“Luxury wine” is one of the most abused, and ambiguous, terms employed by the drinks industry. Everyone claims to sell it, nobody is exactly sure what it is, and consumers aren’t always convinced that they’ve found it, even when they’ve been assured that’s what they’re drinking.
We’re not talking here about the rarefied First Growths of Bordeaux, whose prices have risen into the stratosphere. Instead, we’re more concerned with the upscale wines available to all of us: wines which we purchase for celebrations, to impress our guests, to offer as gifts, or as a personal indulgence.
That edges us closer to a definition of luxury wine, but it’s still not close enough.
There are consumers who can afford to spend £15 on a midweek wine, which they will drink without ceremony in front of the TV. There are also, as we all know, wines that retail for £7 that may offer far more pleasure than something at twice the price.
But there’s no doubt that price is a factor in our definition of luxury wine. Wine Intelligence’s consumer research on this subject set the bar at £10 – not because we assume that all wine above that price is special, but because it provides a meaningful starting point. Did we set our sights too low? Some might argue that we did, but considering that the current average retail price for wine in the UK is around £4.32, and only a small proportion of wine is sold beyond the £7 mark, we’d argue we’re simply being realistic.
Ten pounds is even a decent price in the independent sector, where specialist retailers can hand-sell wines to a generally more knowledgeable clientele. A study of 100 such retailers carried out by Off Licence News this year found their average selling price was £8.96, and only 26% of wines in the sector were sold for £10 or more.
When we spoke to regular wine drinkers, in the UK as well as around the world, we were scrupulous to ensure our own preconceptions about luxury wine were not brought to the table. We wanted to know what they consider to be luxury wine: what attributes they expect to find when they buy a wine at more than twice the price of the market average. As chief executive Lulie Halstead put it: “If we’re to define what luxury wine is, the industry shouldn’t be listening to itself.”
Heritage is the most important factor, it emerged. Consumers expect that luxury wine should have a history to it, but also a sense of place: provenance is the number two influence. That might mean Bordeaux or Burgundy, and for many consumers it certainly does. But the world is opening up. Speaking at Fine Wine 2010 in Ribera del Duero – a major international conference organised by Wine Intelligence – Tim Atkin MW used his keynote speech to declare that “Fine wine can come from anywhere”, thanks to improvements in quality in every continent.
The research showed that the next most important considerations are the hand-crafted credentials of the wine; its critical acclaim (which is where the likes of Robert Parker have a role to play); its family history; and finally its rarity factor and the ethics of the producer.
But there were other conclusions to draw – not about the qualities of the wine we were discussing, but to do with consumers themselves. Because not all luxury wine drinkers are the same.
The people who buy luxury wine most regularly – those on high incomes with a keen interest in the category – account for 60% of the value, but only 12% of the consumer base. They’re easily outnumbered by the occasional buyers – consumers who may be just as involved with wine, but typically don’t have the spare cash to delve into the luxury wine fixture more than once or twice a year.
The UK wine industry has been talking for many years – mostly among itself – about the need for premiumisation, and how it will persuade consumers to pay more for better quality wine. The recession and the three-for-£10 fetish put that conversation on hold.
But with recovery on the way, and most producing countries recognising that price points are on the move anyway thanks to currency and excise issues, the focus is once again on the upper end of the market. For some, the above-£10 segment will be the icing on the cake. For others, it may be the only path to profitability in the competitive UK marketplace.
Wine Intelligence’s full findings on Luxury wine in the UK is available as a free bonus report when subscribing to Vinsub before 31st August.
Tags: Fine Wine, luxury wine, Vinisub
