Wine Evolution 2007

UK consumers "discount addicts," while U.S. wine market predicted to prosper.

Sophie Kevany reports from France on the main themes of the wine industry seminar Wine Evolution 2007, an annual two-day event held in Paris. The seminar is organized by consulting firm Skalli & Rein.

Downward pressure on wine prices, the search for new markets and differences between UK and U.S. markets were three important themes of Wine Evolution 2007.

The UK, while recognized as one of the world's most important markets, is currently suffering from the success of its discount pricing strategies.

"There's a growing fear among wine producers that UK consumers are being turned into 'discount addicts' and 'promotion junkies'," said journalist Chris Brook Carter.

In contrast to the UK, where the average price per bottle of wine is three to four pounds sterling, U.S. speakers, for whom $10-15 is the norm, were more upbeat.

 Vic Motto
Speaker Vic Motto, director Global Wine Partner, USA. Copyright Skalli and Rein.

"The U.S. is not the UK," said Vic Motto of investment bank, Global Wine Partners. "We don't have the dominant retail chains, our largest national chain has less than 3% of market share. With us it is the distributors who have the power," Motto said.

An expanding middle class interested in wine, plus upcoming changes in distribution laws, will drive U.S. wine sales, Motto predicted. Retail and distribution strategies, however, need to take advantage of fragmented markets. "Consumers want more choices, how can we use fragmentation [of production] to their advantage?" he asked.
Emerging markets were also under consideration. The Japanese market is currently notable for falling wine prices and increased discount wine sales.

In India, current per capita wine consumption is about a teaspoon per person, however annual consumption growth of about 33%, and the arrival of supermarket chains Tesco, Wallmart and Carrefour in 2008, is expected to change this.

In China, payment cycles of up to 220 days remain a major problem. Others include aggressive local wineries, faking and lack of adequate distribution and storage facilities.

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