by Tim Atkin

The UK’s culture of cheapness

Anyone who still believes the UK is the centre of the wine world should pay a visit to ProWein, the annual trade fair in Düsseldorf. The place has a self-confidence that is based on tangible success. Producers from all over the globe want to show their wines there, confident that they will reach a wide and commercially relevant audience of buyers, agents, sommeliers and journalists.

The show is already large, but is adding another two halls in 2013. Contrast this with the slow and rather depressing decline in stand space at the London International Wine Trade Fair, where New Zealand, Pernod-Ricard, PLB and Alliance Wine among others have decided that they can spend their money better elsewhere.

Even those who are coming this year appear to be losing interest in the UK. To take only one example, 14 Argentine wineries had signed up to the LIWF at the last count, whereas there were 54 at ProWein, with Wines of Argentina running a waiting list. The figures tell their own poignant story.

The marginalisation of the LIWF and the growth of ProWein reflect a broader trend. We might not like it, but the UK is not the wine powerhouse it once was. We still have a lot of knowledgeable consumers and some very good independents and major retailers, but we are no longer the export market of choice for most producers. Desperation yes, choice no.

The reason for this is primarily profitability. Or lack thereof. I had a chat with one of the large number of UK agents attending ProWein and he shared a sobering fact. He makes more money shipping a single container of wine to the Philippines than he does shipping ten to the UK.

The average price of a bottle of wine remains stubbornly low at £4.85, even more so when you consider that the UK has one of the highest rates of alcohol tax in the EU. The discrepancy got even worse this week, thanks to the latest round of duty “escalation”.

George Osborne’s budget may push the average price of a bottle of wine over £5, but it won’t do anything for the profitability of the sector. It’s ironic that in a country where some people are prepared to spend huge amounts of money on 2009 Bordeaux re-rated by the American critic, Robert Parker, the average consumer (if there is such a thing) is notoriously reluctant to pay more than a fiver.

Will minimum pricing per unit of alcohol, said to be a distinct possibility by April 2015, affect this? It will have a much bigger impact on cheap cider and vodka – the drinks favoured by people who want “more bang for their buck”, as the euphemism would have it – than on wine.

But by doing away with the bottom end of the market, including Asda’s utterly irresponsible three for £10 deals, it may do the wine industry a favour. Supermarkets can screw suppliers all they want, buy British wine and favour UK bottling, but with MUP at 45p, wine will start at £4.05 a bottle.

Before it can be introduced, we need the government to lead an open debate on minimum pricing. Is it a way to help reduce harmful consumption? Or just a way to increase tax revenue by appearing to do the right and healthy thing?

And yet, even if it happens, the fundamental problem affecting the UK wine trade won’t go away. Exporters are looking elsewhere – to the USA, the Far East, Russia and parts of mainland Europe – because those markets pay more.

To change that will not be easy. The culture of cheapness is so deeply ingrained that it may prove impossible to eradicate. Consumers are so used to buying wines on “deals” (even when those deals are a mirage) that weaning them off them will take a dramatic shift in the public perception of how much good (or palatable) wine costs.

Over the last 20 years, we have turned wine into a commodity in the UK, alongside such staples as bread, sugar and milk. And yet wine, as we all know, is not a necessity; it’s a small luxury. Our mistake has been to reduce the value of wine, both actual and perceived, without encouraging people to trade up. No one, not even Waitrose or Majestic, has sold wine as a dream or aspiration.

It’s not too late to reverse the trend, but as those LIWF absentees show the UK is sipping cheap Pinot Grigio in the last chance saloon. If we want to be seen as a dumping ground for plonk that no one else wants, fair enough. But I’d like to think that ultimately consumers want and deserve better. Sooner rather than later, it’s up to the wine trade to provide it.

A pre-budget version of this article was originally published in OLN

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