Offering value alternatives

Wine, as with all globally traded commodities, suffers from price fluctuations on the back of volatile exchange rates as currencies yo-yo up and down. Always a challenge, this has been compounded by dramatic imbalances during and after the recent global economic crisis.

Anyone who has recently holidayed on mainland Europe will have keenly felt the 25% devaluation in sterling against the euro. Down Under, where the joke used to be on the Australian “peso”, is now painfully pricey for the visiting pom.

Moreover, these unfavourable fluctuations have been compounded by soaring tax, transport costs and dry goods prices, leaving the margins of the UK wine merchants’ in tatters. And all at a time when putting up prices is a painful option in the face of cautious consumer spend.

Thus the question for many independents has been how to deliver the same combination of value and quality to their customers for the same old spend. “We generally haven’t seen a drop in spend,” says Matt Parkinson, manager of Hennings in Petworth, West Sussex, referring to the recession and post-recession period. “But what we do see is people wanting better value for money, not necessarily something for less money, but wanting to justify each pound spent.” Parkinson argues, convincingly, this is where the strength of the independent merchant comes in – the ability to hand-sell allowing a cash-strapped or confidence-short customer to be guided to a fantastic alternative that still delivers in the style said punter is accustomed to.

ike many merchants, independent or otherwise, Hennings has looked increasingly to South America, especially Chile, for some of the best value offerings, plus South Africa – although again, with the rand strengthening by 50% against sterling in the past 12 months this particular party may now be over. These, it seems, are relatively easy sells as UK wine drinkers already have a perception of value from such parts of the world.

Imaginative thinking?But Parkinson also suggests that a little more imaginative thinking is needed, with great value to be found in both southern France and Spain for those prepared to explore the more off-piste wine regions. “France is still offering some great value for money if you look to appellations such as Corbières, St Chinian and Faugères [in the Languedoc] where prices haven’t yet caught up with improvements in winemaking,” he says. “It’s similar with Spain, with wines from regions like Jumilla, Navarra and Rueda, places beyond Rioja, where there is some great value to be found.”?“The trick is in knowing both your customers and your wines. A Corbières will deliver good fruit in a similar way to a New World wine, but perhaps with a little more structure and spice, so should be a relatively easy sideways sell.

“And for any customer who likes a punch of zesty Sauvignon, the crisp, citrus-fresh zing of Rueda is something of a no-brainer and a great switch too as most people can’t conceive of such freshness in a Spanish white.” Robert Crosland on the retail side of Tanners confirms another trend – one that has also been notable in the on-trade, especially in the high-end watering holes of London – namely that “the conspicuous consumption of pre-recessionary boom times is out”, with customers preferring to buy good value rather than flashy wine names.

He says customers have been trading down a little, perhaps spending £8 where a couple of years ago they would have spent £10, shifting to South Africa, Chile and Argentina from countries such as France in a search for similar style coupled with better value. Intriguingly, though, Crosland reports that wealthier customers who typically buy in the £10 to £20 bracket appear to have been less affected by recessionary worries and continue to purchase much as before.

Under-priced regions?In a fascinating development at the higher end, though, Tanners has continued to have success through identifying and marketing en primeur offers from relatively under-priced regions such as Germany and Portugal’s Douro.

Tanner’s Rachael Armstrong describes both offers as “very successful”, adding while “Bordeaux en primeur [the 2009 campaign] is still doing very well, the strength of offers from elsewhere is that customers realise they haven’t picked up the price tag yet that comes with continued recognition”.

Of course, the average independent may not be able to mount en primeur offers from less eulogised or collectable fine wine-producing regions of the world. But the point remains that there is a rash of great-value, serious undervalued wines from Germany and (in comparison with top-end Bordeaux) the Douro, plus a host of other regions besides. Armstrong would also like to push more sherry, which she describes as one of the best-value drinks in the world, and one whose time “must surely come”.

Hennings ships much of its wine itself – especially from the New World – but where it does buy through UK agents, Parkinson says companies such as Boutinot are very helpful when showing viable alternatives to now over-priced regulars that come from less-recognised parts of the winemaking world.

This highlights a key point. If, as an independent merchant, your suppliers can’t or won’t offer great-value alternatives to the now-bloated prices of what may have been your mainstream sales, they are not doing their job properly in supporting your business – and there are plenty that are. Any good agent and importer should have several, often complementary options to plug any gap on the shelf.

Then it’s over to the independent merchants. The ability to hand-sell alternative wines is one of their great strengths, not least over the supermarkets, whose inability to do so continues to see culls in their range.

It represents a fantastic opportunity to show what our independents can do so long as they continue to embrace exciting new finds that offer fantastic value – and drinking – for their customers.