A recent article in the NZ Herald outlined the increasing dominance of the retail wine trade by supermarkets. The main thrust behind the article was the proposal to outlaw selling liquor below cost in order to promote more responsible alcohol consumption. Leaving aside the thorniness of that particular issue, what is also interesting to ponder is how this dominance and the below cost/negligible margin selling is impacting on the wine industry as a whole.
Points to consider:
1. Looking at the UK, a much larger and more sophisticated market than NZ, over 80% of wines are now purchased at multiple grocers, who have extremely aggressive pricing policies. As a result, high street retailers are being forced to the wall. Those that are surviving have specialized to the nth degree.
Here in New Zealand, anecdotal evidence (and naturally, juicy rumours) suggest all is not rosy amongst independent retailers. Furthermore, compared with the UK, the lower level of per capita consumption and let’s be frank, general lack of sophistication amongst NZ’s wine consumers suggests further nervous times ahead.
2. The generally boutique nature of our industry gives little to no bargaining power to those wanting to sell to supermarkets. Even the biggies such as Fosters et al, get done over by the muscle of the supermarkets from time to time, so what hope does a smaller outfit have?
3. With our climate, distance and size, it is likely that small but beautiful is our lot as a wine producing nation, but as Australia has found out, even when you are large and beautiful, staking your claim through endless discounts and cheaper prices is not sustainable in the long-run.
Diddums? That’s business? Well, yes and no. The UK market may indeed be dominated by the supermarkets but at least they seem to take wine a little more seriously, with dedicated buyers who know a LOT about wine, a wide-ranging and respectable selection, often across a broad range of prices and generally even an impressive range of own-label wines. Here, well, apart from a couple of exceptions that prove the rule, it is just cheap, generic and boring.
Nevertheless, the blame can’t all be laid at the doors of the supermarkets. Producers and other retailers haven’t exactly made it difficult for them. Many producers seem to vacillate between taking on the world as the best sauvignon blanc/pinot noir/syrah producers anywhere (not to mention the odd crack at outdoing the Bordelais) and sliding into bankruptcy as presumably, they can’t actually sell what they are making for a profit. Perhaps that is because they have jumped willy-nilly into production because it was fashionable or they were retired orthopaedic surgeons, who knows? Either way, the slightly ad hoc approach and frequently emphasis on hyperbole and waffle over bone fide quality can be a slippery slope that leads to being at the mercy of the big two supermarket chains. Just because you can grow grapes and/or make wine doesn’t necessarily mean you should be, much less that you can charge $50 for your bottle just because your neighbour does.
And while no one can deny that most (all?) retailers are likely unable to compete on price alone, many also seem to ignore what the consumer wants, offering amongst other things supercilious service, their own imports at frankly rapacious margins (thus making it less likely that consumers to bother buying there rather than chucking a couple of bottles in the grocery trolley), little inventiveness in their range and dire staff with little passion or knowledge of what they sell.
Consumers need to ask what they are getting out of price wars. Not a healthy industry that’s for sure, and while no one should be expected to pay through the nose for wine that is not worth its price tag (and ahem, there are enough of those wines already) nor should we expect to see wine increasingly commoditized and defined by price alone without seeing choice and quality as the casualties.
I am not holding my breath, but it would be good to see supermarkets step up and take their wine selections more seriously; to see independent retailers make the most of the great world of wine and give consumers an interesting selection at a wide range of prices; to see those selling to restaurants encourage them to be bold and experiment with more than the standard fare; to treat consumers with respect and for consumers to treat wine with respect. Not too much to ask really?
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