Examination of Witnesses (Questions 620
- 639)
WEDNESDAY 21 MARCH 2007
MR ROBERT BEARDSMORE, MR ROBERT LINDO, MR MICHAEL
ROBERTS AND MR OWEN ELIAS
Q620 Baroness Jones of Whitchurch:
So there cannot be that many of them by definition from the way
you have described it?
Mr Beardsmore: Yes. In terms of pass rates,
again we do fail wines—there is no point in having a scheme
unless you fail them. Of course there are some poor wines out
there. We failed, by one means or another last year, almost 10%
of wines that went through the scheme. But, again, because I see
the paperwork and I know where those are from, in terms of volume
they are almost always from the smaller ones, which you may say
is sad to say, but it is an issue of the expertise and the equipment
they have got. I cannot tell you exactly how many go through,
but it is the vast majority. Some do fail but, again, it is the
smaller batches of wine rather than the big batches which might
be going through at 10,000 litres at a time.
Q621 Baroness Jones of Whitchurch:
Did you want to do a defence of table wine?
Mr Elias: No, I wanted to do a thing about the
marketing of wine. At Chapel Down we are a national brand and
that is how we market ourselves. We do not market ourselves as
Tenterden Vineyard or as Lamberhurst Vineyard. We do estate wines
from them, but our main thing is the brand and that is our reputation
and what people are buying. You can buy bad English wine but,
if we put a bad wine out on the market, whether it has been through
a scheme or not, our reputation goes to zero. The quality wine
scheme has raised the quality of wines in England but it is not
the be all and end all of a wine.
Q622 Baroness Jones of Whitchurch:
Do you participate in the scheme?
Mr Elias: Yes, we participate in it. One of
our biggest selling wines is a UK table wine. We sell it at Waitrose
for £6.99. It does not have a vintage, it has got a name
"Chapel Down Flint Dry". We do it for that because sometimes
it is a non-vintage product, so we do not have to change our labels.
We can alter it, but we sell on the brand and on the quality,
not necessarily English vineyards quality wine. We do that as
well, but it is not the be all and end all.
Q623 Baroness Jones of Whitchurch:
That is leading into the next question I was going to ask, which
is what lessons have you learned? You are all businessmen, you
will have done some research. What do you have to put on the label
to make it sell? What is the kind of thing the consumers really
want?
Mr Lindo: I would make the point that the most
important thing on our label is Camel Valley, and that is the
name of our vineyard. The most important thing for us is that
we built that brand over a long time, and that is what sells our
wine. I agree with what Owen was saying with regard to his brand,
but I was trying to say to you that, if you did not know anything
about anything and you wandered into a shop—Owen's shop
even—and you were deciding what to choose, you would be
better off with something that had been tasted and analysed than
something that might not have been.
Q624 Baroness Jones of Whitchurch:
One of the things that we have been told—and we touched
on this before—about labelling is that one of the reasons
the New World wines are successful is that they have much more
information; they tell people much more about it, what food to
serve with it, lots of things that consumers would like to know.
Do you do that?
Mr Lindo: Yes, we are allowed to do that. We
are allowed to put advisory information on the label as well as
mandatory, which includes things like what to serve it with. I
think labelling is terribly important, but it is something that
everybody trying to sell a product has to go through.
Q625 Mr Roberts:
It probably has been labelling as much as quality of the wine
as well. But New World's dominant growth of UK-wide consumption
has been because people could start to relate to the label, and
suddenly it became that they could relate to a variety. Varieties
have been so very important to the growth of New World wines—to
be able to say "chardonnay", and they know what chardonnay
means. In France it is very parochial and very chauvinistic; you
buy from a chateau down the road, you buy Loire wines when you
are in Loire, you do not even buy Burgundian wines and you know
that chateau over there is French with a funny hat, or whatever
it is, and you know the wine and you go and buy it. On the shelf
and supermarkets here, Bordeaux wine looks the same and it has
got a similar label on it and a confused new buyer says, "Well,
I don't know one from the other, it does not really have a back
label and does not tell me anything about it", so they move
to wines they could understand. That was how, as we refer to it,
"Brand Australia" was created to its detriment. The
Australians rue the day, in some respects, it has been successful,
because now people see an Australian shiraz and it does not really
matter who made it. Hence the concentration on trying to do what
the French have been doing, which is to create little terroirs
and have Coonawarra wines and Clare Valley wines to do some differentiation,
because they have a marketing issue in themselves. We went through
a phase, certainly when we started to market our wines, when we
really made no reference to the fact it was English at all; certainly,
if there was a "Brand English", it was a detrimental
brand rather than a positive brand. We created a brand of our
business and other historical branding and that has become important.
But since 1998 or 1999 the success of English wines means now
that "Brand England" is becoming a valuable brand and
people are looking for English wines, so I am using this as things
change in brands. One of the things is that, I am afraid, people
still believe England is a country and, of course, inside Europe
it is not a country, so we do have a problem. The country is the
United Kingdom and, because we fall through this thing that in
fact England is only a region, we have lost a layer effectively
in our nomination category, because we could have had English
table wine, which is what we would have had in France. French
table wine is a respectable product. But, as much as we love the
generic whole, UK table wine has no cachet and we have lost a
layer, I am afraid. German table wine and French table wine are
accepted as being good products; as you say, English table wine
would be accepted as good under a classification.
Q626 Baroness Jones of Whitchurch:
One more question then. What is your relationship with the supermarkets?
Mr Lindo: It is very good, there is a great
demand from supermarkets. The majority of us have built our reputations
on being part of our local food and drink community. The "buy
local" thing is timed beautifully for English wine. We are
part of our local food and drink communities and many supermarkets
want to be seen to be part of local food and drink communities
for obvious reasons, so there are a lot of products they want
to sell for that reason. At the moment there is far more demand
from supermarkets than can be satisfied by even the large producers.
Q627 Lord Plumb:
Can I ask about prices related to marketing. The Chancellor is
to get on his feet in about 10 minutes. What is the tax on a bottle
of wine at the moment?
Mr Beardsmore: £1.29 duty on still, and
then sparkling is £1.65.
Mr Lindo: There is VAT on both of those figures.
Q628 Lord Plumb:
You expect them to be reduced presumably!
Mr Roberts: I have to say I am hoping, touch
wood!
Q629 Chairman:
I am indulging myself purely here, I have never bought a bottle
of English wine in my life.
Mr Lindo: We should have brought some with us!
Q630 Chairman:
I was rather hoping you would, but never mind. On the way home
on Thursday evening, I will go to Tesco and do the weekly shopping
and pick up my ration of New Zealand Sauvignon Blanc.
Mr Roberts: Change your allegiance and go to
Waitrose.
Q631 Chairman:
We do not have them in Aberdeenshire.
Mr Lindo: This is not an advert, but most of
us do mail order.
Q632 Chairman:
Seriously, it must still be quite a big step to get someone to
buy their first bottle of English wine.
Mr Roberts: We were saying this earlier about
the profile of where we get to the five million bottles, which
is a significant move from where we are. One of the things that
we put into a marketing plan which is very, very important, is
that we get a huge and disproportionate amount of press coverage
wanting the extraordinary grape performer, because we do not have
the depth of pockets of the Champenois and so on, who can spend
a lot of money on creating pull through marketing projects and
so on, so we are very grateful to that. What we do get, and we
hear it on the end of the phone all the time, is people saying,
"Where can I get it?" The hotel at Kabul sells out of
English wine frequently, but I digress. It is a problem and it
is a great disappointment. But, in fact, what everybody sees is
how much demand will increase because of availability, it is because
there is more wine, because we can fill Tesco's supermarket shelves,
because we can fulfil and become generally available, lots and
lots more wine does get sold. I am afraid we will not get into
that position for another four or five years and, of course, we
would not get into the position if we had a planting ban, that
is really the answer. We would never get to the position where
we could have the demand fulfilled for everybody, because you
do have to have critical maths to get onto the supermarket shelves
on a nationwide basis.
Mr Elias: We do supply Waitrose, Sainbury's
and Tesco, but our wines are on allocation as well.
Q633 Chairman:
If I am going around my Tesco's store and I have got my bottle
of New Zealand Sauvignon Blanc at—what is it? £5 or
something, I am not going to fork out £6.99 for a bottle
of English table wine.
Mr Elias: I would.
Mr Lindo: I can explain that to you. The market
conditions are quite different. If you take the number of people
in our country, there are 50 million people; we are producing
two million bottles, it would take 25 years to give everybody
one. The supply and demand potential is overwhelming. So, if somebody
does want a bottle, then they are going to have to pay the price
to get a bottle and we have to meet the quality to satisfy that
price to get them to come back twice. When Mike here has won his
international gold medal and somebody pays £20 for a bottle
of his wine, they are getting a real bargain, because his boxes
of wines cost a lot more.
Lord Cameron of Dillington: We are doing
the Chairman's personal shopping.
Q634 Baroness Jones of Whitchurch:
You are saying that, if you were producing more, the price would
go down?
Mr Lindo: Not for a while, not for a
long time, but there is a lot of potential there.
Chairman: Grubbing-up—before we
get on to my purchasing of household equipment!
Q635 Lord Palmer:
The Refreshment Department here does stock English wine, including
a very, very good sparkling wine—I cannot remember which
one it is. Is there a dedicated Defra department for wine growing?
Or is it pot luck?
Mr Beardsmore: We have a dedicated route into
Defra. Obviously we do not always know exactly how they split
things, but yes, we have the wine group—and two of them
are sitting behind us. We know where we are going when we need
to.
Q636 Lord Palmer:
The Commission's Communication suggests that a major part of reform
should be grubbing-up—I love that expression too—but
there should also be "national envelopes" in which Member
States could take action to restructure their wine industries
and deal with crises. Do you have any reservations about the suggestion?
Might it lead to unfair competition from existing EU suppliers?
Mr Lindo: Basically, our position is "no
subsidies". That is the worst place to put subsidies, to
pay people something. That is our position on it.
Q637 Viscount Ullswater:
Would we get any money in a "national envelope?" It
sounds rather nice, does it not?
Mr Roberts: Is it brown paper or not!
Q638 Viscount Ullswater:
I think Mr Beardsmore is quite right in suggesting that, whatever
"profound reform" it is called, there is no money to
be saved, it is all parcelling money out on a different way. Would
England, Britain, get any money in the future?
Mr Elias: We have done our grubbing already
of unsuitable varieties and replaced them. We have taken out hybrid
varieties, we have taken out the branches that are not productive,
and our growers have done that as well. We have paid to have it
done and we have done it. No subsidy, it is a commercial decision—they
were growing grapes that we could not use, so we said "give
us some of the power" and that is what we have done.
Q639 Chairman:
Do you have concerns that "national envelopes" will
be used to provide a backdoor route for productions?
Mr Elias: Yes, I suppose, possibly. There are
two sides to it. From a personal point of view—because it
is very difficult to have a global view of this as a whole, because
perhaps we all each have different ones. This idea was expressed
in Bordeaux, this "envelope" business, and the partners
objected to these brown paper parcels. But I took a view really
that in fact there is a huge change in Europe historically. We
should not underestimate the tradition and the change in terms
of a village or an area because of the concentration on agriculture.
It does need help and my own view is that if that help can be
redirected in any way that persuades them that these changes to
a market economy are capable of being done, I would be happy with
the help that has been given to them to make the change. If it
makes them become willing to make the change, I am very happy
that it should be done, that is a personal view.
Mr Beardsmore: If I could come back to the question
of whether we would get any money or whether we are likely to
get any. Clearly the size of the envelope would be rather small
given our production. I know the Lord Chairman made a comment
at the beginning that we are outside a lot of the regulation;
that is only partially true. Because we are below 25,000 hectolitres
on a five-year rolling average, obviously that exempts us from
the planting ban, which is extremely important. But all the market
management measures that go with it, and effectively any subsidies
that go with it, that is the bit we are exempt from. Yes, we are
not involved in distillations, we do not need to be anyway. But
everything else we are still in; all the other regulations apply
to us, it is only the money bit and the planting ban that go side
by side that we are exempted from. Coming back to the issue of
whether we would get any money, at the moment we are not even
included in that. That is the bit we are exempt from, we can plant
but we do not have any hand-outs, so my suspicion would be "no".
Depending on how the regulations are changed, that may be different
and it may become production related; but, as things stand at
the moment, that is what we drop out of, that is the bit we do
not adhere to.
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