Is there too much optimism around English sparkling wine?

Robert Joseph is hearing lots of interesting discussions about English sparkling wine. There's only one thing he's not hearing about - who's going to drink it all?

Photo by Tomas Anton Escobar on Unsplash
Photo by Tomas Anton Escobar on Unsplash

“If a member of a golf club with a strict dress code turned up wearing jeans, someone would have a quiet word to say it wasn’t acceptable behaviour.” 

Is this how British winery owners should react if any of their neighbours start heavily discounting their unsold stock? According to one speaker at the recent WineGB industry conference, this is exactly what they should do. A quiet word will be enough to stop wineries selling their wines at rock bottom prices, even if they face financial stress. 

Which could be on its way.

For the moment, influential members of the industry seem untroubled by the possibility that their wines won’t always sell out at high prices, despite the ever-higher production of sparkling English and Welsh wine – tipped to hit 40m by 2040, up from around 16m bottles today. To be fair, if quality were the only criterion for success in the wine or any other sector, their confidence might seem justified. UK sparkling wines have done brilliantly in tastings against Champagnes. Prices have held up too. 

But plenty of companies selling brilliant, premium-priced products and services struggle or fail, through want of distribution, profitability or enough cash to survive a slowdown in sales. The famous British brand Aston Martin, for example, has just had to raise $100m in response to falling profits blamed on an industry downturn and uncertainty around Brexit

When I suggested to Simon Robinson, owner of Hattingley Valley Vineyard and chair of WineGB, that 40m is rather a lot of bottles, he breezily replied that this was “only a tenth as many as Champagne”. Elsewhere, in a WineGB newsletter, he has pointed to Oregon’s successful sixfold increase in production as an example of what the UK could achieve.

I was not alone at the WineGB event in questioning this confidence. Justin Howard-Sneyd, former head of the UK supermarket Waitrose’s buying team, had come up with some predictions based on production of just under 20m bottles. No-one knows exactly the extent of the UK vineyards, or how many vines will be planted this year, but, assuming expansion stops at 4,000ha, and yields remain at their 10-year average of 25 hectolitres per hectare, and sales growth accelerates by 5% to 10% – a big assumption – Howard-Sneyd predicts the industry could be sitting on 13 years of stock by the end of the decade. If vineyards expand to 6,000ha and higher yields of 30 hectolitres per hectare, the suggested surplus is 120m bottles – or 20 years’ stock.

If your attention was caught by those yields, I’m not surprised. The vineyards used for English sparkling wine really do produce less wine per hectare than the ones making grand cru Burgundy – and significantly less than half as much as the 60-65 hectolitres per hectare of Champagne or Franciacorta. Most accountants would find this difference financially unappealing, given the work is the same but the yields are lower. If UK yields were to rise to the levels of those other sparkling wines, on the other hand, the volumes that would need to be sold would be even more astronomical.

Who is going to be drinking all this wine? Some people think there will be no problem, as the global thirst for sparkling wine will only grow. The UK wines can offer that market a high quality product, plus the appeal of Britishness. 

But, as Howard-Sneyd pointed out, the UK only bought 24m bottles of Champagne last year, compared to 32.4m bottles of Champagne in 1999. Of that 24m, only 10m would have cost more than £20 – the segment where English sparkling wines are placed. British consumers, unfortunately, love cheap Champagne and even cheaper soft, sweetish Prosecco.

The Germans are Prosecco fans too, but they also like the consumer-friendly French crémants whose imports into Germany have just overtaken Champagne. While the Champenois acknowledge this trend by successfully launching premium-priced demi-sec ‘Ice’ cuvées, British producers are focusing on the ‘typicity’ of their ‘crisp’ drier style which impress fans of the zero-dosage Champagnes that represent under two percent of the global market.

Talk to British producers, however, and you rarely, if ever, hear references to those crémants, much less methode traditionelle fizz from anywhere outside Champagne. It is almost as though wines like Ferrari’s Trentodocs and Pirie Tasmanian wines – which beat not just Champagne, but also UK fizz in prestigious tastings – don’t exist.

Makers of Australian and indeed New Zealand sparkling wine can, however, benefit from those industries’ huge distribution and marketing networks, while millions of Italian restaurateurs, delicatessen owners and expats will be open to sampling Trentodoc and Franciacorta. Taittinger and Vranken-Pommery, the two Champagne houses that have invested in Britain, also have well-developed routes to market across the globe.
This may not have been as true of the Oregon wines to which Simon Robinson referred, but they mostly sell in the huge, highly profitable domestic US market. Comparisons with the UK are not helpful.

Britain’s response appears to rely in part on novelty. As another producer told me, “Distributors in Texas were surprised to learn that England makes wine”. To which I couldn’t resist replying that English retailers’ discovery of the existence of Texan Zinfandels will not necessarily lead to a starring role on UK shelves.

Fittingly, the WineGB conference was held on 30 January, just 40 hours before Brexit, the divorce from Europe that has the wholehearted support of several high-profile British wine producers. 

Freed from the shackles of Brussels, such people believe, there is almost nothing the UK cannot achieve. Indeed, to read some of the online contributions from keen Brexiters, one might imagine a recreation of the might and power of the British empire. They could be right. On the other hand, the inability of the British government to strike a deal in the three-and-a-half years since the Brexit referendum could suggest a few speed bumps ahead – including for sales of English and Welsh sparkling wine.

Make no mistake. I’ve absolutely no doubt that the most business-like makers of the best British wines will cement their rightful place among the leading sparkling wine producers of the world. But I’m just as certain that the UK wine industry will experience the kind of image-denting glut Australia and New Zealand suffered 20 years ago – and, however much pressure the neighbours may bring to bear, prices will fall beneath the current floor of £20. To, for example, the price of the £14.99 English fizz sold in 2018 at Aldi – and produced at Denbies vineyard, host to the WineGB conference. 

Robert Joseph

 

 

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