The Wine Evolution forum, which took place in Paris last week, sought to bring together wine professionals from all over the world to discuss issues ranging from bottle closures to the retail monopoly in Sweden and the development of emerging markets. Olly Wehring reflects on the conference and the subjects discussed.
The seventh annual Wine Evolution forum in Paris afforded just-drinks the opportunity to meet up with the great and the good of the global wine industry last week. From the UK to India, the US to Japan, around 300 people from 30 different countries attended the event, giving fascinating insights into their respective wine markets.
Opening the show, co-organiser David Skalli said: "We need to share ideas between each other. That is how we have to improve." If anything, this seemed the ideal opportunity as Old World met New.
The two-day conference can fairly be described as a game of two halves, to use an English sporting cliché. Day one concentrated primarily on the state of play in several Western European markets, while the second day looked at the emerging markets of the east, and the potential growth in the US. Along the way, we also looked at the role of alcohol retail monopoly in Sweden, and the long-running battle between natural cork, synthetic cork and screwcap for the hearts and minds of wine consumers around the world.
An hour-and-a-half in the presence of a panel of UK journalists discussing their domestic wine market certainly didn't warm the heart. The competitive nature of the UK is well-documented, but to hear the opinion that the greatest loyalty held by UK wine drinkers is to the GBP3.99 price point almost cleared the hall. And seeing the panel squirm when asked by a Frenchman whether the appellation controlée was still valid in UK consumers' eyes was a sight to behold.
The best way to sum up this session is to quote Greek wine journalist Constantine Stergides: "There seems to be a paradox in the UK market," he said, "between a sophisticated consumer who is driven by low prices." On the panel, moderator Robert Joseph confirmed the difficulties in the UK: "My question is: why should smaller European winemakers even bother trying to get into the UK wine market?" Joseph asked.
In the afternoon, we were treated to an insider's take on the situation in Germany, a market that is heavily driven by the discounters. "In Germany, two out of every bottles of wine are sold for less that EUR2 each," said Werner Engelherd, chief editor of Wein+Markt. "There are 100,000 wines already available - each claim is occupied," he continued. "There is no need for wine number 100,001. If you want to get in, someone has got to be thrown out." So, who will prevail in such an overcrowded and discounted market? "Those with the investment are winning," Engelherd said. "Others will lose."
Day one was rounded off by Vic Motto, chairman and CEO of Global Wine Partners in the US, taking a more general look at the industry. "The playing-field is being levelled," he warned," and time is running out for the dinosaurs of the wine industry. The New World is growing, while the Old World is struggling."
Motto offered hope to the European wine companies, however. "The speed of change is accelerating, but this should be very good for Europe, as they should lead the changes." Turning to the increased consolidation of the industry, Motto offered this prediction: "Consolidation of the large companies will continue - they will be more of a beverage business than just a wine business. The industry is polarising, with the number of small wineries expanding."
The optimistic end to the first day rolled over into day two, as attention turned to the developing markets of the east, most notably Japan and India. Wine consumption in Japan has more than trebled since 1965, noted Lisa Perrotti-Brown, purchasing manager at Millesimes. Despite a 6% fall in Japanese wine imports in the first half of last year, Perrotti-Brown pointed to the success of Yellow Tail in the country as a sign of the potential Japan has to offer.
"Yellow Tail was the success story of 2005," she said, "selling 220,000 cases in its first year in the country." Perrotti-Brown also highlighted the popularity of Beaujolais Nouveau with Japanese consumers, and suggested that this offered other wine companies an opportunity. "A southern hemisphere version of Nouveau would highlight the region's portfolio in Japan."
Turning to India, Rajeev Samant, CEO of Indian producer Sula Vineyards, had some startling statistics showing the small size of the market today, but also the opportunities ahead. "India's per capita wine consumption currently stands at 0.006 litres, compared to China's of 0.7 litres," Samant said. "Growth rates over the last three years, however, have been 25% in volume and 30% in value. Last year, 600,000 cases were consumed, but I feel that, by 2010, India should (grow to) 1.8m cases. Although it's not yet the market of the moment, it's heading in the right direction, and should be the one to watch in the coming years."
As the final day drew to a close, a look at the US wine market also offered future hope. Marc Engel, head of wines practice at B/R/S Group, offered a State of the Union address to delegates, painting an optimistic picture. "The state of the wine union is currently good," he said. "Sales are up, consumption is up, experimentation is up. Wine has become more and more a part of popular culture in the US."
One challenge still present in the country, however, is the three-tier distribution system. "The three-tier system is like an hourglass," noted Michael Quinttus, president of Vintus Import. "You have a large number of producers and importers which has to go through a small number of distributors and wholesalers to get to retailers and restaurateurs." Quinttus suggested that this system lends itself well to consolidation, with companies with larger portfolios able to offer more to distributors in one meeting than smaller companies could.
So, as the forum came to an end, with many bases covered, the general opinion was that the event had been worthwhile for all. How delegates utilise the new information should, hopefully, become apparent as 2006 continues.
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