Ridgeview

English wine is the flavour du jour, but is it set up to capitalise on the recent awards and consumer demand?

Total production is currently tiny, around three million bottles. And 2010 marks a tipping point. Julia Trustram-Eve, marketing manager for English Wine Producers, said “it will be the first time that sparkling wine production has exceeded still wine production.”

Producers are confident about the domestic market, citing the 100 million bottles of sparkling wine consumed each year, around 35 million bottles of which are Champagne. Of the 65 million bottles of non-Champagne, only 1% sells for more than £10 – which is where virtually all UK sparklers are or will be pitched, many at £20 and above, though producers are aiming to take market share from Champagne.

Ian Kellett, managing director of Hambledon Vineyard, is bullish on the market potential, saying “It’s already proven beyond doubt that the UK is the second best sparkling wine region in the world. We [the UK] need to be a 10, 20, 30 million bottle a year business.” And he was really just talking about sparkling wine.  Whatever the ultimate size of production Mike Roberts of Ridgeview reckons “still wine will represent about 10% of the market” in five or six years’ time.

One of the most recently announced ambitious newcomers, ex-hedge fund manager Mark Driver, who has bought a 600 acre farm in East Sussex, called Rathfinny, with plans to plant around 400 acres, was equally bullish, saying “I think there’s increasingly a very good market for English wine.  I’m the target market for English sparkling wine, but a year ago I’d never heard of Nyetimber or Ridgeview. And there’s a growing market for sparkling wine in Asia and North America, where there is an affinity to certain good quality English products.”

It may need the likes of Driver to take the UK industry to the next level, as the main barrier to entry is the cost of set up and the delay between harvest and market, hence the splurge of City émigrés. With up to eight years to plant, make and get to market, financiers with plentiful resource are a necessity.

Driver spent around £3.5m buying the farm and land, and “will invest a similar sum in the next five years, planting, building a winery and equipment.” Their first sparkling is unlikely to be on the market before 2017, and he added “I would hope in 10 years time we start to make some money.”

Kellett expects to invest even more to get historic Hambledon Vineyard back up and running, saying “at the end of the day it will cost us £10m plus to build the business we want to build.”

Chapel Down

The initial objective, he said, is for 250,000 bottles, and “the core plan is to way beyond that.” A £4 million fundraising project closes before the end of January 2011. Kellett said before he went “to the world to ask for £4m” he had to prove his credentials, so for the last three years they’ve been selling grapes to the leading UK producers of sparkling wine “demonstrating to my satisfaction that we are producing the right standard of grapes.”

Someone who has always declined the opportunity to put a figure on the amount he’s invested is Eric Hereema of Nyetimber.  When he bought the property in 2006, just 34 acres were planting producing around 60,000 bottles.  Hereema said “since the most recent planting, we have over 400 acres under vine, not all producing yet. Our target production is 1 million bottles, on average”, which will make him the UK’s biggest producer.

The company is not yet exporting as Hereema sees more potential in the domestic market, saying “all our sales activity is focused in the UK, [but] ultimately we will export. We constantly receive requests from abroad, but at the moment we don’t think it will help the brand.”

Hereema said he hoped to make a profit in about five years’ time. Arguably Nyetimber’s main competitor, Mike Roberts, said Ridgeview “became profitable in 2000, our first full year of sales.” Now, he said, from 170 acres they are making around 250,000 bottles of sparkling, and they’ve just doubled the size of the winery, to cope with 400 to 500m bottles, so there’s still plenty of room to continue the expansion, though Roberts’ plan is now to “create markets and open doors.”

Along with Ridgeview, the industry’s one publicly listed company, Chapel Down, follows a ‘Champagne model’ of sourcing fruit from a “great many vineyards, including established growers who’ve grubbed up the likes of huxulrebe and planted Champagne varieties”, said their managing director Frazer Thompson.

Having raised £1.5m in 2004 plus another £1m about a year ago to finance their 72-acre vineyard expansion in Kent’s North Downs, Thompson said “we have to make it clear that wine is a long term investment and it depends on weather. Our plans were set back by 2007 and 2008 being very low harvests.  We needed to be nimble to compensate for that.” They’ve increased prices, invested in Chapel Down branding, opened the restaurant ‘Richard Phillips at Chapel Down’ to increase the destination value of Tenterden, and been selling more wine direct.

A'Beckett's Vineyard

On a more modest 30 acres in Hampshire, AXA Millesime’s managing director Christian Seely has joined forces with ex-city financier Nicholas Coates to create Coates and Seely sparkling wine. Coates said “Clearly we love wine, but this is a business venture, we’re persuaded the economics stack up. For people who know what they’re doing and have a track record in the production of high quality wine, we’re confident we can make and sell it economically.“

Another 30 acres under vine (on a 400 acre estate) is to be found at Hush Heath Estate, the home of Balfour sparkling rosé, which has grown from 4.75 acres since 2002. The target production for owner Richard Balfour-Lynn, who doubles as the chief executive of a property company that owns the likes of Malmaison and Hotel du Vin, of 100,000 bottles is five times that of the currently released 2006 vintage. Coates and Seely’s winery is also configured for 100,000 bottles.

Balfour-Lynn is clear of his competitive set, saying “pink sparkling is one of the areas the Champagne houses don’t do so well as white, so I decided to challenge them on that. I’m competing with Laurent Perrier Rosé and Billecart Salmon Rosé.”

With as RSP of £37 the aim is high, but he said, branding is “part of positioning, creating a brand and creating a following. The quality is critical, but equally critical is branding, marketing and the PR that goes behind it. We use copper labels and solid copper ice buckets,” adding “the challenge for the English wine industry is to invest that type of money into marketing.”

Confidence in market potential is not restricted to the large scale. At the other end of the spectrum, where personal money is not an option, fundraising remains a necessity, and some innovative approaches have been adopted. And the key at this level is to keep the brand local and focused.

Paul Langham, of A’Beckett’s in Wiltshire, started a vine lease scheme in 2009 where vines are rented for 10 years. He said “vine lease was a way of expanding the business without going near a bank, or taking on an investor.” And “finding the right investor could take a very long time, and so much heart and soul gone into this, how easy would it be for us for us to cede some control? This is a family business with community involvement.”

A’Beckett’s will reach 5.6 ha if the 2011 offer is fully subscribed. If they’d been bigger, he said the route to finance might have been different. But retaining the small, community feel and ‘add-ons’ such as plans for a rural shop and ‘outdoor’ education rooms is important for his brand.

Upfront investment by vine leasing is the option also adopted by 22-acre PebblebedVineyards in Devon, which started off as half an acre on a south-facing field. Geologist and owner Geoff Bowen said “we’re only just breaking even after 7 to 8 years”, after investing five figures of his own money during the last decade. He drew attention and local investment after succeeding in the Dragons’ Den where so many others have been slain.

Their scheme asks for £2,000, “a figure which people might be able to invest.”  And, Bowen said “the scheme is also about involvement, the process of planting, watching the grapes grow, making wine. People will get their money back in bottles, vineyard tours and lunches over ten years.”

It’s clear that supply is not keeping pace with demand for English sparkling wine, and this is the great unknown, because UK sparkling wine is generally on allocation or not widely distributed. But crunch time is just around the corner. Trustram-Eve said “there‘s not much market-ready wine out there. Approximately 1.7m bottles of sparkling wines will be on the market for next year, with 2015 showing about 3.6m bottles coming to market.”

Dream or reality? If just 10% of Champagne buyers move to English sparkling wine, then the market for English bubbly trebles.

Three Choirs Vineyard

The UK wine-growing industry is evolving at a rapid and exciting rate and is struggling to keep up with demand for home grown wines, despite the fact that the vineyard area has been forecast to reach 3,000 hectares within a decade.

The planted vineyard area is about 1,000 hectares, with nearly a quarter of that figure not yet in production, as it takes three to four years from planting to get the first crop off vines.  Just five years ago, the total vineyard area was three quarters of its current size, giving an indication of the phenomenal rate of growth the industry has witnessed.

It is traditional method (wines made the same way as Champagne) sparklers that are leading the way, and while producers such as Nyetimber and Ridgeview already have an international reputation, others are chasing their tails. It is estimated that in five years’ time the UK will be producing about 3 million bottles of bubbly, which is ten times the current production.

Pinot noir is now the UK’s most widely planted grape variety, with chardonnay a close second.  Together, these two traditional Champagne varieties account for fully one quarter of the vineyard area.  

Such is the growing popularity for English wines, that upmarket supermarket Waitrose is planning next year to plant four to five hectares of vines on the 1,600 hectare farm it owns in Hampshire.  The aim is to make sparkling wines, and, given the lead-time for the production of sparklers made in the same way as Champagne, it will be at least 2014 before the un-named fizz lands on the market.   The farm already provides the supermarket with chickens eggs, milk, mushrooms, apples and pears, and is big enough to convert more hectares in the future, should the sparkling wine venture really take off.

At the risk of being heretical, for the UK home-grown wine industry, a little bit of global warming will be no bad thing.  England and Wales are at the very northerly extreme of cool climate viticulture, but, such is the changing pattern of the global climate, an extra degree of warmth each year would mean that fruit ripens regularly in this country.  English wines consultant Stephen Skelton MW said: “Ripening grapes in the UK terms is defined in terms of acidity, we have to get the acids ripe. And 2003, 2004, 2005, and 2006 were great for this.  2007 was an anomaly, It was the second warmest year on record, but the summer was awful,” which meant some of the acids were too high. A few hot days over 29° to 30°C is what we need to ripen acidity, which is not such a hard thing to achieve in the current climate.

Ridgeview

The resulting wines, both still and sparkling, are fresh and lively, with fragrant fruit and only moderate alcohol levels, 11.5% to 12.5%. These can be ideal for lunchtime quaffing wines, and wines by the glass. Indeed, Christine Parkinson, the group wine buyer for Hakkasan and Yauatcha restaurants said “We try to have something English by the glass in both our restaurants, such as Camel Valley Bacchus dry in Yauatcha and Plumpton Estate Rosé in Hakkasan.”  Parkinson added: “I’d love to do more English wine, if I could taste more and find the right ones … English wines suit the cuisine at Hakkasan. We try every wine with the food, and generally speaking the aromatic wines with high acidity tend to go well with our cuisine.”

Chapel Down is one of the leading producers of English wines, and they make some of the best still wines from the third most planted variety, bacchus, especially in their single vineyard Lamberhurst and Tenterden labels.  Their managing director, Frazer Thompson said: “We’ve planted a lot because we believe in future of English wines, especially sparkling, but we think there’s an English equivalent of Cloudy Bay, which is bacchus.” In fact the company recently bought 45 hectares of prime North Downs chalklands, which will be planted to chardonnay and pinot noir.  

Thompson highlighted the growing trend for English wines to be on the wine list, saying places such as “Roast, Gary Rhodes, Ramsay and Conran restaurants have our wines on their lists”, adding “good modern sommeliers are looking for locally-sourced beef, vegetable from the gardens of England, and they’re also looking at wines. People shouldn’t be surprised to see [matches] such as bacchus with Whitstable oysters or Dover sole.”

The UK is also well placed to take advantage of the boom in pink wines. Plantings of red grapes are also on the increase, both for red wines and for pink wines. Chapel Down may have trademarked the ‘English Rose’ label for a still and sparkling pink wine, with a slightly more ruddy complexion than its human namesake, but there are plenty of ‘English Rosés’ (with accent) to be found, such as Stanlake Park’s pinot blush or a’Beckett’s Estate Rosé.

English wines will never be cheap. Production at the cool extreme of viticulture is more expensive than in warm sunny places where grapes ripen regularly, evenly, effortlessly.  Thompson sums this up, saying “technically [English wine] is an excellently tasting product. People’s expectations of anything English should not be cheap. It should be premium in taste and feel, so English fizz will make you feel better than if you’re drinking champagne.”