Marketing: Supermarkets cause hangover: The buying power of big retail chains is worrying wine growers, writes Nicholas Faith

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The Independent Online
LIFE in the wine business these days is tough - or what the French call 'morose'.

Last week in Bordeaux, two salesmen - one selling port, the other champagne - were complaining that many of their best Italian customers were in jail. Should they set up tastings in select Italian prisons as part of a programme to help the prisoners?

Like virtually everyone else in the world wine business, the two were in Bordeaux for Vinexpo, the trade fair held every other year since 1981. This year it attracted 50,000 visitors, who came to inspect the offerings from a record 2,050 exhibitors from 42 countries, including such newcomers as Luxembourg, Bolivia and Romania.

Large wine-producing countries, such as Germany and Italy, naturally had lavish stands. But more significant were those taken by groups of well-known names in the business. Their reason for joining forces was to counter the increasing power - in a very fragmented industry - of a handful of supermarket chains in the main European markets.

In France, Britain, Germany, Belgium and the Netherlands the big chains already account for more than half the wine sales; and even in France two- thirds of drinkers buy their fine wines at supermarkets. This has helped fine-wine producers to sell their wares to a far wider customer base than ever before, but at prices that - at times of sagging demand like the present - afford very little profit margin and tend to destabilise the market.

The most spectacular recent case was the sale by the estate's owner of 1.2 million bottles of a well-known claret, Chateau Talbot. The massive quantity was easily absorbed, showing that even today there are buyers around for wine at the right price. But the sale also intensified the problems of other producers in Bordeaux. The future clearly belongs to the suppliers - still only a handful and few of them French - who have come to terms with the power of their customers.

The most obvious examples are Australian: a company such as Penfold's can offer a proper range of branded wines. This may be a normal enough occurrence in any other business, but it is still a rarity in the wine trade.

There are also a few suppliers who have geared themselves to provide for a few large customers. In the words of Filippo di Simone, a director of Schenk, the Swiss company, and probably the largest international wine merchant: 'We tailor our products to fit the need of each specific client.'

An even more extreme case is Hugh Ryman, whose father bought an estate 20 years ago on the proceeds from the sale of the family stationery business. Mr Ryman now runs a rapidly growing business, making wines in France and Australia more or less to order. He says: 'If you are planting vines you have to think whether Sainsbury's will be able to sell the resulting wine at pounds 3.99.'

(Photograph omitted)

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