Vineyard economics

Current view of the market

We are delighted to be part of the successful UK wine industry. The quality of UK wine is excellent, winning top international awards.

We have seen incredible growth, coming from both big commercial businesses and lots of small individual vineyards too, with the number of acres under vine growing 150% in the last ten years and tripling since 2000. Overall sales of wine grew 31% between 2015 and 2017, with nearly 6 million bottles produced in 2017 according to the most recent WineGB survey.

There is still a lot to be done until we see everyone in the UK aware of English and Welsh wine, with it for sale in every restaurant and pub around the UK.

WineGB is doing a great job bringing everyone together and taking the industry forward. There is a very collaborative approach, even between competitors. This is very different to the accounting industry!

What are some of the issues vineyards and wineries are facing?

  •  Funding: The feedback from you is that most of your banks do not understand your business model. I am on a crusade and have spoken with many commercial banks at a senior level to try and change this but so far, I have had very limited success. Asset finance and invoice finance can go some way but nowhere near enough for those of you who want to develop your businesses. Sometimes other alternative forms of funding such as grants, crowdfunding, SEIS & EIS can help.
  •  Capacity: Investment in new vineyards is significantly increasing the grape supply; however, is there enough investment across the industry going into new wineries to provide the capacity to handle the volumes on a timely basis?
  •  Government: It is disappointing that in the recent Budget the government increased duty on wine but froze it on beer and spirits. WineGB is doing a good job getting increasing engagement from the government, but this needs to continue.
  •  Weather: The weather will always be a challenge, with frosts in 2017 and a bumper harvest in 2018.

Outlook for the sector

The outlook is very positive. The UK wine industry is primed for success over the next ten years.

The quality of both the sparkling and still wines being produced are excellent and this has been evidenced by winning top awards at international wine competitions. I fully expect this success to continue and the reputation to grow on a global level. In particular, growth in exports will be a key opportunity, but it will be important to manage exchange risks.

There has been significant investment in the industry, including the larger vineyards scaling up their businesses and new international businesses entering the market. I would expect this to continue. There will probably be more mergers and acquisitions, particularly with the smaller and medium size vineyards. Cash management will be a key challenge.

Wine tourism will be another area of development and represent a potential diversification of income streams. Developing brands locally and the use of social media will be increasingly important.

There will be some great opportunities, but there will be some winners and losers.

Advice for vineyards and wineries

My top tip for vineyard owners is to ensure you are clear on your objectives. What strategy do you have in place to attain your goals? You need to consider the funding for this strategy as early as possible.

Comments are closed.

Proudly powered by WordPress | Theme: Baskerville 2 by Anders Noren.

Up ↑