Lower-alcohol wine, emerging markets and Florida real estate were tipped as the top moneymaking opportunities at a conference during this week’s LIWF.
Industry figures would rather invest in Florida real estate than a winery in China
Speaking during a Wine Intelligence event dubbed The Future of Wine in 60 Minutes, Richard Halstead, CEO at the company, said he believed the lower alcohol segment in the UK off-trade would increase to account for a 6-8% volume share.
Quoting Wine Intelligence research, he commented, “45% of regular wine drinkers in the UK who have bought lower alcohol wine before would consider buying it again – that is 13 million buyers.”
He also pointed out that he believed it’s likely the government will introduce a new duty band for wines between 5.5% and 8.5% abv, but in doing so, he expects the duty on normal strength products to go up even more.
This, and UK multiple retailers’ commitment to increase the shelf space for lower alcohol wines he said would drive sales of the lower alcohol category.
Supporting this view, Andy Phelps, director of BWS at Sainsbury’s reiterated the supermarket’s plan to double sales of lower alcohol wines by 2020.
He said the retailer was already ahead of target and had grown sales of these products by 14% last year, referring to wines at around 10.5% abv.
He added that the retailer was looking at reducing the abv of its own-label wines and considering new ways to more clearly label its lower alcohol products.
Meanwhile, Simon McMurtrie, CEO at Direct Wines said the world’s largest mail order wine business aims to increase its turnover from £360 million to £550m over the next five years.
The additional revenue would, he forecast, come from emerging markets.
“We don’t assume any significant growth in the UK – I think the supermarkets will continue to do a good job and we will continue to do a good job,” he said.
However he said that Poland, India and China were opportunities for Direct Wines and picked out these three markets as places where consumers “were hungry for information”.
Continuing, he recorded, “In Poland vodka consumption is in decline and wine is in sharp growth; in India we are the only direct to consumer seller of wine having bought the Wine Society of India, and in Hong Kong we have found that 50% of our customers are living on the mainland and come to Hong Kong on the weekend to collect their wine.”
He also stressed the success of Direct Wine operations in the US, Switzerland, Germany and Australia.
Finally, during the course of the discussion, attendees were asked whether they would rather invest in a winery in China; an 8.5% abv wine brand in the UK; a range of natural and organic wines for the UK and Nordics, or real estate in Florida.
Winning by considerable margin was the latter option, proving the trade’s own view of the limited profit opportunities in the industry at present.
Furthermore, Halstead concluded by forecasting that Florida real estate may indeed bring the most returns, showing how prices have fallen dramatically since 2005 but have now reached a low-point and are projected to rise in 2013.