Fortified Wine in the UK - Coursework Example

Fortified wine in the UK and other markets Introduction Fortified wine refers to that wine which has distilled beverage, normally brandy added to it. Wine was fortified with intentions of preserving it. This is attributed to the fact that ethanol, which is a key component of the distilled brandy added to wines for fortification, is a natural antiseptic. Fortification also plays a key role in adding to distinct flavors to wines; thus, increasing the number of people consuming them. Some of the fortified wines that have been developed include; sherry, marsala, vermouth, port, madeira, among others. Wine market has developed for centuries with the key players being Spain, France, Italy, Germany, and USA. Other markets have developed since wine consumption has tremendously increased. United Kingdom forms a perfect example of a country whose wine industry is slowly shaping up. Therefore, this paper shall explore the development of the fortified wine market in the United Kingdom. It will also compare and contrast other markets with the United Kingdom’s fortified wine market. Executive Summary The United Kingdom’s fortified wine market is one of the most complex and diverse in the whole world. This is because it imports wines from almost all the leading wine producers. The United Kingdom has transformed itself from the traditional spirit and beer drinking nation into one of the key wine export in the world. Wine consumption per capita has increased considerably over the years. Reports indicate that a study conducted by Key Note, a leading market survey institution, revealed that the United Kingdom market for wine had grown steadily from the year, 2005 to 2009. The report indicates that the peak of growth registered in 2007 was at 5.6%; while its lowest growth rate was 1.3% registered in 2009. This low growth rate in the wine market was as a result of the global recession that also affected the country. The report also indicated that the United Kingdom’s consumer spent lots of money in the year 2009. The total amount spent on wine accounted for 20% of all the money spent on household drinks. On the other hand, funds spent on wine were 28% of the total funds spent on alcohol. This report clarified the classification of Britons as wine and beer drinkers. The United Kingdom is the eighth largest consumer of wine. Since it does not produce its wine, it relies heavily on imports. Therefore, it imports most of its wine from Australia. This is attributed to the fact that Australian wine has a greater market penetration, loyalty and frequency of purchase (Greenblat, 2011). However, the Australian wine is facing stiff competition from South African and Italian wines. They are all battling out to be the United Kingdom’s main wine importer since they have realized that United Kingdom provide a reliable market. South Africa is the main threat that Australia is facing in supplying the United Kingdom with wine. This is because South African wine is relatively cheap and is of high quality. The upsurge in the consumption of fortified wine in the United Kingdom has been registered from the affluent, middle-aged consumers, and not from the insurgence of younger consumers. The age group between thirty five and fifty four represents the biggest consumers of wine in the United Kingdom. The three main factors that influence the United Kingdom consumer’s purchasing power comprises; price, promotional offers, and the wine style. Other factors that may compel their choices include; an individual’s brand familiarity and recommendation from family or friends. In terms of wine style, majority of the United Kingdom consumers’ of wine prefer white wine. This could be attributed to the fact that it is an everyday, easy to drink wine that novice wine drinkers and women can easily partake. The trend towards lighter wines is because they have a slightly lower alcohol content compared to the red wine. Additionally, white wines are usually served chilled, and this is refreshing; especially during the summer. Some of the most preferred white wines include Pinot Grigio, Sauvignon Blanc, Chardonnay, among others. The United Kingdom wine consumers’ are interested in buying high quality wines. Therefore, for them to enjoy some of this high quality wines at cheaper rates; most people prefer to treat themselves at home rather than going to expensive restaurants and bars. Wines retailing between £4 and £6 proved to be selling a lot. Majority of wine being sold in the United Kingdom market is conducted through the retail channel, majorly through supermarkets. The main supermarkets that act as wine retail outlets include Tesco, Sainsbury, Safeway, Kwik Save, just to mention but a few. This has increased wines’ accessibility to consumers. On the other hand, promotional activities carried out by supermarkets have played a significant role in the growth of the United Kingdom’s wine market. Comparison between United Kingdom fortified wine market and other markets In as much as the United Kingdom imports its wine, its wine market is the fifth largest in the world. The worth of this market was estimated to be USSD 17.53 in 2009. As already pointed out, United Kingdom imports most of its wine from Australia. The Australian wine market is made up of over two thousand wine companies. The wine sector plays an integral role in the Australian economy since it employs over thirty one thousand people. The Australian wine sector has flourished because; it has a stable supply factor, a flexible winemaking practice, a strong-identifiable brand, infrastructure, and regulation integrity. In terms of stable supply of wine, Australia has soared extraordinary heights in its production of high quality wine. Furthermore, it has managed to develop a variety of wines with different price ranges that consumers can choose from. It has over one hundred and forty varieties of grapes growing in sixty two regions. This has facilitated the production of the different varieties of wine to suit different markets. Its climatic conditions and natural resources favor growth of grapes to supply the wine companies with the raw material. Australia’s flexible winemaking tendencies have necessitated experiments that have encouraged the development of affordable wine styles. These wine styles have played instrumental roles in the growth of novel wine drinkers. The Australian wine sector has been keen on producing powerful identifiable brands. These brands that combine new thinking and traditional brands have led to the creation of brands that are acceptable in the market. The United Kingdom is one of the countries that import Australian wine because its brands meet the demands of its consumers. Australia’s strong infrastructure made up of wine makers, viticulturists, and research institutions have enabled the production of high quality fortified wines. Furthermore, they have established a body that ensures that only high quality wine is exported. These factors have enabled the steady growth of Australia’s wine market as one of the leading in the sector. It is a fact that United Kingdom is importing majority of its wine from Australia. This is because Australia has put measures in place to ensure that high quality wine is produced. In as much as Australia is enjoying a larger portion of the United Kingdom wine market, it is facing stiff competition from South America, Chile and South Africa. This is because these countries are also producing high quality wine, but at a cheaper rate. New Zealand also enjoys the United Kingdom wine market. In fact, it is the second largest wine exporter to the United Kingdom. New Zealand’s wine industry also plays an extremely essential role in the New Zealand economy. In as much as it creates jobs, it also generates income in form of export earnings. It has produced several award winning wines that are exported to various cellars worldwide. It has ten main wine producing areas with soil structures and climatic conditions that facilitate growth of grape varieties for wine production. Some of the wine varieties that it produces include; Sauvignon Blanc, Pinot Noir, Cabernet, Chardonnay, among others. The New Zealand wine market is growing tremendously, and the export income earned from wine production grows by 24% every year. This is a clear indication that the wine market is developing at a faster rate. Apart from the United Kingdom, it also exports its wine to Canada and Asia. Canadian wine market also plays an integral role in the wine industry. This is because it is one of the fastest growing wine markets in the world. Just like the United Kingdom, it also imports a greater percentage of wine. Italy and France are its top importers, and at number three and four is Australia and USA respectively. The Canadian wine market is different from other markets since its consumers are inclined towards purchasing highly priced wines. This is because Canadian wine consumers believe that high quality wine should be highly priced. Additionally, as opposed to the United Kingdom, the Canadian wine consumers prefer red wine to white wine. The Canadian wine market is managed by provincial liquor boards that have monopolized the market. All the Canadian provinces except Alberta have liquor control boards that regulate licensing, importation, as well as labeling and packaging of alcoholic beverages. This has given the provinces to set their own prices and quotas. Conclusion Fortified wine market is an integral sector of the economy that should be handled with care. As explicated above, the United Kingdom and Canada depend on wine imports in order to serve there wine consumers. Therefore, leading exporters such as Australia, New Zealand, France, and Italy should ensure that they continue with producing high quality wine that serve the demands and needs of their market. This is because failure to produce high quality wine may inhibit them from competing favorably in the market. Bibliography Greenblat, Eli, 2011. ‘Wine Industry digests unpalatable truths.’ The Business Daily, viewed 8 Nov 2012 from http://www.smh.com.au/business/wine-industry-digests-unpalatable- truths-20111127-1o1lj.html Lichine, Alexis, 2000. Alexis Lichine’s New Encyclopedia of Wines & Spirits. New York: Alfred Knopf Publishers. Oldman, Mark, 2004. Oldman's Guide to Outsmarting Wine. New York: Penguin Publishers Robinson, J. 2006. The Oxford Companion to Wine. New York: Oxford University Press. ‘Record of the amount spent on wine 2009’ n.d. 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