2008: Wine Inflation, the Budget and the Euro/Sterling Issue
For the first time in nearly twelve years, the UK wine trade and its customers are about to experience severe wine price inflation. Most unusually, a combination of factors has struck at the same time which has had the effect of magnifying the overall problem.
After a long period of over-production and full wine lakes, a series of short harvests, largely caused by climatic change, have resulted in some quite severe supply shortages. We have already seen big price rises from Australia, most of Europe and South America. Producers’ problems have been further aggravated by heavy increases in the worldwide cost of glass, corks and screw-caps.
Add to this the downstream effect of today’s oil price. Shipping, freight and warehousing costs have all increased in proportion to the rising cost of oil and, of course, our own distribution costs have also increased. However, the most serious factor that has certainly forced all importers to evaluate their costing structures is the fall of the value of Sterling against the Euro (a bit more than 15% in the past nine months) and the Australian and New Zealand dollars. Just as we thought that our purchase prices from Chile and Argentina might be protected by the relative weakness of the US dollar, we have heard that nearly all our suppliers in South America now want to invoice us in Sterling rather than US dollars as they are losing too much money due to the weakness of their Peso currencies against the dollar. Could it get any worse?
Yes! The Chancellor's decision on March 12th to hit the wine drinker with a huge hike in duty is astounding. The implication given was that this would help kerb the binge drinking of the youth of Great Britain. So 3p goes onto a litre of cider, a similar amount on alco-pops and 14p on a bottle of wine. Thus the teenage claret-head gets hit the hardest. Great logic.
So, when and what are we going to do about it? Well, obviously we need to react as soon as possible as we are beginning to seriously haemorrhage our profitability. The duty increase comes into effect on Sunday 16th March and will have to be passed on immediately as will any price increases from our producers. Currency/oil based price rises will come into effect with our new wine list that is due out imminently.
As the head wine buyer for Tesco recently said, it is likely that, by the end of March, a bottle of wine that is price pointed at £3.99 will have to go out on the shelves at £4.99!
Esporao White Reserva - Alentejo
This fabulous white from Portugal'a Alentejo region gets a rave review in this month's 'Imbibe' magazine. One of the tasters thought it 'magnificent' and shouted 'bring on the fish' so we thought, 'OK' and popped down to the Fish Shack at Darts Shopping Village, Topsham and persuaded Jason Leeming to donate a fabulous recipe to go with the wine. Have a look at the featured recipe.
La Courtine, 2007 - Producteurs Plaimont, Gascony
Our beloved Colombard 'Les Aroutis' is being updated. The 2006 vintage is nearly at an end and the winery have decided that a new image is required for the new vintage. We have used the same label for many years now so the time is ripe for a change.
However, CPW are always more concerned about the taste rather than fashion and 'La Courtine', 2007 (as it will now be called) keeps up the remarkable track record of this wine so we can recommend it with complete confidence. What's inside the bottle is as good as it has always been.
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