Recent research by America’s Morgan Stanley financial services revealed that the world is facing a global wine shortage, with consumer demand significantly outstripping supply. Andrew Baker Head Wine Buyer for Virgin Wines, the major UK wine retailer, comments on the UK market.
“The world may be experiencing significant demand for wine, but we’re also seeing this replicated in the UK market. Our sales in recent years have risen significantly in line with global demand. We’ve also experienced an increase in average bottle value, with customers spending an average of £7.50 per bottle, as UK wine lovers continue to demand a finer drinking experience.
Building great relationships with winemakers from the very beginning of a relationship is key at such times. We work with talented, passionate winemakers to offer a range of around 600 wines at any one time to our customers, all of which are sourced as a result of long lasting, rewarding supply partnerships. We have developed both quality and sustainable pricing with our wine producers to ensure we can ride out times of famine with relatively little fluctuation in price. This is only possible where there’s a long term expectation of business and runs counter to the widely observed short-term opportunism of wine trading.
The report highlights that it expects the current production shortfall to culminate in higher prices. Where demand outstrips supply at a given moment, trading naturally becomes intense. This will be particularly felt in the lower end of the market where you see bulk wine trading with very high volumes and low costs. This means that this sector of the market is always the first to be bought by panicked buyers around the world.
We’re not surprised by the global growth in new world wines; our customers have always been passionate about wines from these countries. We continue to have extremely strong relationships here and find ourselves less reliant upon the more classical European regions that coincidentally are being bought very strongly by the immature markets in the East. Because of this we are relatively insulated from the worst aspects of this difficult marketplace. However, we are being hammered by government policy – be it QE devaluation of the pound or the iniquitous duty escalator. These policies have had a greater impact on our business and a profound effect on our costs, much more so than fluctuations in global wine prices.”