Poor harvests, industry consolidation and Brexit anxieties are coming together to create a ‘perfect storm’ for the wine trade in 2018, according to the director of the London Wine Fair, which gets underway today.
The combination of a disappointing 2017 vintage in several key regions is combining with underlying economic uncertainty to produce testing trading conditions, says Hannah Tovey, who still hopes to see a record attendance at the three-day event at Olympia, this year featuring a ‘Dragons’ Den-style’ innovation zone in which wine industry start-ups will pitch for City investment.
“Everything is coming together to create a difficult time” says Tovey. “Brexit means many in the wine industry have ring-fenced their marketing budgets because of the huge amount of uncertainty around tariffs. Tariffs and 20 years of rising duties, added to the huge amounts of consolidation in the industry, mean that there are fewer clients out there. And this year is the worst vintage in 30 years.”
Widespread spring frosts across France in 2017 affected many regions, and critics are unimpressed, for example, with the 2017 Bordeaux vintage.
According to Tovey: “All of those things create what I call ‘the perfect storm’ for our industry.”
Miles Beale, the CEO of the Wine and Spirits Trade Association, is set to chair a briefing at the fair this morning on the potential impact Brexit might have on the wine trade. He told City A.M. that potential tariffs on goods are still “a major concern for businesses, and the way in which goods and, of course, people, move across the border is still very unclear.”
Wine importer Patrick McGrath said: “Wine sales are flat, though value is increasing”.
Tovey thinks innovation is the answer. ‘The industry is having to adapt and change,” she said. “There used to be a fairly clear model of how wine used to go to consumer from vineyard via a clear chain of companies, but nowadays those models are completely blurred because of new technology and firms like Amazon. And bloggers now massively affect the brands that people purchase.”
On Wednesday, the fair’s innovation zone will showcase nine start-ups from the industries that support the wine trade, all hoping to attract the attention of a range of backers from venture capitalists to angel investors.
In an effort to “reignite that feeling of doing business on site”, Tovey also says that the main hall of the fair will be rebranded as the “trading floor” this year.
One bright spot in the market is English fizz. Patrick McGrath says: “Without a doubt this has been the best year for English sparkling wine. A million vines were planted last year, and we are set for the same this month.”
McGrath added: “In the last two or three years, and in particular this last year, there has been a realisation that this is a serious wine.”
Figures from Wine GB predict that the UK will be selling roughly 40m bottles of wine by 2040, having produced just under 6m bottles in 2017, with markets showing a rise in demand for British sparkling wine brands such as Nyetimber and Chapel Down.
Julia Trustram Eve, the marketing director at Wine GB, insists that though “not everything in the garden is smelling of roses”, boosts to tourism and exports have meant “we have found our feet”.