price Italian restaurant in London, I found just three red wines under £45. This has become far from unusual. And it is likely to get worse in the fallout from Donald Trump’s disastrous war on Iran, with inflation already rising.
What’s more, affordability is a bigger problem than suggested simply by headline inflation. People’s disposable income is affected by other things too, such as taxes and benefits. The UK’s Office for Budget Responsibility forecast that what it terms Real Household Disposable Income would grow at under 1% a year between 2025 and 2029 (by contrast it grew at an annual average of 3% between 2000 and 2007; British per capita wine consumption peaked in 2009). And that prediction of, basically, how much cash people will have for non-essential treats was made before the Iran war blew a hole in the global economy.
The other problem with premiumisation is longer term. If the wine trade is effectively depending on a gradually shrinking pool of wealthier drinkers for growth, with the middle of the market hollowed out and more price-sensitive consumers forced to find alternatives, that will over time change the culture of wine.
Younger drinkers have always come to wine later than to BuzzBallz, or the ready-mixed cocktails’ cultural antecedents. But we still can’t risk them switching off early from wine.
As for everyone else, let’s remember the sea change in British wine culture over the past half century. Despite industry panic, two thirds of British adults today tell pollsters they drink wine. Yet in the 1960s, one estimate is that only around 5% of Britons drank wine with any frequency. Only in the 1970s, in Jancis Robinson’s words, did we begin to “lose our suspicion of this inherently foreign drink”. But history can go backwards too.
One clear culprit is the UK’s duty system. Duty on a 13% ABV bottle of wine has risen by almost a third over the past five years. At the same time, UK wine businesses, bars and restaurants were hit hard by last year’s increases in the minimum wage and employers’ National Insurance contributions. Governments of whatever stripe should stop treating the drinks’ industry as cash cow.
As for the wine trade, “premiumisation shouldn’t mean exclusion,” Michael Sager, owner of London’s Sager + Wilde wine bar, told one website. “It should mean we stop pretending you can make real wine for 62p and start helping people find wines that will actually transport them somewhere.”
I know it’s not simple. But we can’t risk premiumisation sending wine in Britain back to the days when it was the preserve of Oxbridge colleges and the Provence-holidaying solicitors. Wine should be a democratic drink: we must do our best to make it so in every sense.
Andy Neather blogs at https://aviewfrommytable.substack.com; photo by Element5 Digital on Unsplash