AAWE Annual Conference - Brexit and the Impact on the UK Wine Industry

American Assoc. of Wine Economists Annual Conference, Cornell Univ. NY. Presentation on the impact of Brexit

Unlike my esteemed colleagues I cannot claim to be an academic, but as a substitute for a university education, when it comes to food and wine I can offer unrivalled passion and enthusiasm spanning more than 40 years; from volunteering at the Chicago School in exchange for tuition at the Chicago Wine School, my appointment as chef to the UK Ambassador to the UN, and my return to the UK over 20 years ago to become a Senior Hotel & Restaurant Inspector for a major guide, all without any formal training or qualifications.

I now spend my time supporting service and hospitality providers across the industry in giving the ultimate customer experience, and as a journalist, writing about the issues the industry is facing. 

As a WSET accredited tutor I am immensely proud that I have always enjoyed a 100% pass rate for my students. In considering the impact of the Brexit vote on the UK wine industry, let me set the scene.

My final presentation, which I have just delivered, (see link)... our local vineyard 'Wayford' got a special mention for their award winning sparkling Pint Noir, and the bottle I brought along with me is being served at lunch today!

https://drive.google.com/open?id=15gNNib3Zzz5MhYI4wCZEtytSU3pxJgY-

The importance of the UK cannot be underestimated. The UK is at the heart of the global wine industry. We are the 5th largest economy worldwide, the sixth largest wine market in the world and the second largest trader in wine by volume. The UK accounts for nearly 15% of the world’s wine imports. We consume over 15 million hectolitres of the stuff. The Wine and Spirit Trade Association attributes £17 billion of economic activity in the UK to wine.

No mean achievement for a small island nation. As just one of 28 EU member states we have certainly caused some turmoil. We punch well above our weight, as we have done for centuries, so I pose this question to you, why should we be afraid to go it alone? Certainly there are a number of reasons for concern, but I am an optimist, a glass half full person. I believe that if you think the worst will happen, eventually it will. We are the engineers of our own destiny.

Since the Brexit vote almost exactly two years ago, one could be forgiven for thinking that politically the UK is in a state of disarray. It is, and it is not helpful.

There has been a significant amount of negative publicity, largely promulgated by Remainers unable to accept the unpalatable result of a democratic vote. Despite the predictions of doom and gloom from the pundits we know all too well how frequently they get it wrong. In 1977, Ken Olsen, founder of the Digital Equipment Corporation Said, “There is no reason anyone would want a computer in their home.” Who predicted 9/11, the financial crisis of 2008, or the election of Trump as President? 

What is really having an impact is the current uncertainty, which is fuelling fear, resulting in an aversion to risk; an unwillingness to take any chances; a wait and see game, and it is the end consumer that suffers. Those in the business of making and selling wine know all too well just how unstable an industry it is. But, we cannot continue to make decisions based on fear and what might or might not happen. Uncertainty is uncomfortable but the notion of certainty is absurd.

Of course, good news does not make headlines. Yes, we are drinking less wine, but what is not widely reported is that revenue has increased.    

For me, twice divorced myself, but still hopeful of finding a third husband, Brexit has all the hallmarks of a bitter marriage break up. One partner wants out and the other is determined to punish them as a result. In the end both parties, and any offspring, are the ones that suffer; the only ones making a killing are the lawyers, at the expense of those involved in the UK wine industry, and  consumers. Of immediate concern to the UK industry as a whole in the UK has been the impact on labour, which in recent years has largely been from Eastern European countries. Then of course there are those subsidiary industries such as transport, storage, wholesalers, retailers, both on and off trade.

There is no doubt that when it is all done and dusted (and the bets are on as to whether or not we will actually leave) there will be an impact in the wider context, but we do not have to sit back as placid bystanders with a victim mentality. 

In considering the strengths and weaknesses of the UK wine industry we do not need to be conscious of both internal and external threats to stability and growth but it is evident that we must focus on maximising our opportunities and capitalise on those unique characteristics that make us as so special. 

At long last UK vineyard owners have got their act together and we are now seeing a greater degree of cohesion in their approach, both with regard to their ability to lobby the industry as a whole and also in relation to marketing activity, which until now has largely been spasmodic and uncoordinated. Much of this has been pioneered by the likes of Ridgeview, Nyetimber, Camel Valley, and my local vineyard, Wayford, whose wines have gained international recognition; and not before time. 

30 years ago, when overseeing the official entertaining for the British Embassy to the UN, my attempts to promote British chefs, products and wine were met with derision and incredulity, until I appeared on the front page of the New York Times. This is no longer the case and we can hold our heads up high. 

Brand Britain is much sought after and despite high production costs our premium sparkling wines are much sought after. Far from seeing a slump in investment, in recent months both Pommery and Taittinger have invested in UK vineyards. We are seeing a shift towards quality over quantity. Whilst future trading arrangements with the EU still unclear that is no reason to stand still.

Our wines are never going to compete with the bland New World wines filing our supermarket shelves, but neither should we want to.

When taking into account the way in which consumers buy, there is always the danger of assuming that price is the key to success, and moving straight to the purchase based solely on price. This is a common trap that those wanting to make a quick buck all too easily fall into. You may make a sale the first time around, but you should be aiming for repeat business, and increased exposure to new markets. This can only be done by active engagement with the end user, in a meaningful way, responding to their changing needs. This is not rocket science, but it does take time and effort and is not achieved by churning out the same bland products in the same old way. The world is changing and if we do what we have always done, we will not get what we have always got. We need to give customers a reason to buy from us.

There are really only a handle of reasons that anyone will buy anything, including wine. Although price is an important factor, it is just one of many. In the UK the average price of a bottle of wine now hovers at around £6 and is on the rise. but we buy the things we do for a variety of reasons. 

How many of us have set ourselves a budget for something, a house, a car, a holiday perhaps, and exceeded that budget because we wanted it so badly? We all have at some point in our lives. If price really is the issue you may well settle for a bottle of supermarket ‘special offer’ plonk. If there is nothing to drink in the house and friends drop by you may well pop to the local corner shop (yes, we do still have them) and pay over the odds for a bottle to save time. 

On a girls’ night out, what better way to get in the mood for a good time but bubbles, which accounts largely for the rise in Prosecco sales in recent years. However, the Prosecco loving crowd will eventually grow up and move on. Sales of Prosecco are already on the wane as demand has exceeded quality supply and the market has become flooded with inferior products. Want to make someone look good and feel good for a special birthday or treat? Then you might be inclined to push the boat out and spend a few extra pennies on something individual that you know they will enjoy. 

And finally, the money no object, out to impress purchase, Penfolds Grange perhaps, Opus One, Petrus, or a bottle of Krug. I have always been a Champagne girl myself. It is only by understanding our customers’ needs, at that particular time, that we can make them want to satisfy that need with what we have on offer.

On the subject of price, much is made of the rise in prices as a result of Brexit, but scant regard is paid by the average consumer to just what it is they are getting for their fiver. We in the industry know the difference, but what are we doing to educate our customers? Or is it just that we choose not to?

So, we have come full circle. In 1973, the year that the UK entered into what was then the European Economic Community, I was 19 years of age. Like many of my generation, I was just waking up to the joys of a glass of wine, usually with a meal. The choice on offer was largely limited to a handful of off dry whites, with a bottle of chianti, in its straw basket, or a bottle of Claret, reserved for a special occasion, and ordered by a man. Here we are then, in 2018, when wine drinking has become the norm in the UK, (watch out though for the trend in designer gins). In all but the most serious restaurants, we are still offered a dumbed down version of wines to suit the profit margins of the greedy shareholders, who pick their wine lists from a limited range on offer by their wholesaler. The only difference being that now we order our glass of wine by grape variety, with little thought for any food pairing. Who cares where the wine was made or by whom? It is Merlot or Sauvignon Blanc so it must be OK. Indifferent wine that is served by untrained, poorly paid staff, who neither know nor care. Oh, and yes, it is served in either 175ml. or 250ml glasses, despite the law requiring 125ml. to be offered, what used to be considered a normal sized glass of wine. We really are missing a trick.

There are at least two things that we can agree with on Brexit. Firstly, nobody has any real idea of what is going to happen next. Secondly, we are self-indulging in the ‘blame game’, often using Brexit as the excuse for those head line grabbing events that dominate the UK media. 

Since the vote in 2016, on the one hand Brexiteers have been dredging up any positive economic data they can get they hands on, in denial of the doom and gloom predictions, whilst Remainers keep their focus on the declining value of sterling as more proof of the foolhardiness of leaving. 

The wine business has been as guilty of indulging in this pre-emptive ‘blame game’ as anybody else. For those in the industry this may make for a painful reality check. We can stay stuck in the rut of mediocrity or we can take action to get out of it by ensuring that those who represent us, and our wines, are well trained, well informed and passionate about imparting that knowledge to those who after all pay they wages – the customer. 

I leave you with the words of a prominent UK hotelier – ‘I no longer chase ratings but when we did, I used, and still recommend, ex senior hotel and restaurant inspector Linda Piggott-Vijeh for gap analysis. She is scarily straight, incredibly passionate, takes no prisoners and is ultimately very productive.’ Attitude IS everything.

© Linda Piggott-Vijeh June 2018.