Stronger supplier relations are key to tackling global wine shortage says Virgin Wines
If the global wine market is to cope with the on-going issue of consumer demand outstripping wine supply it has to focus on building stronger trade relations between buyers and producers, according to Andrew Baker, head wine buyer for Virgin Wines, the major UK wine retailer, comments on the UK market.
His views come in the wake of the widely reported analysis of the global wine market by Morgan Stanley revealed by Harpers.co.uk earlier in the week. In it Morgan Stanley predicted the wine industry is currently under-supplied by "nearly 300 million cases", despite there being one million producers globally making 2.8 billion cases a year.
It claimed gobal production dropped 5% last year, to the lowest levels since the 1960s and brought global supply and demand into equilibrium for the first time in recent history. With production in Europe dropping by 10% due to bad weather and consumption globally rising by 1% in 2012, wine stocks have decreased considerably.
In reply Baker said: "The world may be experiencing significant demand for wine, but we're also seeing this replicated in the UK market. Our sales in recent years have risen significantly in line with global demand. We've also experienced an increase in average bottle value, with customers spending an average of £7.50 per bottle, as UK wine lovers continue to demand a finer drinking experience.
"Building great relationships with winemakers from the very beginning of a relationship is key at such times. We work with talented, passionate winemakers to offer a range of around 600 wines at any one time to our customers, all of which are sourced as a result of long lasting, rewarding supply partnerships. We have developed both quality and sustainable pricing with our wine producers to ensure we can ride out times of famine with relatively little fluctuation in price. This is only possible where there's a long term expectation of business and runs counter to the widely observed short-term opportunism of wine trading."
Baker agreed with the report that the current production shortfall will result in higher prices. He added: "Where demand outstrips supply at a given moment, trading naturally becomes intense. This will be particularly felt in the lower end of the market where you see bulk wine trading with very high volumes and low costs. This means that this sector of the market is always the first to be bought by panicked buyers around the world."
· Do you have a view on the Morgan Stanley report and the issue of consumer demand outstripping global wine supply? If so email richard.siddle@wrbm.com.
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