Prosecco prices set to rise due to lack of availability at entry point

12 February, 2016

The days of cheap Prosecco could be numbered as the base price has risen by around a quarter in the past year, a leading importer has warned.

Hallgarten Druitt made headlines last year after freezing its prices and said it has been able to repeat the feat on most wines this year, but Prosecco is a notable exception.

Managing director Andrew Bewes told OLN: “Prosecco will hit everyone. The cost of production has risen. The base price has gone up 20%-25%. We will see it moving more in line with the Champagne market.

“There is still some cheap Prosecco lying around, just like New Zealand Sauvignon Blanc, but it won’t last forever. We will see a lack of availability at entry point.”

Bewes believes the prestige section of the Prosecco market will open up and there will soon be a clear gulf between entry-level and the high-end wine.

Prosecco is similar to Pinot Grigio in that there are no big brands – the name Prosecco is a brand itself – but Bewes believes some of the bigger producers’ names will come to the fore, “led by those willing and able to supply the high street”. Bewes said: “There has been a bit of a rebalancing. We did freeze our prices last year. That was well received. The exchange rate largely went in our favour. Just as we were doing our 2016 pricing the pound collapsed. It led to a bit of a quandary, where costs go up, of course. Duty has eased. We have seen a rebalancing.

“Our partners in Australia and New Zealand bent over backwards when their currency was incredibly strong and we have allowed some price rises there and that’s largely been sucked up by exchange rates. The euro is the other way round.

“We have gained on transport. The cost of shipping wine into the UK has reduced along with the oil price. We have held the vast majority of our prices.”

Hallgarten was showing off wines from a diverse range of countries including Japan, India, Greece and Lebanon at its recent London tasting, and a particular highlight was its newly overhauled South African range.

Bewes said it enjoys its role as a niche supplier of a wide range of weird and wonderful wines to the off-trade, but has been working hard to improve its offering of core wines for the independent channel.

He said: “We decided to stop treating the independent sector as an add-on to our restaurant focus and launched a dedicated list and rejigged our pricing strategy to reflect that sector. Independents have been receptive.

“We have a fantastic position, being a marginal player. We have long been used by the independent sector as an obliging partner to supply a large number of wines in smaller volumes. Where we haven’t tuned into changing needs of independents is on core wines, where we are so good in the on-trade. We need to move from jam only to a bit of bread and butter.

“To give the best prices you need to have economy of scale and that largely boils down to cost of delivery and fulfilment.”

He added: “We have had a good year with supermarkets. Our position with grocers is similar to our position with the independents. We provide niche products and we aren’t really involved at the more acute end of the market with high volumes and low margins. A lot of rationalisation has been at the volume end.

“But we are also seeing a dumbing down at the upper end, which is tough to watch. We passionately believe that the only reason for us being here is exciting consumers, and that happens with wine between £8-£20.

“The shelf space for that has diminished and that’s why independents are coming to the fore. It’s very difficult to sell boutique, high-end products without that hand sell. The advantage an independent has is the equivalent of a restaurant with a sommelier. “They can stick their neck out and say, ‘try this – it’s fantastic’. The independent retail section is really exciting and I would hope it’s in for more growth.

“Like every sector it contains the good, the bad and the ugly. After the failure of First Quench some have reappeared and transformed themselves into genuine specialists and others have continued with a basic range or a c-store range. Our interest is on the specialist end of the market.”

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