After hailing 2024 as a “year of growth”, October’s UK budget served a hammer blow to the country’s fledgling wine industry.
Trade body WineGB’s requests for a duty cut were ignored, as were calls for cellar-door tax relief.
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Instead, the recently elected Labour government said it would continue with a contentious ABV-based tax system and announced changes to agricultural inheritance tax relief that could hit family-run vineyards.
“There’s no new wine region which has managed to establish without having significant government investment,” WineGB CEO Nicola Bates tells Just Drinks. “The UK is still one of the few wine-producing countries in Europe that levies excise duty on homegrown and -produced products.
“We’ve had a harvest which wasn’t as good as 2023, consumer confidence remains low and therefore we’re facing an environment where we’ve had more costs from government coming from the Budget, consumers who love our wines but aren’t necessarily as well placed to buy them at the moment and a scenario where we’re just not necessarily seeing the [government] spend come through just yet.”
With such striking headwinds, can English winemakers hope to grow beyond their current niche?
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By GlobalDataSales out of whack with interest
Both the production and sales of English wine are growing – an impressive feat when you consider the world’s vineyard surface area, production and consumption continue to decline – albeit from a much smaller base than established regions.
But sales of English wine aren’t keeping up with plantings, leading to some concern around oversupplies in the years to come.
In 2023, production rose 77% to 162,000 hectolitres compared to 2022, while sales rose 10% to 8.8 million bottles, according to data from WineGB’s 2024 industry survey of English and Welsh wine.
WineGB’s Bates says the term oversupply “dramatises” the situation but supply levels emphasise the “fundamental” need for continued growth in the industry.
Martin McGowan, trade sales director at Ridgeview Wine Estate, says “bumps along the way” are par for the course in the next few years and is not concerned about demand for English wine longer term.
What is relatively consistent is that the rate-of-sale performance is behind the hype
Martin McGowan, Ridgeview Wine Estate
He admits there is a disconnect between excitement in the trade and consumer demand at present, though.
“I've not had a conversation with any buyer that isn't interested in English wine to a degree but what is relatively consistent is that the rate-of-sale performance is behind the hype,” he adds. “I just don't think enough consumers know about it.”
Last year, Sussex-based Ridgeview hired an executive team (including McGowan) to grow the business following several years of investment in production and storage, which meant the winery had more wine than demand. It now produces around 500,000 bottles a year.
Of his strategy for growth, McGowan says: “We will focus on quality distribution and increasing the premium rate of sale at the right point of purchase.
“There is no KPI in our business that will set distribution targets. I'd rather have ten new sites selling thousands of bottles each, rather than 100 doing ten to 50 bottles.”
For Denbies Wine Estate in Surrey, the industry’s reliance on one type of product is “a bit of a vulnerability” for the long term.
Only around a third of Denbies’ wine volumes are sparkling and CEO Chris White says: “I've already seen some [other] suppliers are shifting their production towards still [wine].”
Does the potential for oversupplies concern him? “If I were just in the external market, I would be concerned,” he says. “Because there's going to be margin erosion there, especially at a time when cost of production is going up. But because of our strategy, I am less concerned.”
Could Prosecco styles shift volumes?
Others are looking to cheaper methods of producing sparkling wine to provide an alternative, more affordable offering – take Fitz, the tank-method brand launched in 2016.
“We are bigger drinkers in the UK for Prosecco than we are Champagne, so, you're right; I think there's market for it,” says White.
These alternatives formed around 7% of production from the 2024 harvest, though Bates says regulatory proposals in the UK could “undercut our market before it really gets going”. Proposed changes, part of a consultation announced last year, would allow the carbonation of bulk, imported wine in-market, with the exclusion of traditional method.
However, Bates adds: “We do not expect that we're ever going to be bulk-buy. We do not have the yields at this point. But we are certainly competitive in lots of other ways and provide a story and locality which no one else can match overseas.”
Denbies has played with “easy drinking” styles of traditional-method sparkling, which spend less time on lees and don’t use the Champagne varieties. White says its non-traditional – and cheaper – sparklings are now its best sellers.
Most point out alternative-method wines must be marketed carefully, so as not to cannibalise traditional method, or confuse shoppers.
Some, including Ridgeview, are strictly focused on higher-end traditional-method wine and maintaining quality over quantity – but does that not exclude a significant commercial opportunity?
“Yes, it absolutely does,” McGowan says. “The market will always be hungry for a cheaper alternative to a premium product.”
One benefit of Ridgeview being a family-owned business is “the values of the business supersede some of the commercial opportunities in the short term”, he says. He points out “the really valuable Champagne houses” also focus entirely on traditional-method wines.
Winning shelf space
Domestic retail sales form the majority – around 36% – of English and Welsh wine sales volumes but winning shelf space is a tough gig.
“If you're going to do business with the supermarkets, there's only going to be so long that they'll work with you because you're local,” McGowan says.
Off-trade forms 50% of Ridgeview’s sales and McGowan emphasises “you have to put forward great commercial cases” to win shelf space over the likes of Champagne or Prosecco.
“It has to be a category consideration. And I think this is where it's important that people in English wine operate at an excellent level that is on par with other FMCG companies because, if we can't sit in a room and hold a conversation that gives them confidence, then other people can,” he says.
McGowan is positive English wine is a solid commercial fit for the off-trade. “The narrative around all of the supermarkets is largely the same in the US, Australia, Scandinavia…” he says. “There is an interest to innovate and that's an exciting time for English wine.”
Ridgeview also produces own-label wines for UK retailers including Waitrose, which accounts for around half of production. McGowan says this business model “can help establish stronger relationships with partners who sell our branded wine”.
At Chapel Down, off-trade sales plummeted 36% in the first half of 2024 to £3.1m ($3.9m), which the winery put down to “supermarket restocking” and a skewed comparison to 2023 when the UK celebrated the King’s coronation.
But outgoing CEO Andrew Carter says sales “rebounded” in the second half and insists underlying consumer demand remains strong. He says the off-trade will “absolutely” remain the winery’s largest sales channel looking forward.
“The reason our penetration is 16% of households is because they're coming into the supermarket to buy, quite simply,” he says.
On-trade led by ‘quintessentially British’ accounts
In the UK on-trade, shelf space has been easier to win in “quintessentially-British, premium establishments” such as hotels and spas that will “support English wine above Champagne”, McGowan says.
While these listings get sales teams “really excited”, they are an exception in a highly competitive market.
McGowan is now looking at cruise ships, an “untapped” opportunity within the travel sector, and private-members’ clubs, where customers are “open to trialling and like new ideas”.
Carter at Chapel Down says there is a “long runway” of on-trade outlets willing to stock English wine – noting a recent trickle in interest from “top-end on-trade” to “more premium mainstream bars and restaurants” like Greene King and Mitchells & Butlers.
Selling direct
Tourism and cellar-door sales remain a crucial income stream for English wineries, but Bates says producers are “bringing a knife to a gunfight” when it comes to advertising.
“The spend which we put on consumer advertising is incredibly small as a country for tourism per se, let alone us within that,” she says. “That's why we need to have support from government to get that exposure, and that's not happening.”
Few have invested quite so heavily in their tourism offering as Denbies. “The majority of the wine that we sell is D2C, which is quite unique in the industry,” says White. “We've done that by bringing as many people to the site as possible.”
The Surrey-based winery has around 450,000 visitors a year. Alongside the usual tours and tastings, it has a hotel, four restaurants, a farm shop, a garden centre, a health and wellbeing centre and an exhibition space. Other local businesses are also set up on site, including coffee-roastery Chimney Fire Coffee and bicycle-rental company Just Pedal.
When you sell wines directly, you have the ability to massage your prices or discounts
Chris White, Denbies Wine Estate
For White, this diversification is crucial to long-term profitability. Denbies' D2C sales form around 50% of volume sales but closer to 60% in value terms.
“When you sell wines directly, you have the ability to massage your prices or discounts, which you can't do when you're selling to the trade,” White says. “They want the same price and the same wine year on year, which is quite challenging when you get variances of supply.”
Denbies is “continuously reinventing and expanding the offering” to encourage people to return and expand its target market. “It's expensive and we have to be quite aggressive but it's something that we’ve been doing for the last 30-odd years,” White says.
“When there is a day that I don't feel like we can do anything else here on-site, that’s the day that I feel I'm no longer of any use to the business.”
Expanding in export
While English wine is gaining traction in the UK, its presence abroad remains minimal.
Exports only formed 8% of sales in 2023, though this was up four percentage points on 2022, according to WineGB.
Bates says “people are turning their attention to us” but capitalising on interest quickly is important to turn curiosity into long-term contracts. “You don't get to be a trend for a very long time,” she adds.
WineGB is putting a chunk of resources into supporting exports, attending international exhibitions and tastings, working with foreign embassies and presenting the wines at smaller events like dinners.
“That's how they did it in the New World and, if it was successful for them, we can apply that same methodology here,” Bates says. “We have a huge advantage being an incredibly well-networked wine-distributing region.”
Norway is the country’s largest overseas market, followed by Japan and the US. Both Chapel Down and Ridgeview are focusing hard on the US – though Bates says the potential trade tariffs when Donald Trump takes power “could potentially be quite prohibitive”.
“It doesn't mean you wouldn't do the US, because the scale of opportunity is by far and away the greatest,” Carter says. “You just need to build brand and build investment behind that.”
I wouldn’t take [the lack of sales] as equalling not a lot of interest. There's huge interest in English wine
Andrew Carter, Chapel Down
Looking forward, Bates touts Canada as a “huge opportunity through the different boards”, following English wine’s success in the Scandinavian monopolies. But she says market-access problems in Canada, particularly around sending samples, need tackling first.
While export provides an “exciting” opportunity, Ridgeview's McGowan says it will take years before it starts to soak up huge volumes of wine. “I don't think export is going to be the answer to any of the excess supply over the next three to four years,” he adds.
In the short term, the greatest opportunity for English wine remains in the domestic market but winemakers are stoically confident in the industry’s long-term growth potential at home and abroad. Carter, who led an aborted bid to sell Chapel Down last year, says: “I wouldn't take [the lack of sale] as equalling not a lot of interest. There's huge interest in English wine.”
“There is a huge consumer interest,” echoes Bates. “We have taken market share that's principally coming from Champagne.
“If we can maintain that level of momentum going forward, you see a thriving industry which is able to take advantage of that appetite. But we need to keep telling that story to consumers.”
