An importer’s perspective on the UK wine market

Following a discussion with new MD at John E Fells, Euan Mackay, db learns what the UK wine market looks like from an importer’s perspective.

Joining Fells as managing director in September last year – taking over from Steve Moody, who has become the company’s chairman – Mackay has seen his position in the trade changed markedly.

Previously occupying a role as commercial director for Portugal’s Symington Family Estates, he was based in Porto, and has therefore not only had to move countries, but shift from representing the producer’s perspective to seeing the market through the distributor’s eyes.

While Mackay’s ultimate boss is the same – the Symington family is the majority shareholder of Fells – his new role “is a big change,” he told db during a meeting last month.

However, it’s one he feels well placed to tackle because, as he said, “I’ve spent the last 25 years talking to distributors around the world, so I knew the challenges they have.”

Furthermore, he’s also acutely aware of the difficulties facing producers, not least the long lead times for new product development – something he says some distributors aren’t always sensitive to.

“As a producer, you might be asked to create a brand-new product over dinner, and that might take two years, which for the distributor is not quick enough,” he said.

On the other hand, he has always valued the feedback from distributors, which has led to innovations from the suppliers.

For example, he recalled how Graham’s Blend no.5 white Port for cocktails was conceived following a conversation between Fells and Symington Family Estates, while the ‘Single Harvest’ tawny tag for Graham’s Colheitas came about following a discussion between the Port producer and its distributor in Macau, who wanted something high-end, but more “understandable” than the term ‘Colheita’, which is traditionally used for a vintage-dated tawny.

As for the UK wine market, when viewed upon from his new role, Mackay admits the trading environment is far from easy.

“There are more reds than blacks right now,” he said, adding, “There are more areas that are behind than ahead,” comparing the situation to this time last year, and referring to fine wine merchants, restaurants, regional wholesalers and supermarkets.

Considering the performance of wine in the latter retail type in particular, he recorded a lack of brand loyalty among price-sensitive consumers at present. “If you move over a price point, for example, from £7.99 to £8.25, sales can drop by 40%,” he said.

His approach to the current challenges is to ensure “our service level is very strong”, while bringing on board new agencies, such as Hungary’s Royal Tokaji and Copenhagen Sparkling Tea, which Mackay describes as “our nod to the no-alcohol sector.”

Looking back, he said, “2023 was pretty good and we always knew this year would be difficult, and it is.”

Speaking about “the cost of living crisis”, he said that there is a delay between the rhetoric and the reality, with people now really starting to feel the pinch from, for example, increases in the cost of car or house insurance, or rising mortgage rates, which directly affect their spending power on non-essential items, such as wine.

For his business, transport costs have more than tripled on certain routes due to Suez Canal trade disruptions, which he illustrates with the price of a 40ft container from China to London – a journey that once cost £2000 he said is now priced at £7,500 (a cost that’s relevant to Fells’ gifting business, which relies on materials from China).

Looking ahead, he’s hopeful that “consumer confidence” will pick up in 2025, particularly with an expectation that interest rates will come down and energy prices will drop.

Securing Fells a successful future in the UK will be, he believes, “agility” as well as the ability “to add value” both on the customer and supplier side.

“We are here to build brands, rather than just sell them,” he said, and while not looking to expand the Fells portfolio of 48 wineries much further, he does see a few gaps, notably regarding the distributor’s Italian portfolio and, possibly, the “right” Provençal rosé.

As for the Port sector, “it’s the only one were we are category leaders,” he says, speaking of the Symington Family’s powerful presence primarily due to the Cockburn’s and Graham’s brands.

However, fortified wine in the UK, “despite all the lobbying and efforts, has received a bloody nose”, he said, referring to last August’s rise in duty on wines of +20%ABV by as much as £1.30 to £4.28 per 75cl bottle.

“And we still don’t know the true effect of that,” he added, “because most retailers bought forward their stock purchasing” – acquiring the Port needed for last year’s Christmas sales period before the rise in duty was applied.

In preparation for this year’s festive season, when the majority of Port is sold in the UK, Mackay says that Cockburn’s is planning a new look that “will challenge the consumer”, commenting that fortified wine is “a category that needs to innovate all the time to keep the gatekeepers excited and Port on people’s radar.”

This “face lift”, which is for the brand leading line of Cockburn’s called Special Reserve, will be out in the autumn and promises to be “radical”, according to Mackay.

And while he adds that the packaging revamp is divisive, he also confirmed that “most of the retailers are on board”.