Examination of Witnesses (Questions 643
- 659)
WEDNESDAY 2 MAY 2007
MR JULIAN DYER AND MR DAN JAGO
Q643 Chairman:
Good morning, both of you, and welcome. I take it that you know
each other?
Mr Jago: We do! We have heard of them!
Q644 Chairman:
Thank you very much for finding the time to come and talk to us,
it is really helpful. I always have to start these sessions by
explaining that it is being web cast, so there is a possibility
that somewhere out there in the ether at some time somebody may
be listening to this. Also, there will be a transcript and you
will get the opportunity of looking over that and correcting anything.
Can I explain what we are doing. The Commission has indicated
some preliminary thoughts, a Communication on the reform of the
EU wine regime, as you will be aware, and we have been looking
at that, if for no other reason than because it costs €1.5
billion a year, which is quite a bit of money. Of course, we also
have an increasing interest in our own British/English wine industry.
We have spoken to representatives of the Member States in Europe,
we have spoken to the Commission, we have spoken to various interest
groups here. I suppose you are in a way key, because you are at
the interface between the consumer and the producer in many ways,
and it is really, I suppose, how the market is going to develop
and reform and change in which we are most interested. One of
the messages that we have picked up from some elements in Europe
is that really there is not too much of a problem and what problem
there is is really the problem of the consumer in not recognising
the great qualities of European wine and drinking stuff from the
New World, in which case the European wine industry continues
to decline, but never mind—enough of that from me! Could
we start by both of you giving us a rough indication of how you
see the distinguishing characteristics between the European wine
producers and New World wine producers when you deal with these
two very different industries. What are the main differences that
you see?
Mr Dyer: Speaking generally—because there
are obviously details behind the generalisms—generically,
clearly the Old World is a lot longer established. I was looking
back, and in fact a lot of the wine laws precede the EU, so it
does go back some way. When you are dealing by and large with
the Old World producers, you are dealing with a much more fragmented
production base in terms of a plethora of choice—generally
the size of producers and the dramatically diverging styles of
wine that there are available and really the general lack of customer
understanding of a way through that choice. Generally—and
I will give you more detail in a minute—when you are dealing
with New World producers—not all New World producers—you
are dealing with newer companies, largely English—speaking,
who are thinking first of the customer before they make their
wine and then actively targeting the relevant markets in the UK,
the relevant retailers on trade, off trade, with strategies to
sell those wines to those outlets and therefore to the customer
in a much more targeted and focused way. So they are turning the
paradigm on its head and thinking customer first and then product
later, whereas generally the prevailing attitude amongst Old World
producers is, "Here is my wine, I have made it, now why do
you not like it?" That is a bit unfair, because there are
a lot of new emerging Old World producers who are changing their
spots and are starting to think a bit more forward and starting
to understand the need to retail and market their wines accordingly,
but the prevailing attitude in the New World is basically they
are a step ahead of that, a bit more sophisticated when it comes
to the marketing of wines and a bit more sophisticated in terms
of how they deal with the likes of me and Dan, and have had the
greatest success in the last 10 years. That said, it is quite
interesting when you look at the market share stats that the gap
in terms of growth has closed dramatically; the wine market is
now relatively flat. It is flat by volume, up about three or four
percentage points by value; and, if you look at the New World
versus the Old, the total market, the New World has grown about
2% and the Old World is declining about one. So the convergence
rates are really getting close, and in fact I can actually show
you, because you can look at this and see what I mean. I think
this is it in terms of volume. You can see that this is 1990 and
this is 2006, and the dark splodge is New World wine share and
the lighter is Old World wine share. You can see 1990 to 1995
the big splodge is getting bigger, and in fact the last two years—a
bit of an unfair comparison because you go five year, five year,
five year, one year—you can see that there has been some
kind of levelling off. So, in fact, going forward, and certainly
with what we are seeing in terms of our sales, I would not be
surprised if you now see a stabilisation in terms of erosion of
Old World and increased sales of New World. There are some further
dynamics behind that, such as quite a short vintage in Australia—30%
down this year and likely to be tighter again next year as well.
That is my opening position.
Mr Jago: That sums up almost everything I think
there is to say about it. The history of finance, the history
of the hereditary process in terms of farming and agriculture
in the Old World, France and Spain particularly, versus the publicly
funded large corporate activity that has driven the New World
development of wine production, are accountable for a great deal
of the ways in which people have brought product to market. Historically
the Old World has very much felt, as Julian says, that "This
is my product and I expect you to understand it and buy it."
And, as the Beaujolais were famously quoted as saying, it is the
customer who is wrong and not the producer, whereas the New World
very much came at it from an alternative angle and very clearly
said that they were prepared to invest ahead of sales, which is
much more of an FMCG basis for selling products, to introduce
the customer and expose the customer to the product ahead of what
might be a customer's understanding of it. We have seen an increasing
switch of customers' use of wine from what was regarded as a slightly
ethereal, heavy, if you like, snobbish area of interest in investment
and "a cup of tea just as well, does it not, with supper",
to a much more mainstream product, and I think the fact is that
wine is fundamentally an alcohol beverage made from grapes that
works extremely well with food, and customers are beginning to
realise this. We are seeing a transition of younger consumers,
particularly women, from RTDs—ready to drink—or Alcopops
into the rosés of the New World, which are sweet, easy
to understand and easy to drink. Certainly, the New World started
very early by saying, "We will tell you what it is made from
and we will tell you what it tastes like before we tell you anything
else," and the Old World has been very slow to understand
that, yet has also not necessarily managed its historical value
in its brands; but the brands in the Old World are Rioja, Chablis,
Cha®teauneuf du Pape, Margaux, and the brands in the New World
are Lindemanns, Hardys and all the others. But the consumer finds
it easier to understand the way in which FMCG products are marketed
than the very complex way of the traditional market of wine.
Q645 Baroness Miller of Chilthorne Dormer:
Can I ask you how you structure your buying team. At very senior
level, do you have a red buyer and a white buyer? Or do you have
a New World and an Old World buyer, for instance?
Mr Dyer: There are slight differences between
the Sainsburys and the Tesco model but broadly we split up with
buyers looking after various countries. In terms of Sainsburys
what we do is make sure that each buyer, by and large, has Old
and New World representation. That clearly gives a better spread
of work, so you do one vintage in the Northern Hemisphere in October
and you do one vintage in the Southern Hemisphere in February/March,
and make sure that we have five wine buyers and we split up the
world amongst us. So we do not do it by colour and we do not do
it by Northern or Southern hemisphere.
Mr Jago: The model at Tesco is slightly different
in that we have two distinct streams. We have what we call the
product development stream: they are people who go out and find
wines, taste in vineyards, work with producers and growers and
agents to actually develop the product and the packaging. They
will then pass that over to a buying stream. So you have a pair,
and the buying manager will partner the product development manager.
The buyer will then conduct the commercial negotiations, making
sure that the product and the supply chain and the logistics and
all the things that seem to take up 90% of the time, not 10% of
the time, get done efficiently. So we have four on each side,
including currently a Master of Wine who, for nine years, has
been based in Australia for Tesco. We sent Phil Reedman out there
a long, long time ago when we started to see the emergence of
the Australian wine industry and he has been based in Adelaide
for nine years working for us. Interestingly enough, we are dispensing
with that role; Phil has in fact resigned and we will be basing
his replacement back in the UK because the needs, the availability
and the slightly evangelical state of the Australian wine industry
perhaps is maturing.
Q646 Lord Plumb:
It is a very interesting point and I wonder to what extent there
is integration between the grower and yourselves. Do you give
advice, for instance, on possible changes that you see necessary
relating to the grower?
Mr Jago: Yes, we like to. I think particularly
the Australian model is a good one for us where we ship a lot
of our own—label wines in bulk to the UK and bottle them
in the UK, for a number of reasons; but we are very actively involved
in developing the styles and in fact we would be specifying styles,
before the harvest is made, with many of the producers we work
with.
Q647 Lord Plumb:
Is there any financial integration?
Mr Jago: No, not in terms of formal financial
integration of any sort at all, no.
Mr Dyer: By and large producers understand that
we, as retailers, really understand what the UK customer is after
in terms of style and benchmarking. So clearly an extreme example
is own label, where we have direct control over the quality and
style of those blends and work closely with producers on making
those wines, to other wines where we give advice on style and
say, "We think we need more fruit, we need less oak, this
is the kind of style the customer is after" to branded wines
which you buy off the shelf where you have less say in it. But
we try, by and large, to give advice about what we think will
sell in the UK market because generally customer styles do vary
around the world in terms of what some customers might need.
Q648 Chairman:
Is that particularly in relation to New World wines?
Mr Dyer: We tend to have a greater say and involvement
in New World generally because they are much more open and flexible,
but we do adopt that approach where possible in the Old World,
particularly across our own label.
Q649 Viscount Brookeborough:
You mentioned only the UK market. What about your stores in other
countries, Tesco in particular? Is it a very different taste?
Mr Jago: It is enormously different. I am, in
fact, responsible for working with 12—and soon it will be
13—countries, and we have just finished putting to bed our
range for the United States, and it is fundamentally different,
both the styles and flavours that they want from their wines and
the range of wines that they want to have included within their
range. We then compare that with Korea and Thailand and Central
Europe and they are very different in all places, although there
is a rapidly emerging acceptability for New World wines in some
of the more traditional, the maturing wine-drinking markets; so,
if we look at Central Europe where they drink domestic wines,
they are beginning to understand that New World brands are enhancing
to the wine-drinking population.
Q650 Lord Cameron of Dillington:
To some extent you touched on my question. Supermarkets are a
comparatively newcomer to the whole wine market place, but you
are now a huge percentage of it, particularly in this country.
Can you tell me what influence you think you have on wine producers
and what changes you feel that you have made to the way they operate,
their margins, the varieties and so on, both in the Old World
and in the New World?
Mr Dyer: The supermarkets make up between 65
and 70% of UK wine sales, which have been developed really over
15 years. In terms of the way in which we work with our producers,
our sole interest is making sure that we meet our customers' needs
first and foremost, in terms of range, depth, quality and style,
and we will do everything we can to work with producers who understand
that, to get those wines to shelf. There are lots of different
levels in terms of those styles: on the one hand you have base—level
wines, commodity products where you have perhaps more of a relationship
which is not that close, so you might pick wines from different
producers each year to match a certain price point, to core own—label
products, where you are working very closely with those producers
to come up with styles and the quality you want, through to high—end
wine, over £7 to £15 typically, where you are sourcing
wines to add depth, range, authority and choice to the fixture.
And we have a different relationship with all these producers
all the way through the chain. I do not think we try and change
the way they work but clearly those producers who are more proactive
in understanding our needs and aspirations tend to work more closely
with us, particularly if they have the wine quality and the wine
style.
Q651 Lord Cameron of Dillington:
I know from the food perspective that you obviously try to encourage.
So do you make one phone call and you encourage more cooperatives
in the European wine industry who will get together to produce
the wine for you?
Mr Dyer: We would not do that. We do not have
a policy to reduce our supply base, so we are not saying, "Because
you are European producers we do not want to work with 25 producers
in France, we would rather it was two, so therefore you are not
going to grow as much." We, frankly, will work with whom
we need to to develop and put in place the best range of wines
that we feel fill the store. The fact is that in Australia we
have a far smaller supply base and in California we have a far
smaller supply base than we have in lots of Old World countries.
On the one hand, it is a challenge but we are not doing our customers
a service if we say, "Actually we do not want to do that,
so we will have less choice in the ranges in the fixture".
So buying from the Old World tends to be a bit more complex, but
that does not mean that we do not actually try and do our best
to put those products out on the shelf.
Mr Jago: The growth in wine over this period
of time has come about as a result of the supermarkets making
wine more accessible fundamentally—easier to get hold of,
easier to understand—and they have been merchandised in
a way with which customers are familiar. They understand how to
stock a supermarket shelf pretty effectively, and I think it was
really the lead of supermarkets and retailers generally taking
the lead in terms of making wine a hero area—this has created
a customer acceptance and understanding for wine, so we have to
look at it that way around. I think there have been some challenges
recently placed on the supply industry, that they have been rather
slow to develop and innovate compared to the retailers who have
led the increased penetration and consumption of wine over the
last few years. Wine is very much a meritocracy, and I think that
those who are good and work hard and understand the needs of our
customers are the ones who generally succeed in the market place,
and the willingness to learn rather than the willingness to teach
is important in understanding one of the principal separations
between the Old World and the New World.
Q652 Lord Cameron of Dillington:
Would your Continental counterparts be answering these questions
in the same way, in terms of percentage of the market place? We
are big wine buyers in this country, as are other countries, but
I wondered whether the whole market place is different than there?
Mr Dyer: I think it is a bit more democratic
here because we are more catholic in our tastes and we have a
small but growing domestic industry. But largely we as consumers
will pick and choose those products which offer the best value
and meet our needs better than the others, whereas a lot of other
countries in Europe have strong domestic markets and they will
tend to favour those wines accordingly. So, if you walk into the
average French supermarket 90% of the range is French with a very
small sort of forfeit section for stuff that is not from France.
In fact, it is even smaller than that—if you go to a French
supermarket in the Loire, 50% of the range is from the Loire Valley,
30% is from Bordeaux and there might be a four-foot bay from Australia
and South America. So we tend to be quite catholic in our tastes
and, therefore, I think the UK market has been seen in the world
as a good test ground for new products and is one of the most
open markets and one of the most competitive markets. That is
some of the feedback that we get in our dealings around the world.
Mr Jago: Many producers will certainly use the
UK as a proving ground for their products that they do not always
take elsewhere. The analogy used to be that, if it were successful
in the UK, it would then be worth taking to the rest of the world.
Certainly some of our Western European non—wine—producing
neighbours—Scandinavia and Western Europe—watch the
UK market with great interest in terms of understanding what the
next trends will be, because we are regarded as being fairly fast-moving
and innovative.
Q653 Lord Ullswater:
I would like to ask you about the wine consumer because I would
like to know what is your experience of the British consumer when
purchasing wines. You said a moment ago that you had to get to
know the needs of the consumer and I would be interested to know
what your judgment is of the needs of the consumer. You also said
a minute ago that the tastes of consumers in the UK and the USA
were very different, that your offering would be very different
in the two countries. So where does taste lie? And, when Mr Dyer
showed us that bar chart of the introduction of the New World
wines, has that been done by the supermarkets? Have they conditioned
wine consumers' tastes or how has that come about?
Mr Jago: I personally would consider it very
difficult to condition people's tastes with regard to something
that has such a diverse base of styles and characters and colours
and flavours as wine. We regularly canvass our customers, regularly
we talk to them about what they like, what they do not like and
which particular style they like. Every four weeks we run a tasting
panel, which is made up of 140 customers selected at random who
have said they profess an interest and understanding, and they
all come and taste a range of wines and tell us a little about
what they like and what they do not like, and it is very revealing.
Their tastes change with age, particularly, and I think that is
common in that we tend to start sweet and develop more complexity
as we get older. One's disposable income also has a great impact
on what you are prepared to experiment with or what you can afford
to experiment with. I think there is no doubt that retailers have
led a consumer awareness of certain new styles, particularly wines
from California and Australia where we have made them more accessible
in the belief that those styles will be appealing to customers,
and they have responded by buying them in droves, as we have seen.
So I think it is proven that the view that we could lead their
tastes was exploratory but actually the end result is that we
were probably quite right in terms of understanding that people
were looking for something more than the slightly traditional
style of the Old World, as it was considered, and still is considered
to be.
Q654 Lord Ullswater:
Can I continue with this? Does the price or where the wine comes
from have importance to the customer? We were given a small piece
of evidence about somebody who might naturally, for their own
consumption, buy Australian chardonnay but, if they were going
out to dinner, would take a bottle of French wine with them, which
I find rather intriguing.
Mr Jago: It is absolutely true. I came to Tesco
from 15 years of a wine importing and distributing business and
we did a lot of work with the trade. It is very interesting that,
if you have somebody at home who will drink Australian chardonnay,
universally, or Australian Shiraz, when they take a client out
to lunch they will almost certainly choose Chablis and St Emilion.
There is a natural tendency to consider what is right and on special
occasions people undoubtedly trade up and, when they trade up,
they trade back to tradition because there is still this view
that the heart and history of wine is based in the appellations
and DOCs of the Old World. So, yes, what people say and what people
do are always different things in wine, and it makes it a very
complex subject.
Mr Dyer: Just a point to endorse and carry it
on further is that wine is now no longer just about special occasions,
it is about every day consumption. It is that growth of consumers
who by and large come into the New World because they were not
drinking wine before. Ten years ago we were a nation of beer drinkers
and we are now a nation of wine drinkers, and who would have thought
that would ever happen? It is these new styles of wine that they
are after for every day drinking. I agree entirely that, when
it comes to celebrations or entertaining customers, in the main
they do by and large revert to traditional styles of wine, be
it Chablis, Cha®teauneuf. There is also a slight age gap as
well, because it tends to be younger consumers who traditionally—it
is a bit funny, that word—have bought the New World wines
because they are easier to understand, they are labelled more
easily, they are in English, whereas it is the more traditional,
high—end knowledgeable consumers, who tend to be older,
who are happy to experiment and buy some of the Old World wines,
where there is less signposting on the labels.
Mr Jago: I think your age and when you were
introduced to wine is critical in this as well. Generally—and
this is a matter of generalisation—people over the age of
40 started drinking wine with German wine, because it was the
then equivalent of the New World—it was sweeter, it was
easier to access, slightly lower in alcohol, slightly more acceptable
for parents, to introduce their parents that way, or maybe French
wine, or maybe Spanish, if it was red; and those under the age
of 40 in general have been introduced to wine through the New
World—their parents were drinking Australian wine and discovering
that style of wine. It tends to be a fairly indicative style of
where people start their drinking, although it is not indicative
of where they end up, because there is a general view that, as
people become more and more interested in wine and become more
and more exploratory with wine, they work harder into the complex
areas of the Old World than the New World. One of the challenges
that the New World producers face is to create a range of wines
that have complexity and heritage and history, which they do not
have, versus those, for instance, of Bordeaux.
Q655 Lord Ullswater:
Could I make a generalisation, upon which I would like you to
comment? Would people who are going in to buy wine in the supermarket
consider that the price levels indicated quality? That is a complete
generalisation, going on from the Australian chardonnay to the
rather more expensive red wine that they might take out with them
to dinner?
Mr Jago: I think it is fair to say that they
would. It is a fairly complex process of selection when somebody
goes into a store—they start with colour, they then move
through to a series of either country or grape variety; price
and promotion are incredibly important to a lot of customers these
days, and price is one of the defining levels of perceived quality,
although if it is an expensive Cha®teauneuf and it is an expensive
Australian chardonnay there are different levels of understanding
of what quality really means.
Mr Dyer: It is a very daunting fixture, the
wine fixture. If you go into the average store, there are hundreds
of wines, 40 to 50 feet of red and white, and it is daunting.
If you are not a wine expert, where do you start? That is why
price becomes very important because it is one of the guarantors
of quality—the more you pay, the better quality wine. That
is why Press recommendations are very important, because it is
something that stands out on a shelf and says, "This wine
has been recommended by so and so". So recommendation and
price are two of the most important levers there are in terms
of predetermining what the customer will buy.
Q656 Baroness Miller of Chilthorne Dormer:
Can I ask one very short question on that? What, then, was the
message in the Press release from Tesco yesterday about the £100
bottle of wine?
Mr Jago: It was interesting that one, because
actually we have had a £100 bottle of wine in the business
for more than four years, so it was interesting to see what the
Press interpreted on the basis of what the Press release was.
There is a general trend from consumers to spend more on wine
and certainly on less special occasions than they used to. I think
for us the purpose of that message is to say to people, "Your
traditional wine merchant is not the only place where you can
access good wine", and you would expect us to do that. As
in many things, supermarkets have become top-to-bottom suppliers
of products rather than just bottom.
Mr Dyer: If you visit Sainsbury's in Pimlico,
you will find a range of wines above £100!
Q657 Chairman:
I am afraid, as far as I am concerned, they can stay there! Can
I just ask you about labelling? How important is labelling, what
does the customer look for in a label? What does the customer
want on the label? And how does what the customer wants relate
to the EU labelling rules?
Mr Dyer: Labelling is incredibly subjective
and not very objective; some labels work, some labels do not;
there is no rhyme or reason to it. I will give you my anecdote
of what a good label looks like and then I will go into some of
the detail. A good label needs to look like a wine label—not
a lot of them do. A good wine label needs to look more expensive
than you are paying—not a lot of them do. And you need to
be able to read it—not a lot of them do. Generally, those
labels that work well tend to adhere to those three key tenets
and be very simple and very classic. My role model for a brilliant
wine label is the traditional French claret label—a bit
of white, white rectangle with a chateau on it, simple lettering,
it is beautiful. In fact, that model has been adopted by some
New World producers to market their wines, so even if it is a
classic New World label, like Jacob's Creek, it is very simple—a
white background, nice, easy—to—read lettering, looks
classy, looks like it has come from somewhere that is an estate
rather than just a generic appellation and it is a good,
easy—to—understand label. That follows on to what
works well from the New World and the Old World. From the New
World they generally say, "What does the customer want?"
They want to know what is in it, hence the grape variety; they
want to know what it tastes like, and increasingly putting tasting
notes on the back; and they want to be able to read it and look
attractive. By and large Old World labels are predetermined by
wine regulations around what you can and cannot say, so, for example,
a lot of the Old World you cannot say what grape variety is in
it. The classic is what grape variety is in Chablis? It is chardonnay,
but you cannot say that and so it is potentially alienating some
of those customers, and you are more hidebound by what you say
on the label. The New World has genuinely been front foot forward
because they have been able to say, "What does the UK customer
want? Let us label it and accordingly make it as simple as possible."
There are a lot of examples of bad labels from the New World and
there are a lot of examples of great labels from the Old World,
so I think it is a bit of a red herring, this one. But there is
no doubt that putting a grape variety on a label is a massive
bonus, so that is what the New World tends to do, without exception,
be it Californian, South American or Australian wine—grape
variety has a key part to play.
Mr Jago: I think brand recognition is also quite
important. The New World has been particularly good at understanding
that, if your label is diamond-shaped and bright yellow, you can
spot it from 30 feet away; and, when faced by, in some of our
larger stores, 3000 fronts of bottles of wine—say, 1000
wines for three facings of each—you have a lot of wine from
which to find your bottle. If you happen to know that you like
that particular chardonnay, you can go and find it quite easily.
The Old World has not been good at this and, when you look at
the specific regulations regarding size of lettering, the size
of relationships between produce of and appellation, I
think they have been quite restrictive—you are not allowed
to put in Rioja the word "Rioja" any larger than certain
other parts of the brand name. This is quite interesting because
it does restrict what you could do with regards to creating branding.
There is no reason why Chablis should not be in letters two inches
tall on a bottle because that is what a consumer will look for
first and foremost in trying to understand premium wine. I think
there have been very traditional views, particularly within France
based on protectionism, and I think there is a view—and
I am sure we will come on to this if we have time—an understanding
of how the appellation system has both worked and comprehensively
failed to support and protect the members of its community.
Mr Dyer: Just one other point to make, because
it was a good point that Dan made. If you go into a typical New
World fixture, take Australia for example, there are fewer producers
out there; there are four big producers and a few smaller ones,
but there is a lot less choice in terms of producers and brands
as there would be, say, from France. Therefore, when you look
at the fixtures, there is a lot of commonality—Lindemanns,
there are a lot of ranges of wine which look similar; Penfolds,
Jacob's Creek. Go to Californian Gallo, there are huge swathes
of ranges that look similar and stand out and are easy to understand
from a customer's perspective. If you then go to the Old World,
where there are a lot more producers and a lot more choice, no
producer is really having a massive part of the shelf. So therefore
little things just look a bit more messy and a bit less standing
out, and therefore there are less signposting visual clues on
the shelf. I am sure that is a role to play as well in terms of
what a customer, who is not a wine expert, may or may not pick
up.
Q658 Viscount Brookeborough:
I think my main question has been answered, but if I could just
ask you a couple of other questions. First of all, to what extent
does the level of alcohol make a difference in the purchaser's
mind? I think it is right to say that wine has, over the last
15 or 20 years, got generally more alcoholic.
Mr Dyer: It is really interesting this one.
It is not as important as you think. When I joined the wine trade
and joined Sainsburys buying team in the late 90s, alcohol was
quite important and I can remember, on some of our own label wines,
there was one Spanish wine where, due to a vintage being not as
warm, it went down from 14% to 12.5, and the customer letters
we got were amazing, saying, "You have reduced the alcohol,
you are paying less duty, it is an outrage." We had to write
back saying that actually we do not pay less duty and actually
it is to do with the vintage. But there was clear recognition
that alcohol was important. What you see now in fact is a trend
towards lighter styles of wine, fresher styles of wine. If you
look at the huge sales we have of the pink wines from California,
the white Zinfandels and the white Grenaches, these are all about
8.5, 9, 9.5%—not that strong. Increasingly we see customers
writing in and saying, "Actually I would like a wine that
is not as strong," In fact—and it will not be a secret
soon—we are launching a range of own—label wines which
is slightly lower alcohol, around about 10%, because we think
there is a big customer franchise for wines that are not alcoholic,
do not make you feel a bit woozy after a couple of glasses—you
can drink a couple of glasses at lunchtime—but deliver all
the flavour cues you would expect of stronger wines. In fact,
this plays right into the hands of the Old World, where traditionally
they have had lower alcohol levels because some of the viticultural
areas have been cooler, therefore they are getting less sugar
in the grapes and therefore less alcohol in the resultant wines.
So you could argue that that is playing back into the hands of
parts of Europe, particularly Italy and Northern France. So alcohol
is important, but it is not the only thing and I think there is
a trend that we are coming down now with alcohol rather than going
up.
Mr Jago: Certainly when I joined the wine industry
in the late 80s, no one ever looked at the alcohol levels in wine,
it was almost irrelevant, and I think probably legislation then
was not the same as it is now, where it has to appear in front
and centre in terms of legal packaging. But our consumers have
in this instance probably not said to us they want lower alcohol
wines, but we are working extremely hard to lead their taste down
to a more approachable and accessible route for reducing alcohol
levels whilst retaining flavour. In terms of viticulture and vinification
it is quite difficult to make lower alcohol wines; there are strong
EU regulations that prevent people from de-alcoholising wine before
it is brought into the EU, so Australians have had regulations
for many years that says they may not reduce their alcohol via
technology. There are also some of the challenges around what
you can and cannot say. You have heard Julian describe a range
of lower alcohol wines—there are fairly strict regulations
on what you can call low, what you can call lower and what you
can call no, and it tops out at about 2%. So it rather rules out
the ability to be able to say, "This is a lower alcohol wine"
legally on the label if it is 9% rather than 12%.
Q659 Viscount Brookeborough:
I was in Marks & Spencer the other day in Lisburn.
Mr Jago: We have heard of them!
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