Justin Knock of Cobevco on why growth in bulk wine will boost branded wine
As value rises on the producer side of the supply chain due to reducing global wine stocks and increasing shortages in many key producing countries - Spain, Italy, Australia, New Zealand and to a lesser extent Chile and Argentina - we are set for price rises in the UK, Ireland and mainland Europe.
Tight global supply will also encourage more sales of regional wines, as smaller producers seek to capitalise on supply shortages by selling internationally.
Packaging innovation will be a key focus for producers this year, as consumers look for added value and increased choice from brands. Retailers are already starting to stock ‘alternative’ packaging formats, including bag-in-box and medium sized bottles, but 2013 will see producers introduce even more options, with both smaller and larger formats becoming more widely available.
The global shortage of supply overlaid with well-known exchange rate weakness in the UK and Europe, rising taxes and the spectre of increasing inflation will mean brand owners must look to squeeze more efficiency and capability out of their supply chain. So alongside entry-level priced and generic origin wines, a wider range of wines will start to be shipped in bulk and packaged locally, including wines of higher price points and of more specific regional origin.
Local packaging specialists can provide superior expertise to many wineries at the critical point of bottling. They often have a much better understanding of dissolved and total packaged oxygen, microbial and physical stability and maintaining production consistency during and between packaging runs, and have systems in place to manage these issues cost-effectively. Such contract packers, which typically also provide flexible warehousing and logistics, will prove a bigger draw for producers this year.
Transport costs have historically prohibited smaller regional producers from expanding into overseas markets. Once only a viable option for global producer brands, regional producers seeking to take advantage of shortage of supply and expand into international markets are increasingly using bulk shipping and contract packing methods.
The trade has become much more switched on to the benefit of this way of working, not least access to lighter glass and new packaging formats, a more cost efficient, environmentally sound supply chain and consistency of quality for fast moving products. As a result, we are set to see many more brands establish themselves internationally by utilising contract packers at market destination.
* Justin Knock is winemaking consultant at Cobevco