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Wine trade feels pressure of mounting costs

Published:  04 May, 2012

Fluctuating currency markets and high transport costs are putting wine retailers under more pressure.

Noel Reid, wines and spirits buyer at Frederic Robinson, said: "I don't think there's anyone out there who could say that exchange rates and transport costs are not a problem for
them at the moment, alongside duty hikes.

"It's causing real concern in the trade and is putting pressure on house wines in particular. I know people who are having to try to source wines under 80 cents in order to hit their list price.

"We are always looking for best prices from hauliers to ensure transport costs are kept low and to keep the bottle price down. We're also buying euros in advance in order to minimise spiralling costs."

Jamie Hutchinson, founder of independent retailer the Sampler, said: "It's been frustrating that the recent strength of the euro has not led to lower cost prices [from wholesalers]."

What's more, with consumer price sensitivity heightened, the Sampler saw its average bottle price drop by 10%-15% at the end of last year, said Hutchinson.

"We had to sell more volumes just to stand still, but it's beginning to come back a bit," he added.

He said it was proving very difficult to predict what would sell well, with "Burgundy doing really well and Bordeaux doing really badly".

Jura sales have gone up "amazingly", said Hutchinson, partly because there are so few stockists, but also thanks to celebrity chef Raymond Blanc's the Very Hungry Frenchman TV programme on BBC2.

Charles Purdy, director at international payment specialists Smart Currency, said buyers were "at the mercy of timing when distributors paid for the product". He added that "we're in a very volatile market".

"The current climate is not good for the euro - look at Spain's major problems. I don't see sterling weakening any time soon. It might make more sense for cashflow to buy more products direct and make savings that way."

Tradeteam's business development director Mark Fergusson said that while volumes were currently "not as strong as we had hoped" there are no real new costs pressures.

He felt that current sluggish trading was more down to the cumulative effect of currency, transport and consumers with "not as much money in thier pockets".

However, Fergusson believes that with the upcoming summer events, and better weather, trading will improve in the sector.