UK Wine Import Industry Within This Report  Term Paper

  • Length: 14 pages
  • Subject: Agriculture
  • Type: Term Paper
  • Paper: #23106503

Excerpt from Term Paper :

UK Wine Import Industry

Within this report, an analysis will be provided of the wine import industry in the UK. Initially, an environmental analysis will be provided. This will be followed by a competitive analysis of the UK wine import market. The report will conclude with a summary of key findings.

Environmental Analyses

The history of grapevine cultivation, wine production and wine importing/exporting is both interesting and relevant to understanding the current marketing mix and importation of wine into the UK. While an in-depth historical analyses is beyond the scope of this paper, a brief overview of historical issues of relevance to the importation of wine into the UK and the globalization of the wine industry today will be provided.

Anderson, Norman and Wittwer (2001) have provided a succinct historical analysis of critical issues related to globalization and the wine industry. As described by the authors, grapevines were first cultivated approximately 6000 years ago in the Black and Caspian Seas region, spreading gradually to Egypt, Greece and Spain by 2,500 BC. From that point, cultivars were taken from Greece to Italy where native varieties were already being sued around the 8th century BC; to France from Rome around 600 BC, and was spread north in the 2nd and1st centuries BC. As reported by Anderson et al., by the 4th century AD, the cultivation of grapes used for wine was well established in the Old World and in North Africa.

According to Anderson et al. (2001), as explorers moved into the New World, grape cultivars were taken to South America and Mexico in the 1500s, to South Africa by 1655, and to North America by 1619. However successful cultivation did not occur in North American until the 1900s when the Spanish-Mexican Jesuits moved into California and began growing grapes in this region. Similarly, in 1788, cuttings were imported to Australia by early British settlers and into New Zealand in the 1800s.

As also reported by Anderson et al. (2001), for centuries, policies established by various governments significantly impacted the exportation and importation of wine throughout the world. Wine taxes were frequently levied on both imports and exports with fluctuations often reflecting relations between countries. According to Anderson et al., the most extensive and recent policy influences impacting wine exporting and importing were those established after World War II, including the European Union's

Common Agricultural Policy (CAP) and the COMECON arrangements within the communist bloc. While the communist bloc no longer presents problems, as explained by Anderson and colleagues, wine policies originating within CAP may present exportation and importation issues within the future. Additionally, taxes associated with wine consumption in countries throughout the world may also present unique challenges. As noted by Anderson et al., such taxes remain significantly high in non-producing countries.

Wine Consumption in the UK

Wine consumption in the UK has increased significant. As reported by Berry Bros and Rudd (2003), the UK has emerged as the largest importer of wine as well as the largest consumer of wine among non-producer countries. According to information available within the Berry Bros and Rudd report, recent research has documented that UK wine consumers as a whole drank the equivalent of 1.3bn bottles in 2001, with each person on average consuming 21.8 litres.

On the basis of current estimates, as explained by Berry Bros and Rudd, if the growth rate associated with wine consumption continues, it is expected that the per person average will rise to 25.4 litres of wine a year, with total wine sales climbing to £6.9 billion in 2006.

As noted by Conibear (2000), consumers of alcohol in the UK have also shown an increase in drinking wine as well as a taste for better quality wine in comparison to spirits and beer. Even though UK wine consumers drink less wine than consumers in Italy, France and Spain, as reported by Conibear, the UK value spend on wine is equal to that of Italy.

Furthermore, as reported by Conibear (2000), research documents that young women in the UK are increasingly becoming consumers of wine, drinking 9.4 litres in 1999 and projected to rise to 11.8 litres by 2004. Similarly, the research suggests that women are growing more comfortable to drinking wine in public without the presence of men. Similarly, as reported by Harpers (2001), currently, females purchase over 60% of all wine in the UK. According to Harpers, the purchasing power of women within the wine market has increased largely as a result of the dominance of the wine category by supermarket distribution. As reported by Harpers, a 6.5% yearly growth rate in female wine consumption was noted between 1996 and 2001, with forecasts suggesting that this rate could be expected to continue.

As reported by Fallowfield (2001), another influence leading to the increase in female wine consumers is continuing widespread economic independence of women. The driving force behind the shift towards women is the more widespread economic independence of women. According to Fallowfield, women recognize wine as something that they can afford and tend to value wine as something more than just a drink in a bottle. Thus, wine consumption for UK women represents a "luxury like perfume," with the wine industry effectively selling the enjoyment of drinking wine as hardily as they are selling the wine itself. Furthermore, as reported by Fallowfield, women as wine consumers have been described as enjoying the opportunity of experimenting with wines and also look for sophistication amongst wines.

While young women in the UK have been identified as increasing wine consumer group, according to information provided by Harper's (2001), statistics on wine consumption amongst 18- to 25-year-olds suggests that a decline has occurred, with some of the greatest decreases occurring within more recent years. Concern has emerged, as noted within the Harper's report that this declines could eventually impact the overall heath of the wine market in the UK. Thus, individuals within this age bracket have become recognized as a target for marketing. As suggested within the report, while many of the younger generation have grown up in an environment in which their parents drink wine, there is greater diversity within the overall drinks market. While some in the wine market have suggested that younger persons will develop a taste for wine in their later adult years, others suggest that this assumption is not necessarily the case. As reported in Harper's, if wine preference is not established in early adulthood, the probability that it will not be established in one's later adult years is probably a more correct assumption.

As well, as reported by Harper's (2001), the wine industry has failed to recognize UK young people as a profitable market as this age group is often misperceived as having little money to spend. However, as noted in the report in Harper's, this represents another misconception regarding persons in this age bracket. Research has documented that when the head of the household is under 30, expenditures on alcohol have increased extensively, with n approximate £14.80 a week spent on alcohol in 1997/1998. According to the Harper's report, this estimate rose to £18.20 in 1999. Thus, as can be concluded on the basis of this information, while young people between the ages of 18 and 25 represent a potential market for the wine industry, this group currently is not representative of wine consumer's within the UK market.

According to Berry Bros and Rudd (2003), the ongoing growth amongst wine consumers in the UK has largely been driven by the New World producers as well as special offers in supermarkets. As well, as Berry Bros and Rudd noted, on the average, wine consumers purchase wine at an average price per bottle of £4.65, with 75% of wine purchased for consumption in the home. Additionally, research has also documented that the growth rate in wine consumption has been strongest amongst those age 35 and 50, with some evidence suggested that the growth rate is influenced more by an increase in intake among long-term wine consumers rather than the emergence of more new consumers. Further information was provided by the U.S. Department of Agriculture (USDA) (2003) who reported that within the UK red wine consumption has now become more popular than white wine, which is thought to indicate the maturity and increasing level of knowledge of UK consumers. As well, according to information provided by USDA, generally wine consumers in the UK are representative of the upper middle/middle class (classified as AB social grade) and are drinking more frequently, particularly at-home.

Current Trends in Wine Importing

In order to understand the competitive situation of South Africa in its efforts to import wine to the UK, it is important initially to gain a perspective of the current overall trends in wine importing as they relate to the UK. Thus, an overview will be provided of these trends.

According to Anderson et al. (2001), while Europe in the late 1980s accounted for all but 4% of wine exports and 75% of wine imports globally, in the…

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