THE FUTURE'S BIG .....

Published: 23 July, 2008

Five to ten global' wine companies will emerge in the next ten years and dominate the market, claimed Chris Day, managing director of Berren Asset Management (the controller of the International Wine Investment Fund), at last week's LIWSF. Speaking at a seminar held by Skalli & Rein entitled Consolidation in the Wine Industry', Day said that the industry faces continued shake-up and consolidation, and the generation of "mega" wine companies is inevitable, as no wine company has more than one per cent of the world wine market - in stark contrast to other beverages'. The mega' wine companies were predicted to be formed from 200-500 large wine companies and would command 20-30% of the world wine market. Day said Beringer Blass, Constellation Wines and LVMH were the only current examples. He also said that it would be premium wines which would drive growth: Premium wine is still projected to grow at eight to ten per cent per annum in a market where global wine consumption is basically flat. Countries such as the United States, Britain and Germany and some Asian countries are projected to see their premium wine sectors grow strongly,' said Day. Fellow debate panel member Allan Cheesman, former wine consultant at Sainsbury's, defended the role of the multiples in the increasingly consolidated retail industry and felt the bully-boy' reputation was unfounded. I would like to remind the trade that there is a word in the English language called "no".' Cheesman also predicted that the multiples will continue to prosper and I am sorry to say that specialists will continue to suffer'. Suppliers will be pleased, however, that Cheesman also predicted that price points would move upwards. John Mills, managing director of the UK arm of Constellation Wines, used his position on the panel to urge suppliers to stop feeling sorry for yourself and start adding value and innovating'.

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