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Regarding: Oregon wants to double UK sales within three years

I just read this story: Oregon wants to double UK sales within three years, published by Harpers, a UK magazine. The following was written by Gemma McKenna, on Thursday, 24 May 2012:

The head of the Oregon Wine Board hopes to double its UK sales within the next three years.

Tom Danowski, executive director, told Harpers that the UK currently accounts for 2-3% of its sales, making it the number two export market after Canada.

“The UK is going in the right direction, but we still have a lot of work to do,” he said. He added that in the more premium side of the trade – it was “getting a glimmer of recognition” for being a “very high quality product” albeit a “little more expensive than people like”.

Its average retail price in the UK market is around £15 to £30.

When I read the title of, Oregon wants to double UK sales within three years,” my first thought was, “Yeah, right.”

My reasons for that thinking are the following:

  • UK wine drinkers are ‘discount junkies’, says research, by Rebecca Gibb
    • “The UK has become a nation of wine-drinking ‘discount junkies’, fueled by constant price promoting in supermarkets, a new survey claims. “
    • “Deep discounting continues in the UK including three bottles for £10 in some supermarkets despite duty standing at £1.81 per bottle excluding a further 20% sales tax (VAT). “
      • This is a story I read last August 2011, and I knew it to be true from my own personal experiences.
  • I had a client who exported to the UK.
    • His $15 to $30 dollar bottles of wine were refused by the Brits, who can be very indignant when purchasing wines of this price point.
    • Hard as my client tried, the UK buyers only brought in their $7 bottles of wine.
    • These $7 wines flew off the shelves.
  • Many Oregon winemakers pride themselves on making very high end (a.k.a. expensive) wines.
    • As good as they may be, I believe they’re still a hard sell in the UK
    • Oregon wines compete with Burgundies, at a great reduced rate for the Burgundians
  • With ready access to European wines that don’t have exorbitant import taxes, there’s little to no incentive to “buy American.”

Then, I read on…

” …but he [Danowsky] was more than happy for entry-level US wines to act as an “icebreaker” for Oregon.

With a focus on value wines from Oregon, there are many great wineries that offer delicious wines for excellent prices; like Sokol Blosser, King Estate, and Oak Knoll, for instance. Will the Brits ever rise to the occasion and begin to buy those upper tier wines? It’s highly unlikely, simply based on the fact that the UK gets such great wines without those insane taxes. Unlike the Chinese who are willing to pay for cache, people from Great Britan are far from trying to be trend setters. They set their own standards centuries ago. Now, it’s about great wine for the price, and they’re not going to be bowled over by price.

Important stats from the story, to understand Oregon’s real capabilities and potential:

  • Oregon has 450 wineries
  • Top five varieties in 2011
    • Pinot Noir ~ 12,560 acres
    • Pinot Gris ~ 2,590 acres
    • Chardonnay
    • Riesling
    • Cabernet Sauvignon
  • Winery typically produces under 5,000 cases per year

I’m impressed that Oregon Wine Board’s new director has this understanding of how Oregon can succeed in the UK, and my hat is off to Tom Danowski. I’ll be watching this one closely, as I continue to advocate for Oregon Pinot Gris.

For insight into the original pioneers of the Oregon Wine industry, the video BY the Oregon Public Broadcasting is extremely well done. Click here for the Website, in order to view the video.

 

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6 Responses to “Regarding: Oregon wants to double UK sales within three years”

  1. Marty Johnson says:

    Why shouldn’t the Brits follow the lead of other wine drinkers? I recently had two potential customers in our tasting room tell me that the prices for our Rieslings were “kinda high for the market”. We have two off dry Rieslings at $8.00 and a 3.5% RS Riesling for $10.00 retail. Both of these people held our local wine association Passport which would have entitled them to 10% off of retail. With a production of less than 100 cases each, it’s pretty tough to craft a wine for much less than this! But consumers have become so used to the “Two Buck Chuck” mentality, and quality level, that I fear for the future of small lot, hand crafted wines. Not just in Europe, but here at home as well.

  2. Jo Diaz says:

    Living in the US is expensive…

    I can’t believe anyone with their heads screwed on straight would complain about an $8 and/or $10 Riesling… Supplies of Riesling are short… Makes no sense to me… But, some people are just learning, and I guess we have to be patient with them, not admonish them, which is my first instinct…

  3. Patrick says:

    While OWB trying to buy admission to the cheap seats of the UK wine market…China wine market is experiencing growth at all price segments. Sustainability is Oregon’s USP, and Chinese are increasingly growing concerned about sources and methods of production.
    I recently attended a California wine event at the Roosevelt in Shanghai. The number of labels and distributors just at this event was phenomenal.
    A week later I returned to the Roosevelt to view their “Wine Vault” and found three Pinot Noirs from two different Oregon producers in a far, dark corner of the wine cellar. France Bordeaux & Burgundies are clearly the big draw for the Roosevelt, which is also true for the Chinese market.
    Oregon premium wine needs to be in China, and the OWB needs to be focused on China not Hong Kong or the UK. The way to the Chinese palate is not through Hong Kong.

    http://www.cnngo.com/shanghai/drink/back-classics-roosevelt-private-cellar-wine-vault-733886

  4. Jo Diaz says:

    Excellent advice, Patrick. I wonder if anyone will hear it?

  5. Patrick says:

    Jo, Thank you. I’m a native Oregonian in China at this very moment studying Chinese 20 hours a week, 5 days a week in an intensive course, and in my afternoons I’m working on a sales brochure for my nascent Oregon wine & spirits export company.

    As Chinese tastes mature, and it seems that Hong Kong is driving the shift away from Bordeaux towards Burgundy, there will be an exceptional opportunity for Oregon Pinot Noir and other varieties.

    Although the buyers may be aware of Oregon and have even enjoyed Oregon wine, the issue is convincing their customers. Everyone has heard of Burgundy, yet no one has heard of the Willamette Valley, Second, there is a perception in China that “new world” wines abandoned the concept of terroir and “manufacture” rather than craft wines. Third, to reverse these perceptions, OWB needs to be in Shanghai regularly.

    There is room for artisanal, rare wines that often are not found outside the state of Oregon. The low end of the playing field is dominated by Chinese wineries, which there are over 400 and counting. Imported wine only accounts for 15% of the market. Wine import tax is north of 40%, so if a wine is going to be imported it should be exceptional. Although Hong Kong import duty is is 0%, the pressure to lower tax rates is not strong.

    Apologies for the long comment.

  6. Jo Diaz says:

    No apology necessary, Patrick. It’s all great information about the Chinese market. Now, let’s hope the OWB is reading and listening.

    I’ll send an E-Mail to the director, just in case.

    Thanks!

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