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Time for a reality check

Published:  18 January, 2007

The recent optimism around the news that cost of making wine would be rising across the board would be heart-warming, if it wasn't also so utterly misplaced.

Only in the wine trade would people embrace higher costs of making something as somehow a good thing, as if the consumer would immediately go out and pay whatever the industry kindly asked them to do.

Miguel Torres told us last year "at last the producers will get what they need to make a profit ", while others in the UK have said that at last the right price will be paid for a bottle of wine. Wine is undervalued, hence the jump in prices will put it at the right price point, so the argument runs.

But you can bet your bottom dollar that the supermarkets won't just hand a 1-added price tag onto a bottle of wine just to please the winemakers. Especially as Morrison's has just had a highly successful Christmas based on deeply cutting many lines.

Dave Stewart, head of drinks at Asda and featured in these pages next week, looked as if we were speaking a foreign language when we suggested that promotions might have to be reduced, or prices raised.

And Stuart Rose of Marks & Spencer told the Radio 4's the Today programme at the start of the year that no industry could afford to raise prices in the current economic climate.

That just about sums it up: don't you dare charge us more, Rose is effectively saying. The M&S shopper is looking to make savings now rather than spend more.

Yet someone is going to have to absorb those increased costs of a poor harvest, coupled with packaging material and transportation price hikes in 2008.

And by now you can probably guess where this is all going. If the retailers won't pass on costs to their customers, and producers are adamant that they will have to charge more, then that leaves a certain someone in the middle. With minimal supply chain spend to make savings on, and profits tight enough already, it's fair to say that there will be a few more Orbitals this year.

James Aufenast is Deputy Editor of Harpers