California Wine Institute to close UK office

The Wine Institute of California is to close its UK office next month following severe cuts in funding from the US Dept of Agriculture, it was announced today.

The office, which is based in London, has been headed up by John McLaren for the past 21 years, and is funded under the Market Access Programme from the Department of Agriculture in Washington DC.

Aside from the support provided by the London office to Californian wine importers and retailers in the UK, McLaren – along with Venla Freeman, the Institute’s UK trade promotions manager – organises the annual Go West tasting for Californian wine, which is held in March at London’s QEII centre.

The London office closure will result in the termination of both McLaren’s and Freeman’s positions at the Wine Institute.

Speaking to the drinks business this morning after the news broke, McLaren expressed his “shock” at the decision, and the timing of the announcement.

“If sales of California wine in the UK were plummeting then I might understand, but over £10, there is considerable growth for California, and there is still a lot of momentum to be achieved,” he said.

Continuing, he said that the decision to close the UK office was “unfortunate for me and Venla, and it is unfortunate for the UK trade, who won’t get the service we provide, and the timing is unfortunate too, because premium California is doing so well, and there is still a lot of momentum for the UK.”

Although the UK is California’s largest export market by volume, following “severe cuts” in funding from the USDA, McLaren told db that the Wine Institute has made the decision “to prioritise growing markets and markets where there are opportunities, rather than established markets where it is assumed that they have momentum of their own.”

However, he added, “But I’m not sure how it is believed that this momentum will continue without our office, because we are providing a lot of support for small upmarket importers of Californian wine, and there is still a lot that needs to be achieved.”

John McLaren is UK director for the Wine Institute

When asked by db for the reason for funding cuts by the USDA, he commented, “I’m not sure why the budget has been cut in [Washington] DC, and in terms of overall DC activities it is peanuts, but I do know that the overall programme, which is to support agricultural products, has been criticised in the Senate – people have asked ‘why should huge meat and soya bean companies etc be benefitting from US tax dollars?’ But at the same time it is helping the smaller players, and I wish they would consider that.”

Continuing he said, “And this is a major cut, over the last three years we’ve had to work on a smaller budget, but it has still been very worthwhile, and I would have liked to have a choice to do it [promote Californian wines in the UK] myself on a smaller basis… but that wasn’t offered to me.”

He also said that he believed it was unlikely that Californian wineries would step in to provide the shortfall in funding since the USDA announced its cuts.

“The wineries don’t want the Institute to stop [promoting Californian wines in the UK], but there are not going to suddenly volunteer a million dollars, and we wouldn’t have time to cobble that together now, and the idea that someone in San Francisco would go round to the wineries with a begging bowl doesn’t look likely to me.”

Looking ahead, he stressed that the UK office would continue to function until 30 September, and in the longer term, although no plans have been made, he said, “My guess is that there will be a person looking after communications and PR and helping with trips on pretty small scale and on a very small budget.”

Then he expressed his disappointment that the announcement should have been made with no outline for the future. “It is sad that after September there seems to be nothing at all, and nobody to hand over to.”

Concluding, he said that he thought the Wine Institute would soon regret closing the UK office, “I believe that next year someone will say, look at the opportunities missed; the momentum lost.”

News of the Wine Institute’s decision to close its UK office follows the announcement last month that the Comité Champagne would no longer be hosting its annual Champagne tasting in London, much to the dismay of UK-based agents and importers of Champagne, who urged the Comité to reconsider its decision, pointing out that the country is not only the largest export market for Champagne, but also that its capital, London, is the principle shop-window from which to promote Champagne – or indeed any wine – to a global audience.

California is the the fourth largest wine producer in the world (after France, Spain, Italy) and the Institute has previously identified the UK as a target market along with Canada, Germany, Japan, Hong Kong and China.

Writing on the Californian Wine Institute’s website in February this year, McLaren outlined the current growth in Californian wine sales in the UK and the possibilities for further profitable expansion.

“The United Kingdom has always been a receptive market for California wines, and a quarter of all U.S. wine exports by volume come to this country,” he observed.

Continuing, he commented, “Value increases are now out-stripping volume growth, with U.S. wine export value to the UK rising by 28% last year. The wine trade here has shifted emphasis to restaurants and casual dining, and a burgeoning independent retail sector, leading to increased interest in premium wines from the Golden State.

Finally, he wrote, “California is better placed here than it has ever been before, and we expect further growth in 2016 and beyond.”

The Wine Institute is the voice for California wine representing more than 1,000 wineries and affiliated businesses from the state, and the only group representing the industry at the state, federal and international levels.