U.S. Wine Exporters Cheer Expanding U.K. Market

In a market long dominated by French and German wines, U.S. wine exporters now ride the wave of shifting consumption trends to boost their sales. In 1995, UK imports of U.S. still wine increased by 30 percent over calendar year 1994. And the success story continues, as 1996 imports were up 50 percent over 1995 to total 273,000 hectoliters. (One hectoliter is equal to 100 liters.)

While wine sales increased in the United Kingdom from 1984 to 1994, overall alcohol consumption declined 4 percent. During this 10-year period, beer consumption dropped by 10 percent; spirit consumption fell 3 percent.

The British, who follow a worldwide trend toward a healthier lifestyle, regard wine as an important accompaniment to good food. Their increasing yen for wine coincides with a decline in the demand for beer and spirits.

U.S. vintners aim to please an increasingly knowledgeable U.K. wine customer--a discerning consumer with an educated wine palate who expects quality at a very reasonable price.

Wine drinkers tend to be in the 35-49 age group and in the middle to upper-middle socio-economic classes. White wines are the most popular. Generally, men and older consumers have a penchant for reds over whites; women prefer whites and rosés.

Sophisticated wine customers looking to explore unfamiliar tastes are prepared to try new varieties. In this arena, buyers report that Zinfandel could present an excellent promotional opportunity.

For many years, European Union (EU) wines have controlled the U.K. wine market, where they enjoy a tariff-free advantage over non-EU wines. Only within the last decade has the surge of good quality, price-competitive wines from the "New World" eroded this established relationship.

French wine still holds a substantial market share--although down from 35 percent in 1994 to 32 percent in 1995. Germany's market share fell from 17 percent in 1994 to 15 percent in 1995.

Excellent quality, competitive pricing and favorable exchange rates have enabled non-EU exporters to make a substantial dent in the EU market share. The U.K. market promises further gains for U.S. winemakers as British consumers continue to savor the abundance of the world's wines.

At the lower end of the market, Bulgarian wines continue to sell well. South Africa's improved political climate was reflected in its good performance--market share jumped threefold, from 1 percent in 1992 to 4 percent in 1995, with higher sales figures expected.

Weather adversely affected harvests in Australia, Italy and Spain in 1994 and 1995, but these are temporary setbacks. Australia experienced a record crush for its 1996 vintage, and U.K. imports from Australia for calendar year 1996 were even better than predicted, at 676,l00 hectoliters.

Spain is recovering from its drought and expects improvements in its product quality.

Chile provides U.S. wine exporters with the greatest competition. Chilean exports to the United Kingdom doubled in 1995 after a large-scale promotion of Chilean wines that sold for about $5.00 per bottle. Their wines now sell from about $5.50 to a little over $7.00 per bottle, close to the U.S. price bracket.

U.S. wines have the most difficulty competing in the lower price range. The British customer expects a good-quality wine within the $5.50-$8.50 price range. The shelf price of a 75-centiliter bottle of California wine averages just over $7 in the U.K. marketplace.

As Chile and South Africa proceed with plans to increase substantially their acreage devoted to wine grapes, the resulting increase in wine supplies will mean more competition for U.S. wineries.

To ensure ease in entering the U.K. market, exporters must adhere to regulatory requirements. Market access may be denied or shipments held in storage until all requirements are satisfied.

Some forms are mandatory. A VI 1 form confirms the size and nature of the wine consignment that must accompany each shipment. The EU Commission Regulation (EC) 3590/85 (OJ L343), as amended, describes the provisions of the form.

Additionally, a T-form (transit document) is issued when the wine enters the EU; this establishes entitlement to EU rates of duty.

Exporters shipping over 3,000 liters per consignment must also obtain an Intervention Board for Agricultural Produce (IBAP) CAP Import License, available through a U.K. importer.

At this time, customs (import) duty averages about $21 per dozen bottles and excise duty averages just under $2 per dozen bottles. Sparkling wine rates are somewhat higher. Rates are also affected by the alcohol strength of the wine, container size and wine type. In the future, as the World Trade Organization (WTO) brings duties down, exporters will find their wines more competitive.

Keep in mind that wine retail price includes a value-added tax, now at 17.5 percent, and an excise duty. The excise duty rate is applied as follows:

Wine must conform in description and presentation to EU regulations in the Council Regulation (EC) 2392/89 (OJ L232) as amended, and 3201/90 (L309), as amended. Certain other composition requirements must also be met.

The time-honored approach for foreign suppliers to gain access to the U.K. wine market is through an agent. Look for one who has contacts throughout the marketplace and who can help guide you through the labyrinth of regulatory and financial issues.

Two versions of still wine are sold in the United Kingdom. Fresh grape wine is pressed and bottled in the country of origin. Made wines consist of imported pressed grapes--called "must" in the trade--which is blended with other varieties (usually lower quality) and made into wine in-country.

Head of Wines Branch
Food and Drink Industry
Division C
Contact: Martyn J. Ibbotson
Ministry of Agriculture, Fisheries and Food
Whitehall Place (East Block)
Whitehall
London SW1A 2HH
United Kingdom
Tel: 011-44-171-270-8243
Fax: 011-44-171-270-8733

Wine Standards Board of the Vintners' Company
Contact: CMDR J. M. Findlay, Secretary
Five Kings House
1 Queen Street Place
London EC4R 1QS
United Kingdom
Tel: 011-44-171-236-9512

For a copy of the complete market report from which this article was prepared, contact:

Wilson is an agricultural marketing specialist with the FAS Office of Agricultural Affairs at the U.S. Embassy in London. Tel. (011-44-171) 408-8063; fax (011-44-171) 409-2019. E-mail: AgLondon_PO@fas.usda.gov.

*Still Wine*	*$/Hectoliter*
From 5.5 through 15 percent alcohol	236.87

*Fortified and Other Wines*
Over 15 to 22 percent Over 22 percent	364.40 440.43