The truth about Aussie fine wine in the UK...

I feel compelled to write in response to Andrew Margan and Tony Park's letters, which both make valid points. However, they merely skim the surface. The Vinorium has sold over $47 million worth of Aussie wine during the past seven or eight years. Which - and to quote Andrew Margan - proves we have enough 'skin in the game' and provides a sound basis for our position.

Firstly, and respectfully to Tony, I believe some comments lack the reality of modern wine life in the UK In particular, I am baffled by, "Apart from going to specialist wine merchants the majority of consumers can only get Australian wine from supermarkets.' What is wrong with an independent, specialist wine merchant? Surely a merchant with a deep understanding of their subject is far better than the likes of Majestic who plan to take over the UK and drive out specialist independent merchants, which would be a catastrophe.

The depth of Australian wines in the UK is excellent, however the landscape in which many are sold and marketed has changed considerably, which reverts to Tony's main gripe.

Sales at The Vinorium from 2019 to 2021 were fabulous - circa $16 million, of which more than 95 percent can be attributed to Australian wines. At the height of output, we were home to fifty Aussie winemakers (all shipped directly) and some 600 wines. Most producers enjoyed exposure to the UK for the first time. Our model of shipping direct from an Aussie producer and selling direct to the consumer excelled. Bearing in mind, we had eight members of staff who produced similar profit margins to that of a traditional importer who are twenty-five times the size of our company (both in staff numbers and sales).

In the second quarter of 2022 the wheels came off. Literally speaking. Russia's invasion in Ukraine put huge pressure on energy and food prices. To compound issues, our imbecilic government led by Liz Truss) crashed our economy with her mini-budget. The average new mortgage rate rose significantly in the days, weeks and months following the debacle that was Liz Truss. Put simply, interest rates went through the roof which took away much of the UK's disposable income for wine.

We mustn't forget Brexit, which was the biggest economic mistake this country has made. Pre-Brexit, we could ship wines from our HQ warehouse to most EU countries within 48 to 72 hours. We offered the exact same service. Door-to-door, pick and mix, no order is too small or too large and shipping costs were perfectly acceptable. Post-Brexit, shipping wines to EU private customers is impossible. Most countries have imposed punitive restrictions (one to two litres) and the red tape and costs simply make it prohibitive. We have lost over $6 million in sales. 

Equally, the eating-out climate has not recovered since the Covid pandemic. The rate of closures is frightening, albeit slowing. How the industry plans to navigate new and proposed employment laws will be interesting. But, and above all, much of the UK expects to work from home, thus reducing the chance of restaurants making a success. Of course, and based on the above, most people in the UK have less money to spend on wine. Equally, restaurants are being cautious with their spending - it makes complete commercial sense to work through existing stocks before replenishing. A big issue being the prices that many eateries charge for wine - 200 to 300 percent markups are being baulked at, and rightly so. 

The landscape for wine importers has changed considerably. Money is tight and importers (regardless of their size and stature) are feeling the pressure. Many have resorted to 'broking' imports prior to them leaving Australia. Essentially, selling their allocation prior to making a commitment to purchase or prior to them arriving. This is now common practice. Some imports come into the UK with a proportion being exported back out again, which is one of the reasons why Australia is less visible in the UK.

Some pricing is quite frankly delusional. By way of example, but without naming names - one importer is offering their allocation of a Tassie Pinot Noir at the equivalent price of the retail value back in Australia. This wine has already hit the price ceiling before it goes out for sale. With a combination of intelligent, savvy buyers and the aid of the internet, price comparisons quickly unravel. Many Aussie wines (offered in the UK) are woefully overpriced compared to domestic retail values. Granted, one must include shipping costs, however, work on circa $2 per bottle which doesn't touch the sides. Some importers have either no buying skills or have become too greedy. Either way, it has become clearly evident there is no room for three in the bed and reason why many 'top' Aussie wines are being sold to whoever will take them. I must add a caveat - some importers are finding a better pricing balance.

Harking back to Tony's point of 'visibility' - many wines are being offered 'by-the-case' and with a delayed delivery timeframe. Why? Many online merchants/brokers will not carry stocks. Moreover, they operate on reduced margins, undercut the market where possible and make it super-unattractive for merchants (those willing to purchase stocks) to support such wines. Brand building is bullshit as moving the stock is the primary function. The role of many UK brand ambassadors leaves me scratching my head.

Australia has a long and proud history as does Bordeaux, who and despite impressive price reductions (circa 25-30 percent) during this year's Bordeaux 2023 En Primeur campaign, were left gobsmacked by the lack of sales. Many Chateau owners and negociants publicly wringing their hands and declaring the campaign a complete catastrophe. What they plan to do next year is going to be very interesting.

The UK market is no longer accepting of daft pricing. Quite the opposite. As a spectator, we have seen an untold number of Aussie wines flop this year. Wines we would normally purchase from their respective importers, however, we didn't touch them with a barge pole. From the outset, their pricing was wholly unrealistic and if I dare say, naive. Getting on a plane and doing the world release tour is great for Instagram but bad for one's bank balance. This expenditure would have been better served discounting the price to suit economic circumstances. Bad for the brand? What is? Being realistic and demonstrating commonsense or that your new release has failed to sell? Large stock numbers were given to the brokers who also failed.

La Place de Bordeaux has become a catwalk of supermodel releases. The pricing is utterly ridiculous as is often the fashion. Recently, I had supper with an old friend who has worked in Bordeaux (as a negociant) for over 20 years. I enquired as to how New World wines fair on 'La Place'. He laughed and declared, "We sell f*** all." Yet, more and more producers are seduced, which is baffling. We watch the releases, and we've watched the stock numbers on various trading websites stagnate.

It's time we take a hard look at ourselves and take the time to understand the global markets. Australia is heading down the wrong alley with foolish pricing. The mentality of 'last year I was $60 per bottle and now I am $100' is beyond stupid and we are seeing more of it. Sales from merchant to merchant differ, and I can only share the changes in our pattern. Historically, the average sales price (across all Aussie wines) on our list was circa $65 per bottle. During the past two years, this price has dropped to below $50. The right wines around $70 would ordinarily fly out of the door. Today, they limp, and you need to provide customers with a compelling reason to purchase.

Do awards and scores help? In reality, the wine market is swamped by too many critics and far too many awards/shows/medals. It's relentless, it's weekly, they have certainly lost their power/charm and most critically, customers are bored senseless with the tsunami of 'not another score/ award etcetera'. We must listen to them as they ultimately part with their hard-earned cash. This quote sums it up perfectly - written by a longstanding and respected member of the UK wine press, "In the past, you'd have to make a decent wine to score 85. Now, if you piss in a bucket you'd probably get 85 from some critics.

And 90 scores used to be a cause of celebration for a winemaker, whereas now it feels a bit like a fail. 95 is the new 90, some are saying."

Put simply, your wine receives 95 to 96 points and you expect to sell at $60 per bottle (£31.50). Not a bloody chance. Today, and if your reliance is based on critical acclaim and a few digits, the metrics have shrunk to 98-100 points, the latter score being dished out weekly by one critic's website. There is a serious lack of credibility and, as stated above, many UK consumers are bored senseless.

The honest outlook for Aussie wines in the UK remains super-tough. Some will make it, and some will simply fail. Arrogant pricing and producers/importers who do not adapt to sensible pricing will join the Bordelaise. I understand the frustration that many producers have with Wine Australia. I will not defend their position, however, it is not their job to sell wine. That is the sole job of the nominated wine importer. My limited dealings with the UK team have been courteous and professional, however, I do not understand their role in today's market. Everything is politically correct, and they surround themselves with the same people and voices. The commentary from all is routine and certainly lacks reality. Of course, you don't have to listen, and you certainly do not have to follow.

The impact of the new UK duty proposal, Labour's first Budget, what happens under Trump and the wars in Ukraine and Israel will have a profound influence on wine sales in the UK, which will ultimately impact on Aussie exports, but there are always opportunities.

We have proved that a small wine company can change the landscape of wine shipping from Australia. The market in the UK and Europe is ready for more Aussie wines, however, and as cited above, the traditional routes are much tougher to navigate. Wine Australia are too political to help, however some of their statistics are very useful. What the Australian wine market really needs are people who are not afraid to shake the tree. Leaders and not followers, not afraid to put you in your place when your aspirations are simply stupid; will tell you when you are talking nonsense and will not pander to anyone's egos. People that work on the ground, sell wine and are not paid to compile bullshit articles.

Perhaps an alliance of like-minded winemakers? A company that operates throughout the UK and Europe and is owned by the winemakers and the team that oversees day-to-day operations. Sell direct to consumers (much healthier margins), have absolute control over trade sales as these can impact on private client sales. Everyone has skin in the game to re-quote Andrew. It is possible, it provides huge potential for scalability, and above all, puts control 
back into your hands. ♦