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Bulk Wine growth may slow, but it is not going away, debate hears

Published:  21 May, 2015

The growth of the bulk wine market may slow, but it is here to stay, according to expert panellist in a recent debate.

The growth of the bulk wine market may slow, but it is here to stay, according to expert panellist in a recent debate.

The debate on bulk wine, which was organised by Harper and held at the London WIne Fair earlier this week, looked at bulk sourcing as a means to grow profit but asked if the impact on jobs in the country of origin outweighed the commercial gains.

Panellist included Su Birch, former chief executive of Wines of South Africa who now represents a not-for-profit group campaigning for more bottling to be carried out in South Africa, Joan Torrents, buying director of Enotria, Andrew Shaw, buying director of Bibendum PLB Group, Bernard Fontannaz, founder and managing director of Origin Wines and The Coop's wine buyer, Edward Robinson.

Birch argued that the market was stripping value out of the country of origin and eroding profits and that the weak rand made it cost-effective to bottle in South Africa.  "Every time we export in bulk, we exports jobs," she argued.

The country has been pulling back on its bulk wineproduction ahead of the The Economic Partnership Agreement with the EU, which will sets new allowances for quota-free wines to be exported from South Africa. Last year, around 62% of South Africa's wine was exported in bulk in 2014.

Andrew Shaw

Fontannaz said the deal would be a "game changer" and set a new reality for bottling at source.

Shaw said there might be a slow down in the increase, as market dynamics in the UK were changing fast. "We foresee there will be pressure points," he noted. "People will always chase the cheapest juice and at the moment, South Africa is feeling it. FIve years ago it was Australia, and it has been New Zealand in the past," he said.

Speaking after the seminar, Neil Anderson of Kingsland Wine & Spirit told Harpers that bulk wine was here because of the economics and because it offers service and better flexibility. "As an industry, bulk has grown massively - around 62% of wine and I can see that going to 70%," he said. "The conversation may be around bottled at source, but consumers of wine at that level don't really care where it is bottled, it is not relevant to them. Above £7.99 and consumers may begin to be more interested, but consumers of cheaper and higher priced wines look for different thing"

Kobus Basson of Kleine Zlaze told bulk wine was an economic necessity in South Africa "It all begins with the financial sustainability of your model. Problem of South Africa is that it is like a domino. When new in the world market it  played the simplest game at a affordable level. But with low margins, you can't plough much back in , so it grows very little."

"People have to sell bulk to raise cash - it is part of the problem," he said, but added "I am hesitant to blame the export as my concern is that you have no control. But you can't wish it away. It is tough for most producers - and it is not getting easier, as there are challenges in terms of power supply, labour costs are rising and there are some financial challenges."

Su Birch