What will 2023 hold for the drinks industry? Expert insights - part 2
What are the biggest challenges facing the trade in 2023 and how are we going to address them? Lucy Britner talks to key industry players
STAFFING & INVESTMENT
Matt Tipping, chief executive, Jeroboams
Cost inflation and slowing consumer confi dence is not a good combination for any business and I think it’s clear we are going to have to work hard for every sale in 2023.
The factors which have led to the well-publicised staff shortages within sectors of the UK won’t disappear this year, but I do feel they will improve. My belief is those companies that improve recruitment and retention in 2023 are likely to be the ones that have a successful year.
Against this background it would be completely understandable for any business leader to be feeling pessimistic. I certainly have my moments but, ultimately, I’m feeling pretty upbeat.
Our business has performed well over the past few years. Have the factors which led to that success suddenly disappeared? Absolutely not. Our shops are still located within London’s “village” communities where customers like to shop locally. They still enjoy the wines we sell, they still enjoy interacting with our teams and they still enjoy the experience we offer.
We opened a new shop in Wimbledon Village in early December and we are looking at further sites. So investment continues, but cautiously and with an eye on ensuring we future-proof against higher operating costs in our assumptions.
Economic factors are cyclical, and we need to find the balance between adapting to the current environment and continuing to make decisions that focus on long-term success. That’s undoubtedly easier to say than to do, but at least those decisions are within our control.
Hannah Webster, grocery commercial director, Bibendum Off Trade
One of the biggest challenges we face as a wine business is climate change. From warming to wildfires destroying harvests, extreme weather is disrupting winemaking across the globe.
A difficult 2021 harvest for northern France and wildfi res in Napa are just some recent examples. This has been intensified by supply chain issues caused by the pandemic and the impact of rising energy costs on production and packaging.
At Bibendum Off Trade, we have responded in three ways. First, to ensure shopper value remains, we look to offer value and quality where shortages may not fulfil shopper demand. Both Graham Beck and Ferrari have been a huge focus for us in the sparkling category as traditional method alternatives to Champagne. Graham Beck has grown over 100% by value in two years and Ferrari is now stocked in two major grocers.
Second, we support the most sustainable producers who take a long-term view on investing to protect their businesses from climate change. We are seeing some wonderful innovation in our supply base, where our producers are investing in best practice in soil management and vineyard management to protect their vineyards from extremities of weather.
Third, we continue to work with qualitative suppliers to bring invested, sustainable brands to market, offering true value to shoppers and showcasing brands that are worth paying more for.
Ed Baker, managing director, Kingsland Drinks
The impact of climate change is vast but there are two clear factors: unpredictability, which is stifl ing the industry’s ability to forecast and plan; and reliability, as the extremes we’re experiencing change typical characteristics wine regions work hard to maintain. The repercussions of climate change are here to stay.
Sadly, wildfires are inevitable based on previous years, and it’s a given that earlier harvests, higher yields, and diff erent flavour profiles will be key themes in 2023 and beyond. As a result, if temperatures continue to soar, the industry will look towards cooler climates.
In real terms, this could be a shift from mainland Australia to Tasmania, or from Burgundy to England. We can certainly expect this to be the case across the board as the industry is forced to look at more heat-tolerant grape varieties.
The consequences will be felt – if they are not already – right through the supply chain, ultimately driving cost increases which inevitably cut into margin and get passed on to the consumer.
When wine reaches the consumer, the question is will they accept the changes the industry has had to make? For example, will they take a wine from Tasmania versus Australia, or England versus Burgundy, and, critically, can we deliver at the right price?
The flipside of all this is that hot weather brings less disease and, in theory, fewer pesticides. It’s a benefit, certainly, but it doesn’t mean it’ll automatically fuel an easier conversion to organic wine. It’s more complex than that.
Kingsland was the first UK company to bring wine into the country in bulk fl exi-containers, a method that is now industry standard. We pack around 120 million litres per year, so it represents an enormous carbon saving versus bottled-at-source products, estimated at around 40% less CO2 per bottle.
Also, as part of Thirsty Earth, we’ve implemented a sustainability questionnaire for all suppliers. It helps us work with them to ensure our supply base is as sustainable as possible or, at the very least, encourages them to take steps towards building a better drinks industry.
Paul Beavis, chief executive, Wild Idol
This year some key issues will affect the industry, including environmental, economic and social.
Within environmental vineyard activity, to get better quality grapes, there is a constant need for development. Implementing processes that heighten a vineyard’s efficiency can, in turn, help to reduce negative ramifications.
For example, drones can help give vineyard managers a more detailed overview of their sites, which allows potential issues to be addressed much quicker.
Renewable energy for machinery: more accessible, less expensive methods to cut emissions. In addition, developing harder wearing rootstocks which can sustain high variations in temperature changes. These together could help reduce the overall impact.
Packaging and distribution: the development of cans and boxed wine packaging is a step in the right direction. However, using the most environmentally friendly glass producers would support cutting energy costs.
Economic: the industry as a whole needs to accept that costs need to be shared, but this should not reduce the quality of the product and producers shouldn’t cut corners in order to absorb the inevitably higher costs.
Social: a positive effect within the social realm will be achievable through not cutting corners, helping to protect labour staff at the vineyards, ensuring there is a fair correlation between what people pay, the quality of the product and the effects on the workers.