Importer presents optimistic view of UK25th February, 2013 by Patrick Schmitt
A prominent UK wine importer has urged the British trade to view its changing market more optimistically, highlighting the profitable opportunities in London and elsewhere.
Having invited a handful of press to its offices last Friday, Mentzendorff’s managing director Andrew Hawes said he “wanted to present more of a glass half full view” of the UK alcoholic drinks market, because he added, “reports are more glass half empty.”
While he conceded that his business is lucky to contain flagship brands such as Bollinger Champagne and Taylor’s Port, along with Michel Chapoutier’s full portfolio of wines, he said it had still been necessary for the importer to adapt quickly to an altered UK market.
“It is a time of massive change,” he stated, referring to a shift from discount-driven growth to declining consumption, but increasing higher value sales.
“UK drinkers are changing their behavior: they are drinking less but spending more,” he said.
Then, speaking of recently released IWSR forecasts for UK wine sales to 2016, he stressed that the UK – despite falling volume sales – is set to remain the biggest retail market for imported still wine by value.
Looking back however, Hawes recalled how, “at some point in the last 25 years, the UK got into driving the volume side, and there are many negatives from that.”
More recently, contracting sales in the on- and off-trade has caused consolidation among retailers and wholesalers.
As a result, said Hawes, “It has been necessary to evolve our business extremely rapidly.”
Exemplifying the scale of change, Hawes pointed out that Mentzendoff’s two largest areas of business 15 years ago were multiple specialists and a mix of regional and national wholesalers – “two sectors that have changed beyond all recognition.”
While the UK trade has already weathered the disappearance of multiples specialists Unwins and Threshers, and the dramatically reduced scale of Wine Rack and Oddbins, it has only just absorbed the impact of wholesaler WaverleyTBS’s collapse.
“What is happening in the wholesale sector is fairly seismic,” he said.
Pre-empting and adapting to this latter change, Hawes said Mentzendorff has been developing direct relationships with the on-trade, rather than relying entirely on wholesalers to supply the sector – although still using them “where the marketing is pulling the brand through the supply chain.”
Today he said, “By far the fastest growing part of our business is direct sales to the on-trade – it is delivering returns which are growing in excess of 25%, which in the context of the UK market is exciting.”
As for UK retail, Hawes explained, “A lot of the multiple specialist business has diverted to the multiple grocers, and we are happy with that.”
Speaking of the 40 plus staff at Mentzendorff’s London-office who have been successfully working on building relationships with the UK trade as well as using social-media to build brand awareness, Hawes said, “We would take issue with the idea that a traditional full service agency model doesn’t work in the UK.”
More generally, Hawes is concerned that the negative comments from the UK about its own drinks market may be damaging the country’s international image as a sophisticated and highly professional wine trader.
“The UK is in danger of talking ourselves out of our natural role, which is a role of great importance.”
This stems from the wide range of wines served and retailed in the UK, as well as the market’s reputation as “the centre of intellectual capital of the wine world” – an accolade built up over the course of 150 years, according to Hawes.
“The Institute of Masters and Wine and the WSET (Wine & Spirit Education Trust) are both global but are both based in London, and many of the world’s most respected journalists are based in the UK,” he explained.
Turning his attention to the next 12 months, he commented, “There is a lot of opportunity for strong brands and well-run businesses focused on areas of the market where there is growth.”
He also said that he foresees increasing prices as the impact continues to be felt of higher costs of production, smaller harvests and a weak currency.
However, he added, “Our experience is that consumers adjust to price increases and it’s better to sell a bit less and carry on making a little bit of money.”
In fact, Hawes fears it is the trade, not the consumer that is preventing producers’ from passing on cost increases.
“I think retailers are overly obsessed with particular price points,” he said.
Adding that shoppers have an understanding of “genuine value” and are taking more interest in “what they are putting in their bodies”, it is important, he stressed, that they don’t have a “downgraded experience.”
Finally, speaking of the London International Wine Fair (LIWF), he said that Mentzendorff had decided not to exhibit in 2013.
“We took the decision very reluctantly not to attend the LIWF this year.”
Explaining this move, he said, “The London on-trade is the fastest growing area of our business and it has almost zero representation at the LIWF.”
Continuing he commented, “The humming heart of the UK wine trade is in London and the LIWF is marooned on the outer edges [of the capital].”
Meanwhile he described the importer’s own portfolio tasting, which took place last Tuesday, as “more and more successful”.
“Our principles told us they felt it was the most productive tasting they could remember attending.”
He said the money saved from not exhibiting at the LIWF would be re-invested in “bespoke customer events” around the UK, as well as a specific tasting for the on-trade held in central London.