Why the Tesco story is part of a bigger UK retailing picture

Following today's news that the Serious Fraud Office (SFO) is moving in on the Tesco £263m auditing 'black hole', I suspect that several people I know and like will be feeling quite apprehensive at the prospect of some serious official questioning. There is something in this story - from what has emerged so far - that's rather reminiscent of the scandal that surrounded the British parliamentary expenses system a few years ago. But the numbers are, of course, bigger this time. 

In both cases, a group of people knew at least part of what was going on - and knew that others in the loop knew - but no one was talking. In the Westminster scandal, members of parliament annually pocketed thousands of pounds to cover payments for which they were absolutely not eligible. This is precisely what Tesco is accused of doing: asking suppliers for money that should only have been payable if sales of their products had been greater than they actually were. In technical terms, the accusation is that the retailer was 'bringing forward rebates': or, as an accountant might say 'claiming profits that have not yet been made'. Which sounds to me rather like the classic Israeli military term, 'pre-emptive retaliation'. 

Getting sales projections wrong is not very difficult; quite the reverse. But at Tesco, it looks as though it was happening on an industrial scale, and over several years. Profits are believed to have been overstated by £118m in the first half of 2014, by £70m in the 2013-2014 financial year and by £75m prior to that. Given the limited number of suppliers big enough to make these kinds of payments and with whom supermarkets have close relationships, it is more than likely that the retailer will have made a number of visits to the same well. (Wine-focused readers should note that as I mentioned previously, it is very likely that wine suppliers will only have been contributing in the same way - and at relatively smaller levels - as much bigger companies such as Coca Cola, Unilever and Procter & Gamble).

The SFO investigation will take a long while: the numbers are big and the stakes high. But while the wheels grind small and slow, there are bound to be increasing discussions over the nature and desirability of the 'commercial income' that lies at the heart of this saga. Some readers of own little piece may have gained the impression that I prefer the German discounter model of net sales in which the payments only ever go from retailer to supplier and not vice versa.

Far from it. In fact, I entirely understand the logic of suppliers contributing to retailers financially in the context of a strategy to build sales - and ultimately profitability - of a brand. 

The Tesco Wine Fairs are a brilliant example of how this can work at its best, with thousands of consumers being introduced to new and unfamiliar products and potentially being turned not only into customers but also unpaid brand ambassadors. Tesco's extraordinarily widely distributed wine magazine is another useful role model for others to follow. Efforts like these should be at the heart of the Joint Business Plans (JBPs) about which so much has been heard.

The JBP sounds like a very good idea. What's not to like? Well, actually, as several respondents to the piece have made clear, rather a lot. First, it naturally favours the trend towards small numbers of big retailers trading with small numbers of big suppliers. A JBP makes no sense when applied to smaller producers and importers. As Angela Mount, former wine buyer at the now-closed UK retailer Somerfield said in a recent Harpers piece, she was almost obliged to work with companies with the "most lucrative promotional strategies and marketing money". Her employers told her to "Get the brands listed who are going to give us money..."

Second, even when signed between grown ups, a JBP can be a very unequal arrangement.

In theory, the plan is supposed to represent a strategy that suits both sides of the equation.The supplier agrees a price at which they are happy to sell their wine and the retailer calculates the retail prices that give them the margins they require. If all goes well, the wine sells at the predicted rate and price and everybody is delighted. If all goes very well, the supplier will be super-delighted to share some of his extra income with the retailer who facilitated it.

Unfortunately, all does not always go well. The retailer has the power to change those retail prices as and when they please. And for whatever reason. Obviously, this might be because of the wine enjoying a slower than planned rate of sale. On the other hand, it might actually be flying off the shelves, but this very popularity might lead the retailer to want to offer it to their customers as an attractive bargain.

Obviously, reducing the price reduces the retailer margin, allowing it to reclaim its lost profit from the supplier as a rebate. These are the kinds of occasions when Mount might have had to make an uncomfortable call: "I know we did that deal but I now need another £15,000 from you."

In other words, rather like the UK being fined by the EU for having the fastest-recovering economy in Europe, wine producers can be penalised by their customers for making a product consumers enjoy drinking and believe to be good value. Suppliers can of course walk away from the table when the play gets too rough, but the world is full of wine and plenty of companies ready to adapt their modus operandi to the UK model. Like a Victorian schoolboy who keeps a book ready to stick down the back of his trousers in case of a beating from the teacher, they hold a cash reserve with which to fund retailers' unexpected calls for cash.

The point to be stressed is that nothing I have just described necessarily fits into the remit of the SFO enquiry. In other words, as long as the retailer keeps its accounts correctly, it will be breaking no rules. Whether this is all a Good Thing is a matter of opinion.

Pontet Canet or Francois Hollande? Which do you respect?

Picture from the Independent

Francois Hollande is currently le Président de la République Française. He enjoys an approval rating of 13%. His illustrious title doesn't seem to be doing him much good. People are judging him by what they see.

From Decanter

The 2012 vintage of Les Hauts de Pontet, Château Pontet Canet's second label has just lost its AOC/AOP status. My guess is that the wine world will take the same view as French voters: their opinion of the wine and chateau will be unaffected by its supposed official status. Sensible buyers will pick up Les Hauts de Pontet in preference to a swathe of dull, often horribly brettanomyces-tainted Bordeaux that happily flaunt an officially sanctioned Appellation on their labels.

The belated creation of the Vin de France designation - which this wine will now proudly and unworriedly carry - was against the will of almost the entire French wine establishment. It was begrudgingly allowed in order to market basic, multi-regional plonk to stupid Anglo Saxons as a competitor to commercial wines from South-East Australia.

Today, as happened in Italy with the move towards Vino da Tavola in the 1980s, the designation is increasingly being adopted by quality-conscious producers who feel stifled by the  existing system.

Down the road from Pontet Canet, Chateaux La Lagune and Palmer have both recently launched high quality and well-received transgressive Rhône-Bordeaux blends with a Vin de France status. Those wines - and the 2012 Hauts de Pontet, will probably be enjoyed and remembered long after François Hollande has been more or less forgotten.

                 

Tesco: the giant canary in the mine

'Commercial income' like 'collateral damage' is one of those attractively anodyne expressions that hides a decidedly unpleasant reality. In the UK, even some of the most sophisticated members of the business community have only just been introduced to this term that neatly covers all the cash that retailers extract from their suppliers rather than from the more expected source: their customers. 

In the US, where accounts have to reveal the origin of how businesses make their money, the credit rating agency Fitch suggests that almost all of retailers' profits - 8% of the cost of goods - now come directly from suppliers. The UK situation may be even more dramatic. If chartered accountant Duncan Smith of Moore Stephens Food Advisory Group's comments in this BBC piece are to be believed, the big four British supermarkets make £5bn in this way every year - more than their total combined pre-tax profits.

Although the reasons for doing so just now are glaringly obvious, it is far too easy to focus all of our attention on Tesco. Yes, from what we have read, there seems to be little question that Britain's biggest chain played fast and loose with the facts of if and when supplier contributions would be made, but if we set the timings aside, Tesco was far from the only attendee at this orgy. Waitrose, every middle class Brit's favourite shop (when they aren't slumming it at Lidl), also has a price list from which suppliers can choose how to make their contributions and so, apart from the pesky German discounters, does almost everybody else. 

The commercial income Tesco will have got from its Beer, Wine & Spirits department will have been significant, but readers of this article will probably somewhat overestimate the contribution derived from wine companies to the gaping hole in the retailer's projections. To provide some context, the total value of UK retail wine sales is only around twice the £2.8bn spent on cheese in 2014. However, when it comes to providing commercial income, wine will have significantly overperformed when compared to those dairy counters. Cheese is essentially unbranded; half of what we eat is cheddar of some kind, much of it sold under the retailer's own brand and bought from a small number of suppliers. So there aren't as many arms to twist. 

Wine companies in the UK have peculiarly twistable arms, given the relative impossibility of building substantial sales for a brand without passing through the shelves of the big retail chains that control around three quarters of the market. Volumes can be moved through the German discounters, but at low margins and usually under those discounters' own labels. By contrast, the more fragmented nature of the US market - and its size - allow producers who so desire, to sidestep the biggest chains altogether. 

And this is where the most important difference between the markets comes into play. In the US, wine companies have the potential to run their own marketing campaigns and to build and sustain the value of their brands. Under the UK system, they are hit with a double whammy: almost every penny of spare cash is sucked up by retailers who then regularly reduce perceived brand value by cyclical deep discounting. (Heavy price cuts are a feature of the US market too but they are less regular and predictable; when you see a product at a low price, you are more likely to grab it now for fear of never catching that bargain again). A very few, very strong, global brands such as Hardy's and Concha y Toro can buck this trend and run effective campaigns of their own, but they are the glaring exceptions to the rule.

The days when Masters of Wine travelled the world cleverly snapping up bargains wherever they found them are long gone. Today, every sale involves negotiators and quite possibly notorious Joint Business Plans which have much in common with the old days when teachers administering beatings straightfacedly told their unfortunate victims that "This will hurt me more than it hurts you". 

This may not have made the UK a particularly pleasant environment to work in - at least for suppliers who complain about having to deal with serial unexpected requests for additional cash - but, until recently, it seemed to work pretty well for anyone holding shares in the biggest chains. (And, let's face it, there are plenty of shareholders in other sectors who lose little sleep over the contributions supplier-abuse make to their dividends).

But the climate in Britain may really be changing. There are farmer-friendly parliamentarians who had a nibble at this issue a couple of years ago and seem ready to take a much deeper bite this time, and German role models who daily demonstrate that there is another way to play the retail game. A fresh parliamentary enquiry would have no reason to limit its interest to Tesco.

Quite how easy it would be for an entire national retail system to alter its diet, however, is another question...

In praise of hobbyhorses

"Get off your hobbyhorse..."; "Stop banging on..."; "Can't you just change the subject..." 

Pity the people who had to spend time with William Wilberforce when he was going off on yet another of his tirades about why it was wrong to turn darker-skinned people into slaves. Or Emily Pankhurst's dinner companions as she launched into one of her speeches about why women ought to be allowed to vote. Or Thomas Parker or Wally Rippel as they... 

"Thomas Who?"; "Wally What?". 

Unlike Wilberforce and Pankhurst, to be fair, Parker and Rippel didn't propose a social revolution. All they wanted to do was get people to drive environmentally-friendly electric vehicles rather than fuel-guzzling, unsustainable petrol-driven ones. Which, I guess, is also revolutionary, but in a different way. Parker, who knew enough about electric locomotion to have introduced it for London's subway system, actually built a car with a rechargeable battery in 1884. Interestingly, one of his motivations for doing so was a dislike of pollution that also drove him to invent a form of smokeless fuel.

Thomas Parker's functioning 1884 electric car

A hundred years later, a team at General Motors led by Wally Rippel followed in Parker's footsteps and built a batch of electric cars that were well received by the people who were allowed to test them, but mysteriously killed off and destroyed

Poster for Chris Paine's 2006 movie about the
sabotaging of Wally Rippel & team's
GM EV1 functioning electric car.

As director Chris Paine illustrated in his 2006 movie.

Today, thanks largely to prompting from Silicon Valley investors who were unafraid of the traditional motor industry and petroleum industries, electric cars are finally taking off, but it has taken an unconscionably long time. Maybe a little more banging-on and hobby-horse riding might have speeded things up. 

Which is why I make no apology about getting on my hobby horse and banging on about the DISGRACEFUL fact that the wine industry unashamedly continues to sell wine for hundreds of pounds/euros/dollars per bottle in packaging that is acknowledged to be unreliable. And why I'll go on questioning madness such as the logic of banning the use of grape variety labelling on French wine labels. And challenging the logic of putting cheap wine in glass bottles...

If a few more people had been ready to join Wilberforce, Pankhurst, Parker et al in questioning the status quo, change might not only have happened more rapidly, but there maybe there'd have some rather more varied conversation at their dinner parties.

*******************

PS I've noticed that readers often take some of my analogies a little more literally than they were intended, so I'd like to stress that I'm not drawing any parallels between the efforts of the motor and oil industries to strangle electric cars and behaviour within the wine industry. 

Sex and wine

Original image to be found here

As I write this, somewhere in the world, millions of people are having sex. Making love. Shagging. Fucking. Having intercourse. Enjoying conjugal rights. (Interesting how many different terms we have for the same activity). Some are enjoying it a lot more than others - including the people with whom they're actually doing it. There are those for whom it's a routine activity and those for whom it's really, really special. Some have been persuaded into doing it against their will. Some are doing it out of boredom. Some are paying for it. Possibly with money; possibly in other ways. A proportion are exploring new partners, and techniques. This may prove to have been a good idea. Or a very bad one. Some wish they were doing it differently or with someone different. Some are enjoying it so much that they don't want to stop.

As I write this, somewhere in the world, millions of people are drinking wine. Uncorking a last bottle of a case of their father's favourite claret. Opening the tap of a new bag in box. Polishing off the plonk. Relishing Rioja. Adding a splash of Sprite into the St Emilion. Some are enjoying it a lot more than others  - including the people with whom they're actually doing it. There are those for whom it's a routine activity and those for whom it's really, really special. Some have been persuaded into doing it against their will. Some are doing it out of boredom. Some are paying for it. Possibly with money; possibly in other ways. A proportion are exploring new styles. This may prove to have been a good idea. Or a very bad one.  Some wish they were drinking something different or with a different person. Some are enjoying it so much that they don't want to stop.

I'm not offering any of the above as deep insight into the human condition. Merely as a corrective to far too many of the comments I read and hear about the way people drink wine, and about the essential importance of food-and-wine-matching or education or whatever. Drinking - wine or any other beverage - is a human activity. People do it in different ways and at different times and for different reasons. Simple as that. 

Crimea and Punishment

Ok, first things first. Crimea is legally part of Ukraine and Ukraine is not part of Russia. And, speaking as someone who has both just read Sebastian Haffner's Defying Hitler, a brilliant, blood-chilling contemporary account of the apparently inexorable rise of the Nazis in the 1930s, and had a number of very worrying illiberal conversations with Russians today, I think we really do live in frightening times. 

Vladimir Putin (a popularly elected leader, one should remember, just as Adolf Hitler was a member of a democratically elected government) is a truly dangerous character, especially when confronted by a fast reducing asset in the shape of his oil reserves and - for the moment at least - potentially highly damaging sanctions. The general economic and civil rights appeal for Russia's neighbours of leaning towards Europe rather than Moscow is convincingly described in this Forbes post by Vasil Jaiani.

But... as I discovered after talking to a fair few of them, there are plenty of Crimean winemakers who can see a lot of advantages to being part of Russia today rather than a European-focused Ukraine. 

Before waxing too lyrical about the prospects being part of the EU have to offer to producers in Eastern Europe, just look at the flood of premium Bulgarian, Hungarian and Romanian imports that have (not) made their way onto UK shelves for example. Conversely read this considered Academy of Wine Business report on Romania, a 2007 EU entrant, by Cheryl Nakata and Erin Antalis of the University of Illinois at Chicago. Membership of the EU has, the authors say, "provided funds for promoting Romanian wines abroad, and introduced regulations so more of the wines are safe to consume and exportable... and [ferreted out] questionable producers or practices". But they also talk of the remaining "negative image" of Romanian wine in Western Europe, this country’s chief export market. They quote a producer saying “…Romania is selling, like I said, a bad image... We are in the bottom of the list, we are from the edge—we and Bulgaria". For Nakata and Antalis, Romania's wine industry needs to "Enter into export markets where [it] has a positive to neutral country image, and move away from countries where it has a country of origin liability, notably Western Europe".

Most wine writers happily overlook the 'bad image' described by that producer. They fly into countries like Moldova, Georgia, Turkey, and Ukraine, accept some lavish hospitality, meet some charming producers and snap a few shots of the lovely landscape, taste a range of samples, say and write a few nice things, and move on, like movie critics heading off to the next screening. A week or two after their visit and the appearance of their words, the dust settles, much of it on stacks of unsold bottles. What few of the writers trouble their little heads over is the difficulties that the producers in these places have in finding consumers outside their own markets (and often even there) who are actually going to buy their bottles and pay their bills. (Just think of all the thousands of words that were devoted to Turkey's wines a few years ago - and their relatively rare appearances on the international shelves today.)

So, whatever your feelings about the politics of the Russia/Ukraine situation (and I've laid mine out above), maybe you should try wearing the shoes of a winemaker in Crimea. The mood of the producers I met at a tasting in Abrau Durso in Anapa, Russia this weekend was very similar to the one Andrew Jefford described in his March 2014 Decanter piece after his visit to the region.

Despite the quality of many of its wines, Ukraine has actually been a very difficult place to produce and sell wine economically. One major reason for this is the requirement to pay an annual €50,000 for a wholesale licence. Another is the lack of readiness of Ukrainians (unlike Russians) to pay premium prices. Add to these, the survival of a cumbersome state-owned sector and high levels of bureaucracy and corruption and it is not hard to see why Russian-speaking Crimean winemakers might see some appeal in being part of what was already their biggest export market. 

The dice have already been further loaded by the promise of substantial investment into the industry from Russia. Roughly half of Crimean wineries are probably already owned by Russians and both that country's wine producers' association and government have now declared an ambition to move towards 80% self-sufficiency in wine production. 

Ironically this keenness to welcome Crimea (and possibly other Ukrainian vineyards) into a greater Russian industry is not entirely welcome in Russia itself. At Grand Vostock, a good French-Russian joint venture started in 2003, director Elena Denisova openly questioned why the adopted children (the Crimean winemakers) would be getting better treatment than longer-established producers in undeniably Russian regions like Krasnodar. Ms Denisova also raised the question of how much 'Ukranian' wine is actually produced from grapes grown elsewhere (an interesting subject to raise in Russia which has its own traditions of this kind).

And then there are Russia's other neighbours, some of which currently rely on Russia for their sales. Georgia, while selling more bottles to Russia than ever since the reopening by Putin of the market to their wines, is sensibly making efforts to build other export markets (efforts with which - to declare an interest, I am beginning to help). But there is no denying the challenge this represents. Georgia's task, however, looks positively tiny when compared to Moldova's. This ancient wine region has great winemaking potential but today it's impoverished and struggling. Like Georgia, it has lived through a boycott of its wines and knows that if Vlad the Imposer gets out of bed on the wrong side, that door could slam closed again. 

As Jaiani says in his Forbes piece, it may well be preferable in many ways for Moldova to achieve its aim of becoming part of Europe, but I'll bet that there are a few winemakers in that country who might well be looking at the short term prospects enjoyed by their Crimean neighbours with at least a note of envy.

The shrinking shelf, and what Dr Who has to teach the wine world

The famous Dr Who Tardis.

Most wine producers seem to imagine that retailers' shelves and store-rooms are miraculous places that resemble the Tardis in Dr Who. For those unfamiliar with this UK cult BBC TV series, the Tardis resembles an old British police box used by the eponymous hero to travel in time and space. Seen from the outside, it scarcely takes up a square metre of space. Once inside, there is room for the doctor and his companions not only to control the sophisticated craft, but also to host a fair-sized drinks party.

As Wikipedia helpfully explains "the term "TARDIS-like" has been used to describe anything that seems to be bigger on the inside than on the outside".

Unfortunately, the Tardis remains the creation of an imaginative TV scriptwriter and designer. Space, when it comes to police boxes or book or wine shelves is strictly finite. For a retailer to add an Albanian Aligoté or Zimbabwean Zibibbo - or simply a good French or Australian red - to their range, however delicious, some other well chosen wine will usually have to go. 

To be crude about it, anyone trying to sell a wine to a customer who's already in the business of selling the stuff, is a little like a man proposing marriage to a woman wearing a wedding ring. If she's not dissatisfied with what she's already got, you'd better have something pretty impressive to offer her.

But, in the UK at least, that picture is just getting even trickier. The object of your attention may be going off men altogether... Tesco is currently reportedly delisting 150 wines from its range - and continuing to look at ways of reducing the number of suppliers with whom it deals. Morrisons, its competitor is also, equally reportedly, experimenting with a range reduction from 550 to 350 lines in some of its stores. Even these levels of shrinkage would still leave an offering that's 10 or 20 times bigger than the range at Aldi and Lidl, neither of which seem to be doing badly with their 'small but perfectly formed' selections.

Obviously, the bigger UK retailers are not the only market in the world - far from it - and thankfully new wines and producers do make their way onto shelves, across the globe all the time. (We're happily finding new niches for le Grand Noir in all sorts of unexpected places). All I'm saying is that unless you really do have something that's genuinely different and/or appreciably better and/or more attractively-priced it's getting harder to squeeze into that Tardis with every year.

For someone who wants a wine glass that might hold
 more wine than one might expect.

The way I think...

I'm often struck by other people's - especially wine people's - difficulty in coming to terms with the way I think. Why, they wonder, do I always have to bang on about all the things I think are wrong with the status quo?

Leafing through this week's Financial Times, I was surprised and delighted to come across an answer to that question - in an interview with one of my literary heroes: the writer, philosopher and playwright Michael Frayn. 

"The very fact that we can say, 'If I were you' is significant... You can't really understand how things are unless you can think and express that they could be otherwise"

Time, Money and Wine. A personal theory of relativity

Poster by Viktor Hertz

Time and money are both rather peculiar. They each share the odd quality of being simultaneously absolute and relative. Anyone who has ever lacked the means to pay a bill, or the time to complete a task, knows all about the implacability of an empty wallet or vacant top half of an hourglass. But... then there's the relativity. The way that five minutes can feel like an hour when you are waiting for something to happen, and how, in other circumstances, 60 minutes can somehow seem to flash past in an instant. A tiny amount of money that means nothing to you or me might offer the difference between life and death for someone in the Third World in need of food, water or medicine.

Relatively speaking, a hectare of Margaux vineyard costs a huge amount more than a hectare of Médoc and even the humblest bottle of AOC Margaux can command a hugely higher price than a more lovingly- and better-made wine with the other 'M' word on its label. But the absolute cost of producing and packaging the two liquids can be startlingly similar.

When I was a consumer wine writer, one of my main tasks on behalf of my readers was to find and recommend bottles of wine that represented especially good value for money. Bargain Bulgarians; cut-price Corbières; Penedes for pennies... Those were the meat and drink of my columns. Naturally, I tried to intersperse them with in-depth introductions to unfamiliar wine regions and penetrating producer profiles, but neither my editors nor my readers really appreciated these nearly as much as lists of how to save a few pounds when filling that week's shopping basket.

What I was rarely bothered about in those days was how and why those recommended bottles got to be as cheap as they were - provided they tasted good. To be blunt, I paid little more heed to their background than a fashion journalist singing the praises of clothes manufactured in Asian sweatshops. Now, with the exception of some non Fair Trade wines from South America and South Africa, wine isn't usually produced by people on slave wages, but everything comes at a cost, and some businesses are a lot less sustainable than others. Bulgaria - and Eastern Europe in general - offers a good example of the potential unsustainability of cheapness. Consumers and critics in the UK and elsewhere were delighted to buy ludicrously inexpensive Soviet era reds made with the help of Californian expertise that was, in turn, facilitated by the eagerness of US Cola giants to barter their product on the other side of the Iron Curtain.

When that barrier was removed, the collectivist agricultural system dismantled and land redistributed, interest in the entire region evaporated at a speed that will be familiar to many pop groups after the release of their unsuccessful second album. Besides, there were bargains to be found elsewhere.

Cheapness is a dangerous long-term strategy in a capitalist world. Make and sell a product with a paper-thin profit margin and no spare cash to spend on brand-building and there's always the looming risk that somebody, somewhere will be even more desperate to make a sale than you are. When Chinese wages rise too far for Western t-shirt and toy manufacturers, well, there's always a factory in Bangladesh eager for the business. 

But agriculture, especially wine, is less flexible. Those better paid Chinese workers may now be - probably are - making higher value solar panels rather than cheap plastic flipflops. Vineyards and winemakers, especially in the old world, find it rather less easy to adopt new skills. The Bulgarian vines are mostly still turning out an annual crop of grapes that nobody wants to buy at any kind of premium price.

The taint of cheapness is not only a concern in Eastern Europe, however. Despite China's flurry of interest in the wines of France's most famous red wine region, the bulk price for Bordeaux Rouge has stubbornly stuck at under 1.20 euros per litre, surprisingly close to what you might pay for bulk Minervois these days and less than the real price 20 years ago - but still roughly twice what you'd spend on some perfectly drinkable wine on the other side of the Spanish frontier.

When I consider the effort required to tend vines, grow grapes and make wine, and compare these ex-cellars prices to the ones charged for a rather easer-to-produce beverage such as say, tonic water, they seem to be simply too low. 

Cheap regionally designated wine, like the €1.89 AOC Bordeaux I snapped in a French Aldi is - for whatever reason - unsustainably underpriced. Just like the burgers that cost-cutting manufacturers produced from horse instead of beef, and the Big Macs that McDonalds made using fat and trimmings 'washed with' ammonium hydroxide.

But 'underpriced' was not a term I often used as a wine critic. Unlike 'overpriced' which I (along with almost all of my UK colleagues) regularly dragged out to describe almost anything from the Napa Valley (or the rest of the US) or Priorat, or any wine that had caught the eye of a top US opinion-former. Time has, of course, proved us all wrong, just as it has given a huge slap around the face to everyone who suggested that Starbucks et al would never get away with charging $4 - the global average - for a cup of undistinguished coffee whose raw ingredients probably struggle to add up to 20c.

While writing this, I'm thinking of two estates in the southern half of France, growing very similar grapes on very similar land. One - whom we'll call Dom. Trop-Cher (DTC, for short) consistently sells its wine for a much higher price than the other: Dom. Trop-Bon-Marché (DTB). Part of that difference can be attributed to slightly lower yields and the use of more new oak, but by my estimation, that might, at most, explain 15% of the extra cost. The rest is down to the philosophy of the owners. I happen to prefer the style of the DTB wines; Robert Parker, predictably favours DTC, but it's a matter of taste. Both are similarly good. In my previous life as a critic, I praised the family behind DTB for what I saw as their lack of greed. I took too little notice of the worried look on their faces when a pneumatic press unexpectedly needed to be replaced and I positively overlooked the fact that a necessary part of their income seemed to come from renting out rooms in a gite next to their house.

Today, and particularly after reading a recent Decanter interview with Anthony Barton in which he ruefully commented on the lack of real appreciation he got for his policy of moderate pricing at Leoville and Langoa Barton, I feel rather differently.


Excuse my pedantry, if you would, but surely the term 'overpriced' should only be used when it is established that sufficient consumers have been exclusively deterred from making a purchase by what they perceive to be too high a cost. In other words, whatever any critic may personally think of its quality, style or packaging, a $100 Argentine Malbec, $250 Napa Cab or $1000 Bordeaux are technically 'worth' every penny of those prices to their buyers until those buyers stop being prepared to pay them. Like the £250,000 that 700 people have said they'll each pay for a short flight on a Virgin spaceship.

But the thing I failed to understand, as a bargain-chasing hack, was just how close to financial failure some of the wineries I was recommending often came. I recall an Australian flying winemaker disdainfully telling me about how a well-respected Chilean had - unbelievable though it seemed - sold several tons of his best grapes to a competitor during the harvest. The way the story was recounted, it sounded precisely as though the winery owner had pimped his daughter to the local brothel. 

It was a decade later that I learned the background to the deal: the neighbour had actually done the winemaker a favour by buying the fruit for a bundle of cash that enabled him to pay his vintage workers. The bank had offered no support and, without that money, the business would have gone under. Other family-owned wineries I've seen have been forced to sell out completely because of situations such as a UK supermarket reneging on a deal. And then, of course, there are the countless small producers who simply can't afford to make their wine as well as they'd like, for want of the money that would pay for a little more work in the vineyard and slightly stricter selection in the cellars. As they point out, at €1.20/litre there's not a lot of spare change in the till. Stated bluntly, far too many producers of attractively-priced wine are just one lost-customer or bad harvest away from financial disaster. 

(One reason most observers fail to notice this in Europe is the proportion - over half - the wine that is actually produced by cooperatives which are still feather-bedded when compared to individual estates working in the same regions).

When you get behind the scenes you quickly realise how the producers asking the laughably high prices have not only managed to survive the recession but maintain their quality and invest in some marketing, while the fair-price brigade have struggled - and are now often in an even worse financial state than they were before the axe fell.

All of which helps to explain why, based on current evidence, if I had to invest some absolute money or time, I reckon I'd be both relatively and absolutely wiser to do so in a Starbucks franchise than a few hectares of basic Bordeaux.

Sex, Shopping, Wine... and Aldi

Like 99.9999% of the rest of my fellow human beings, I have no idea how Google gets the numbers it does on its 'results', but I have to say that the idea of three hundred million sites sharing "sex and shopping" does strike me as a little strange. How and why did a pairing of these - to my mind at least - rather different activities come to be of even passing interest to so many people?

Okay, I know that "Sex & Shopping" was the title of a British TV documentary series about porn, and that anything that includes the 'S' word sells, but even when you substitute the word 'pleasure', it still looks as though a surprisingly large mass of people associate the process of going out to buy stuff with, well, feeling good...

Now, it would be interesting to know how many of those 129m people were men and how many were women. After all, the accepted wisdom is that the two sexes view the process of shopping very differently. The following cartoon which I came across here 

illustrates a theory that psychologist Steve Taylor explains rather convincingly in a recent Psychology Today article. 

10,000 or so years ago, Taylor points out, men hunted and women gathered. The first of these activities only took two or three hours per day and involved the alpha males finding and killing a beast and dragging it back to the cave as rapidly as possible, before other hunters or beasts stole it from you, or before it went bad. Meanwhile, their female mates were patiently going from bush to bush in the quest for the fruit, nuts and berries that would make up 80-90% of everybody's diet. Obviously, some of the brightly coloured stuff waiting to be picked turned out to be poisonous and some of the apples had worms wriggling around inside them, so the women had to become skilful at taking the time and trouble to sort the good stuff from the dross.

A Telegraph columnist tackles the issue head on.

However offensive it might be to feminists, the notion of women being hard-wired to enjoy browsing is certainly supported by the circumstantial evidence to be witnessed in the clothes and homeware sections of any mall, but... and here I'm moving to the nub of the matter, it seems fair to question how much pleasure humans of either sex get from the 'shopping experience' on offer at the average supermarket grocery store.

To be frank, I don't care how many cafes Waitrose introduce into their shops or how many freshly-cooked bread smells or bunches of flowers are deployed to draw me into some of their competitors' stores, to me - and I suspect to a great many other people - supermarkets are all about breakfast cereal, detergent, bottled water... heavy, bulky stuff I'm going to have to lug home.Yes, I love food, so I do actually sometimes enjoy the part of the shopping experience that involves exercising my finely honed powers of selection over the prawns or plums that are going to go into my basket, but to be frank, that only seems to involve a small part of the time I spend in Waitcos or Asburies. And on the occasions - the majority - when I'm in a hurry (especially when accompanied by my kids) I actually balk at the choice. If the first apples I see look sufficiently appealing and fairly priced, I may unashamedly pick up the kilo or two that I need and happily tick off an item on my list.

Belying her feminine stereotype, my partner is no fan of any kind of shopping (I actually dislike the process less than she does) and we've handled the fruit-and-veg-selection issue, for the moment at least, by doing the middle class thing of getting a weekly box from a nice company called Abel & Cole who even provide recipes to go with the ingredients. The loo roll, soap powder and cereals also usually arrive at our door from a supermarket van.

The Abel & Cole box

And then of course, we use independent butchers and fishmongers and I make forays to shop at various supermarkets and to see what's on their shelves and in their shoppers' baskets. Which brings me naturally to Aldi and Lidl. Probably inevitably, the Germans have already created a word for 'shopping experience': Einkaufserlebnis. For all I know, they may even have one that precisely describes how it feels to push a trolley around one of the German discounters' stores. The term would have absolutely nothing to do with pleasure, other than the satisfaction of handing over less cash after your long wait at the checkout than you might elsewhere. These are utilitarian places with little to distract you from the business of hunting and gathering - even if that involves picking up unexpected items such as the frozen lobsters I saw at €5 in a French branch of Aldi last week.

For a male or female wine lover - someone who loves to cast their eyes slowly and thoughtfully over shelves packed with wine - the discounters are about as close to a pleasure dome as a railway station bookshop would be to an aficionado of great literature. But, of course most normal people are neither bookworms nor wine buffs, which is why there are now so many fewer book and wine shops on high streets across the globe - and so much online buying from the likes of Amazon. A small range of perfectly good, nicely packaged bottles, may actually suit a lot of people a lot better than the scary 'wall of wine' favoured by the traditional larger stores. Especially when they are really attractively priced. The extraordinary growth of the discounters - and the number of people who shop at them as well as at more premium stores - certainly suggests that the old-fashioned hypermarket is rapidly becoming the dinosaur of the retail world.

Both images from linksonjack.com

The clumsiness with which the lumbering T-Rex's of the UK market are trying to defend themselves against the threat from the discounters is brilliantly lampooned by a Lidl advertisement noted here by Contagious.com blogger Dan Southern, who is also responsible for the discovery of the glorious image below from the Simpsons.

Pleasure is, by definition, an essentially personal emotion. Some people get some of their kicks out of writing blog posts like this; some, hopefully get at least a little pleasure out of reading them. Maybe desperate housewives really did often enjoy their outings to the local supermarket; maybe the colours of all those boxes and tins added something positive to their lives that they weren't getting from daytime television or their nuclear families. But that was then and this is now. Today, for every hunter-male or gatherer-female who really wants to spend a few minutes thoughtfully selecting between a Gigondas and a Vacqueyras or a Rioja and a Navarra, I'll bet that there are probably 20 who'll be far happier to grab the inexpensive, award-winning Rhone or Spanish red from the tiny range at Aldidl, or simply to receive a delivery of the stuff they bought last time*. And the sooner the wine industry understands this the healthier it will be.

Nicely packaged bargain Bordeaux on sale
in Aldi, France last week

************

* Support for the picture I'm painting of the average wine 'shopping experience' comes from University of Adelaide-based academic Larry Lockshin as described in this piece by Australian writer Tony Love. According to Lockshin's research, buyers spend 40 seconds selecting a bottle. Over 80% of purchases are based on recognition of a wine the consumer has previously bought; only half of the buyers pay attention to grape variety, region, brand and vintage. A third focus exclusively on price (though not necessarily on cheapness). And all of this came out of post-purchase research in Australia, arguably one of the most wine-sophisticated in the world. Don't kid yourself by imagining very different results in any other country...