Trends, Worries and Opportunities 2025

Welcome to the Rene Global in Conversation Podcast, where we talk about the future of FineWine. I'm Paul Indicare, Director of Rene Global, and in this series we bring your conversation with some of the most interesting and influential figures in and around the world of FineWine to talk about how the world is changing, how these changes impact the production, distribution and consumption of FineWine and how that creates risks to be managed and opportunity to be seized. Happy New Year everyone and welcome to this very first podcast of 2025. I am Paul Indicare, the Executive Director of Rene Global, and today I am joined by Rene's Editors, X-Child, and Air, Felicity Carter. Happy New Year Felicity. Happy New Year Pauline, I hope you had a great Christmas and a year. So just to kick things off, this episode is a bit of a special one. As today we're talking trends, threats, opportunities for 2025. Absolutely, and it's not going to be just, you know, you and me renting about what we win. What? What the hell was going to do? What we wish we would do if we had a magic one in 2025. Oh, all right, yes, it's true. You have spent a lot of time in the last few weeks talking to people who are actually selling wine in many different markets so that you could come up with what's coming up for the year ahead. Okay, so what did they tell you? Well, yeah, I've been talking to, you know, journalists, wine makers, wine buyers, export directors and chief marketing officers. I've been eating mince pies. Yeah, well, yeah, I've been eating a lot of chocolate to be fair between the interviews, you know, just to keep me going. But they come from six different countries and they, you know, just to have their take on how 2024 went in their part of the wine world. And also, of course, how 2025 is likely to go. So they told me so much and before we go further, I really wanted to thank everyone who answered that call and spend hours on the precious time during the Christmas ratch to, you know, not just eat chocolate and mince pies but also to catch up with us and to discuss their realities, their hopes and their fears. So thank you very much. Now across all the conversation we had, the interesting thing, the common point was that everyone had, of course, deep concerns. But everyone was also being very positive and very excited about the year to come. And all and all and that was my first takeaway and that was actually a very good one. Is I think that more people are doing well that what we would intuitively think. So let's start by listening to polyhammons that I'm sure, you know, most of our listeners will know because she always pops in from time to time to give us her perspective on things. But just in case, poly is the founder and the director of five forest, a marketing agency that specialised in strategy and digital marketing. So let's listen to poly. One big discovery that I think is counter to a lot of what we're hearing coming out of the wine industry right now. And the thing that we discovered in 2024 and we work with a lot of clients, we work with a lot of new clients every year is that the there are brands that are in fact thriving. There are fine wine brands that are flourishing, but they are keeping it quiet. And we did a deep dive into what the practices were for the brands that were thriving. And it was just, it was super interesting to us to find out that really, and we see this in, you know, every day human life. And people who are not doing as well as they had hoped are the loudest voices. So I asked some wineries, I was like, is the survivor's guilt, you know, is it that you're afraid that your competition will find out what you're doing and tried to mimic it. And what it comes down to is just a sense of quiet confidence. No, no, we just don't really need to be a part of that conversation. So I think that that's something I would like to, I would like for every wine brand to know is that bear in mind that the loudest voices are often the voices that are not doing well. And that some of the doom and gloom that we're hearing about that that is not every wine brand. And there are brands who have the practices, the operations and the marketing in place that they are continuing to flourish. It's a bit like the twip advisor one, right? You always read about the negative comments, but sometimes you really wish the people that had a good experience would comment as well. Exactly. From your perspective, the brands that are doing well, are they all like big and consolidated and have a larger array of operations or can they like do they come in all sizes and scale. Yeah, I think they come in all sizes and scale. We have seen a very clear in the past two years, a very clear demarcation between large brands and how they are able to weather this storm and our smaller brands who, and actually let me rephrase that in a way because I'm not certain that dividing up my size is really the most accurate. We have seen that brands who are able to adapt and be customer led, which often means brands that are larger simply because they have a larger organizational structure are able to weather the storm better than smaller brands that are sometimes personality directed. And therefore still are really attached to their biases about how wine should grow or wine should be sold or what should happen in the tasting room or what's important to them that those brands smaller brands that are personality driven, you know, by one or two key leaders or family ownership with their hands very much in the operations are not always. And you want to say that not always, but sometimes it's harder for them to adapt to being customer led and I think that an example that we really see this we all can see this in is the introduction of no and low out into your tasting room environments that we do have the larger wineries who either because they've got no and low out in their portfolio. It's very easy for them to do it. It's been a part of their portfolio for a long time or you have smaller wineries that they've seen this coming and they've been participating in no and low outtacings for very long time they're set but some of these personality driven wineries they're very much the no I want to make wine. You know it doesn't matter that this is what people want this is what we do and so of course for them those decisions are going to impact the success of either the the wine offering or the experience offerings. Yeah it's it's true over the past year I've spoken to a number of people who are doing really well and and some people who are doing outstandingly well even in regions where the whole region is depressed so I agree with what she says. Okay so Morale is not that bad but what were people concerned about and how did they concern orient their strategy. Yeah great question so at say there were four major concern across the board the first one was China and we are going to spend a bit of time talking about it a bit later in this podcast because that's a big one. Of course the second one quite logically was the geopolitical turmoil and the resulting you know taxes and tariffs although to be honest one of the things that I think is different from last time is that at least when it comes to the US people are kind of ready they've done it before they've dealt with that situation before so of course nobody's really happy about the situation but people have started taking a lot of actions and like they seem the bit more. At peace with how to deal the situation with the situation yes I mean as a number of people have said already it's a non quantity and so it can't possibly have the same impact it didn't have passed. Yeah so okay so you said a few things what are the other concerns so that there was quite a lot of concern about the on trade at least in some major markets and really having numbers showing that consumption away from home is decreasing. Yeah I just can't just jump into this this is a really really interesting topic so I've spoken to some people this year who've made. Wines that can easily be added to sort of home delivery orders and what they're seeing is that when you make wines of really good quality in alternative packaging like cans and stuff that the sales really go up and so what's happening with many of the delivery systems at the moment is they don't offer very good. Wine or friends but if people could get into those delivery systems they'd probably see a lot of their sales increase. Yeah which will probably again feed one of the you know some of the issues with the on trade is that people have taken the habit of drinking at home and they also have taken the habit of. of being the home price when they drink wine, and then going back to restaurants and seeing the markups has been quite painful in some of the markets will have Joao talk about it a bit later. But finally, the major source of concern, I guess, everyone we talk to, and I'm sure you've heard that, that was 1,000 times this year, but that was the rapid change of consumption habits and the overall decrease of consumption. And I think no one, everyone knew that consumption was decreasing, but I think the word rapid here is really key, because even some of the, like, leverest people I know in the wine world were still quite surprised about the pace. And so that concern was really overarching on everyone that we were talking to. And of course, that also include here, there's a conversation around wine and health. A lot of people were taken aback by the extent of the conversation, by the place that conversation took this year, the echo that it found. But of course, I'm sure you and I were a bit less-- We were ahead of the curve. We were on it. So let's go to Portugal now, where we talked to Joao Gomez de Silva, so the chief commercial officer of Sogrape, the country's biggest company. And as Sogrape manages brands like at every price level, from Matheus Rosé to Barcaveller. So listen to what Joao has to say about the last two points have just raised. What did happen in your part of the world of wine that you were not expecting at all? I think essentially, essentially, do things. The acceleration of the change in consumption habits and the decrease of overall consumption, in the case of Portugal, we're still growing as an origin and span as well. I think overall, the trends are undeniable. There is a decrease in consumption. And the speed at which the change has occurred is really accelerating. And it did surprise me. The replacement for non-accompanic substitutes. Let's put it this way. The change from consumption away from home to consumption at home. You gave me two data that were really interesting. The one in the consumption away from home in Portugal. So you've got more stories every year, but you've got less consumption. Can you-- Yes. What we've seen, and that was a-- that's part of the second surprise, which is this crisis of the hospitality industry, or the on-trade channel. Portugal has benefited in terms of wine consumption from the growth in tourism, which has been relentless for the last eight, 10 years or so. And the latest number, the latest estimate we've got is we have about 30 million tourists this year. And I think that compares to something like 18, 19 million just before COVID. They were 28 million, I think, in 23 and 30 million now in 24. And still-- and I think, as I was saying to you, we don't have precise data, but I'm pretty sure that if this doesn't take-- if tourism tourists do not believe about half of our consumption away from home in Portugal, it can be very close to that number. And we saw consumption away from home declining last year, in spite of the continuous growth. And I think, as we were mentioning, I think this has different reasons. I think there's an attitude issue that affects domestic consumers. Mostly, people go out less. Is this-- are people in a less than a good mood, is uncertainty influencing patterns, probably so? But also, I think, prices and the perception, which was initiated with COVID when people have to consume the home. And then the financial pressure over the hospitality industry that led part of the inflation story that we had in the last 48 months or so, prices are just enormously higher than they used to be. And I think-- And when you spent two years drinking at home and buying retail price instead of going to have to go back and-- I mean, you perceive that it's obviously-- you can drink higher quality wines at a more reasonable price if you drink in the home. But you're not paying for the service. You're not paying for the location. You're not paying for many things that make prices in the on-trade industry higher than for consumption at home. And why you were telling me is some of your clients in New York, they make 30% of their revenue out of non-alcoholic leverage as well. Yeah. Then you have some international numbers that are scared. I mean, the data we have-- and this is information that is shared with clients-- bars in cities like New York, Chicago, are making nowadays about 30% of their revenues with non-alcoholic drinks, mainly non-alcoholic cocktails or no-alcoholine, which is huge. And this has come up in what, two, three years, this number. This was certainly not there before COVID. This was certainly not there in the period immediately after COVID when we were celebrating and spending our savings. And also in the UK, where we were essentially premium on-trade with premium on-trade clients. And where the general statistics show that in two years, we went from one in every five bottles of wine being consumed away from home, so in restaurants and, you know, outside away from home locations, to one in seven. And this is with an overall consumption that is decreasing and has been decreasing for years in the UK. So you've got a higher proportion of a smaller market being consumed at home. And this places an entire new set of challenges, particularly for the fine wine world, because let's face it, restaurants, hotels, bars were the show window. And those were the places where consumers could have the experience, and they could have the sort of information and support on sales that they don't have if they're consuming at home. And this is a major, this is a major mission, because on the other hand, what we have not-- we've confirmed a tendency, which has been here for a long time, general retail has been driving down prices, and has been driving down variety, you know, the kind of variety that you find on a standard shelf of a general merchandise store is much less interesting than the one that used to exist 10, 15 years ago. Producer wines and brands are being replaced by retail brands, which are focused on very simple, very narrow messages. And it's price-driven. And the squeeze on the margins is just non-stop. So that is not a good place to develop your fine wine, your fine wine, the story, and business. And then Egypt hasn't really picked up. After the peak of COVID, digital hasn't really-- I mean, you all knew that things were going to come down. But then we thought, you know, things would pick up from a higher level than before. Yes, we are at a higher level than before COVID. But it's not that the channel is developing. It is the pace that we thought it would. So there are really, very little replacements for a crisis in such an important channel as on trade. My goodness, 30% on non-alcohol. That's huge. Yeah, yeah, it's big. I wasn't expecting that big a number as well. So people are drinking less in general, but they also, as we were mentioning, before drinking less in the on trade, and they're switching to other drinks easily. And an interesting point-- I mean, when we kept discussing this with Jouao, but is that change will certainly take a bigger adaptation for fine wine producers, because the entry level, if you think about it, it's always been such a very competitive space. Beer was there. Ready to drink was always there. Cannabis drinks have started a few years back. So there was always someone else in that category that was trying to take the attention away of the consumers to something else. But then fine wine was kind of safe in our own bubble, where we could just do what we wanted to do, talk to the people that we wanted to talk to, and not talk to anybody else. And so as Jouao explained, the funnel really narrows. And you've got the same number of consumers, but each of them-- consumers consume less. So you need to expand the entry of the, you know, the entry point of the funnel, you need to expand. So what kind of decision did they take based on this insight? Have they changed their strategy in any way? Yeah, yeah, the very Brazilian so-grap and they they realize that they definitely need to get closer to where the clients and the consumer is. Okay, but everybody says that. What does that mean to them in practical terms? Well, I actually asked this exact question to do our, let's hear him. Just a ridiculous example. We've tried with one of our clients in Belgium this year. We were present with Port Line in the Christmas, one of the Christmas markets in Belgium in the Adan. You know, this is a place where the consumer is. This is a place where, you know, it's a logical place for something like Port Line to be to be seen, to be consumed, to be appreciated and enjoyed. And we've never, we had never been there, you know, so we always relied to be somewhere else and people who come to us. Now we're trying to get closer to people. We're trying, we're moving our teams into the markets. We now have people staying in three or four different countries in Canada, in Brazil, in Belgium, in Switzerland, in the UK, in particular case, we have our own distribution company, that's already had our own team there. And we're there because we want to understand better how things are changing, give better support to our clients, and in particular, being capable of talking directly to the consumer. Because we need to talk with consumers that would not usually be in the places where fine lines would be consumed. And this is not an issue about pricing, right? We're basically there 24 hours a day. And actually, this is extremely difficult because as you can imagine, no distributor likes to have someone who's five days a week in the market, 48 weeks a year or whatever, breathing on their necks, and you know, and saying, has this happened? Yeah, have you done this? Have you done this? Has the perfect serve been shown to the client? You know, has the how many, even the traditional ways of communicating? How many wine make it? Dines have you been able to, you know, to execute? And we now have people that are there to execute those things. And we need to learn much more now. From a Portuguese portfolio perspective, where our market share is still quite small when compared to Italian or French, there is still a very big opportunity. We usually say there's a crisis out there. We've decided not to participate in the crisis, right? But for that to happen, we need to change the way things were being gone, right? And this is not just about having people on the ground. It's about really selecting partners with whom we can do business, right? And we've changed a lot of partners in the last couple of years and the changes that are planned for 2025 are not going to be smaller than those. We do need to also have people that are willing to be in the market. I mean, you know, it's as easy as that. And to be in the market means to be in the market at times of the day where people usually prefer to be at home instead of being out there. And in days of the week where people sometimes prefer to be somewhere else and not working. So more boots on the ground. Okay, earlier you mentioned that China was on the least of people's worries. So what about there? Do you think just adding more people on the ground will be enough? So China is definitely not a market that I know very well. So I haven't asked a few people and the first person that I asked was Natalie Wang, the editor of Vinodjoys, so the biggest information platform on the one market in China and Asia in English, in the English language. So I've asked Coach Ketchumiaup on what was happening there. Let's listen. I think one of the biggest surprises, what can always say is one of the biggest challenges that's the recovery that we've been expecting from China is coming so slow. All of people when China lifted pandemic measures, a lot of wineries, even trade people were talking about a fast recovery, possibly in the first half of the year, I think at the beginning even China's official drinks trade had predictions that you know by the end of the first half of the year. And we should pretty much be bouncing back to pre-pandemic level. But the reality unfortunately is far from what we had expected. The reality is the market is recovering at a pace much slower than what we had expected and looking ahead, it's probably going to be even tougher. So I think that's a big reality check for a lot of people who are interested in this part of the market. So was that a surprise for like wineries and people wanting to work with China? Was it a surprise for someone living in China? I mean, for people based there, did the surprise come the same way? Or was it already weeks signals that you guys being based there could see? I think people who are living here in China sort of see the slow world of economy and you can expect it's coming slow and it's a bigger shock I think for a lot of people who haven't been back to China for so long, especially with the pandemic we're talking a lot of wider East Berlin never haven't visited China in four years and they naturally expect the market to bounce back quickly. But that didn't happen. So I think it's more of a big surprise for people outside of the market. But then again, I think even for people within the market, the pessimism that I've heard and I've seen so far is sort of even more surprising to myself who has been covering the market. Because in the past you talked to people I mean the market is tough but then there are always a lot of shining thoughts you know so we're linings to look forward to. But this year actually when you talk to players big or small, overwhelmingly the pessimism they had about the market, about the recovery and what's to come is you know sort of really overwhelming. So that's one thing that really strikes me and going forward. Any particular reason why? Why is the recovery? Yeah. Yeah I think it's just people that it's very uncertain because you know the property market is very down very much down and the property market is a huge deal for China because 70% of families asked it's tied in with property market. So when you see that property and you know the house that you invested in that 10 years ago that's selling for 10 million now drop into 2 million. For them it's a big shock. So you see basically your life savings going down the toilet drink so people are very cautious with spending. Even that still means you get 2 million perhaps 10 years ago you bought it for 1 million. That still means you know double the price but for them it's I could have sold it for 10 million so that kind of is that feeling of having lost money even if you haven't lost it yet. Even though the property doubled in price but again that contributed a lot to people's you know this cautiousness we're spending that's why you see people are cutting back basically everything. So is this a lack of money or the impression of having less or do you see also a shift in the importance that people give to wine like it's been a fade and a trend you know 10 years ago and I would just undo something else to drink. I will say it's a combination of a few factors first a lack of money definitely if people don't see their income and at the same time unemployment rate is very high tech industry is cutting a lot of jobs but at the same time you know the uncertainty with economy like 10 years ago when you see the economy is booming you get a sense you know I spend today's paycheck tomorrow I'm going to get it back tomorrow I might even double it so there's that sort of spending spray but now with you know uncertainties with the future and you don't know especially with the central government now giving in giving a lot of stimulus so we don't see what's going to happen so everybody is sort of just holding on to their savings and at the same time like wine as a category has contracted so much just over the past few years even just seeing the imports figures you know it's just a third of what it was before the pandemic a lot of people in the industry have moved out and consumption people who are drinking are drinking less so it is overall generally quite pessimistic in all that turmoil and difficult conditions can you can you think of a success story that happened last year either on the you know winery side or the distributor side or the restaurant side oh absolutely I think I can think of quite a few and normally They're often not a story that's overlooked. because we see a lot of pessimistic and really sad in their lives. One that encouraging thing that's happening right now in Chinese market is really the growth of white wine. That's a category that's really like leading the charge. German, Riesling, Moskato, Dusty, those wines are really picking up in South-Voilum. It's encouraging in a sense because it's not driven by business consumption because in China, if we don't have any consumption data to track, where is this wine consumed, where did it end up with? If I had to guess, I would say more than half of the wines, Poldos, in particular, sold in China, I'm never drunk. It's always been given as gift to some officials or business partners or drunk or business bankwits. There's no real consumption of wine in that sense. But the growth of wine categories like German, Riesling, Moskato, Dusty, that's driven by real consumption. People who are finding out about this category and spending 100, 200 RMB a bottle of wine, that's something encouraging. It will take time in terms of value. It's not there yet as for Joe, but definitely give him time. That's an interesting segment of the market to look at. The country that was really affected by the Chinese wine market was Australia. Now China has opened back up to Australian wine producers. Did you talk to any of them about the situation? Yes, I talked to Matt Della, who's a master of wine, but it also heads the Wira Wira, Wainui, in McLaren Bell. Quite difficult to pronounce for a French person. Wira Wira, thank you. So listen to what Matt says about China. I was strongly confident that the China tariffs that were placed on Australia wine in 2020 would be lifted this year and indeed they were. So as an industry we're back in China, which is great. Yeah, once again, sending containers to China. But I think the thing perhaps that wasn't anticipated, I knew this because I was involved in the China market during the time that Australia was not. So I saw this happening and the China market has just completely changed in the last five years. It's gone from sort of this very traditional corporate gifting, corporate entertaining, big heavy red wines and big heavy bottles and conventional selling methods too. Now it's a real balance between red and white wine. Much fresher styles being more appreciated. The consumers are normal people who are drinking wine because they like the taste and they think it goes really well with food and they like exploring different styles and flavours. The root to market is heavily driven by e-commerce and there are some fascinating e-commerce models coming out where China and China a lot of people eat out in quite casual dining environments and in the most casual dining environment you can be aware of whatever you want. And now there are delivery services where you can go into this Vivino Type app, order any bottle of wine you want, deliver the restaurant in 15 minutes, it's crazy. So China has always shown a lot of promise for all the years I've been reporting on wine, but it's a very very difficult market, particularly within the fine wine category. So when you spoke to people, what other markets are they talking about? Yeah, well just also I was just thinking, what you were saying right at the beginning of the podcast about the delivery companies, that's actually what Matt is talking about and the big competition to the untrade because now you can just get your wine, deliver wherever you want and just pay retail price. So that's one of the other things that people need to be aware and and adapt the strategy when it comes to the untrade. But back to your question about the markets, there's a lot of conversation, I mean there are three zones that seems of particular interest for exports managers. So Southeast Asia, so everything else but China really, Latin America and as you know and you were at the European Parliament not that long ago, European producers are following the result of the Mercosure agreements very very closely and that could change quite a lot of things for European producers. And the last the last zone is Africa. So let's go back to Natalie Wang talking about Southeast Asia first. What would you say is the biggest opportunity for the fine wine world in the year coming ahead? I think for me from where I am the biggest opportunity definitely lies in Asia. Just look at the sheer dynamics and the outside of China, you mean? Yeah, outside of China and Asia in general like markets like Thailand, Vietnam and even Philippines or Taiwan, all those markets have such vibrancy of the market and then also it's relatively untapped because I don't think a lot of wineries today have the resources to you know, educate people to be on the ground, you know, talk and cultivate a market. So there's a huge missed opportunity. I think this is the part and also just look at the sheer population like Asia we have like what 4.8 billion and Europe total and that's like what 780 million. This is like seven times of the population just come look at the you know upcoming middle class. So I think there's a huge opportunity here and definitely I believe personally I believe this is the future but aren't the wineries producers adapted at you know, selling to this region yet? I mean that's some a question that they have to ask themselves. Well I've got to ask you about the young girl generation and the younger consumers because I'm sure you're aware in the western world the wine world is really where we're about young people drinking dance. Oh I mean that here's completely opposite. That's one thing that's really fascinating because every day I read especially in the US and in Europe, young generations not interested in wine anymore you know they're moving away to low alcoholic, non-alcoholic drink. In here it's completely polar opposite because the drink that's associated with the older generation that's by Joe, nominate the people, high-proof alcohol but you know wine is this you know the hip-trendy new thing that young generation gravitates to to sort of differentiate themselves from the older generation. So wine in that sense has a huge opportunity here to you know speak and talk and engage to the young generation who are trying to find a wine of their generation to you know drink. So it's a huge opportunity here. Hey listeners just interrupting the conversation for a few seconds. First to let you know how grateful we are that you are listening to this episode. Thank you so much and also to kindly ask you to subscribe to our podcast channel on whatever platform you are listening this episode on and to give us a cool rating. It's such an easy way to support us and it really makes all the difference. Thank you so much. Now back to our conversation. Yes and you also spoke about Africa. Now this year I've done quite a lot of work in trying to talk to people about Africa which of course is not a country anymore than Europe is a country. And it's very interesting there are signs of life particularly in the former French colonies and Gola has always been a big market for people like South Africa but now there are signs of places like the Ivory Coast. So my advice is to say that's right yes. So my advice to anybody is always watch where the French go because sometimes they're the first into markets and they actually develop the markets and the French have been very quietly going into former colonies and starting to sell wines. It's quite interesting. Anyway so that's what I have discovered about Africa. What have you discovered about it? Well something quite similar. We didn't talk about French people about Africa but we talk to Sograbe and you know similar stories about Portugal having former colony there. And so Sograbe has a large footprint in the continent of Africa just because also they have operations in Angola as you you mentioned. So let's go. Let's listen to Joao again about his stake on the continent. Africa was one of the very positive surprises of '23'. Of '24'. Sorry. It had not been in '23, by the way. But in '24, business saw a very interesting and sustained development at the different levels of our portfolio. Are we only talking only about Angola here or other? We don't much, much wider footprint. But Angola did perform extremely well as well and consistently so. So, Africa came back, that was a very big surprise for us, but also other smaller markets in Africa that have probably their best year in many years. And this is sort of, it's a pattern that you see across the board. And obviously, the problem with Africa is always that you don't really know what the future will be. So, we have to feel happy about what you have. But is it the case of everything now? Well, but I mean, it is. But I think, and we were mentioning this before, I think there are certain markets where you really understand what the market was. And if you, and I was talking, I was mentioning the US market, it's much easier to say, okay, in an environment where trade is depressed in terms of mood, what are the things that are represent bright spots? And if you're working in those bright spots, you have a story and you have traction, right? And that has happened with Portugal in general. It happens with premium white lines. It happens with dual wines, in particular for Portugal. So, you can play those cards, sorry. And if you play those cards, you get a response. In Africa, it's just about touching and trying to understand what works. But you know the, you understand the response, but you don't, you can measure the response, but you don't really understand why the response is white, red or rosé, or if it's higher price or lower price, or if it's more fine-lined, driven premium or more commercially inspired. The truth is that across Africa, we've had very positive trading conditions throughout the year. And the prospect for 25 is also, is also, is also. So do you think there's room for a company like yours to be a bit more, maybe less, I put it this way, but less reacting to the market and more building the market and driving the market in Africa? I think we have to take the opportunities that come by, and we have to be very quick to respond to those opportunities. Can we build them? Yes, we can, in the sense that if we find the right partners, then we can build the business. And I think in Gola for us, it's very obvious we have our own distributor in Gola. And the fact that we are there, gives us an understanding about the needs of the different segments in the market, from private sales to more than retail, to the restaurant sector, to institutional sales, which in a country like Gola are a very relevant part of the market. And if you understand those opportunities, you know how to respond to them. Now, are those opportunities going to be the same next year? We don't know. That's the unpredictability. So the closer you are, the better you are to respond to these opportunities. I mean, we've had a couple of important institutional deals in Gola, for example, which few that was early at this time last year, whether they would be on the table, I would have no clue. We cannot control the fact that they're on the table, but we can control the fact that in a month or in a matter of weeks, you can respond to those opportunities. And that's the trick. Yeah, that's really interesting. Like I said, I've put quite a bit of effort into trying to speak to people about different countries, and it's not easy actually to get people to talk to you and so on. So I think what we need to do, because it is a fascinating area, is I think we need to go and visit some of these places ourselves. Yeah, I would love to. If anyone wants to partner with us on this research project, I mean, it will not be doable. It's particularly interesting for Fine One. I think a lot of producers always think that emerging markets are about commercial wines, and you can make a terrible mistake that way. Because often in these markets, wine isn't about anything other than prestige. And so people want the prestige product. Like in Nigeria, for example, the emerging middle class don't want yellow tell, they want champagne. So anyway, we've done just a point, listeners, to one of the webinars that we've done last year, that was called this Fine Wine Ready for Africa. Because as even Joa was mentioning, people have been reacting to Africa so far, but they haven't been really building development strategy for that continent. With good reason, it's a complex one, and it's still one in progress, and there's a lot of things to build. There's a lot of investment to be made. But yeah, if people want to go and watch the webinar, and yeah, they can be those start of a study for us if anyone wants to partner with us on that. Yes, but before we go on get our vaccinations and pick out bags, let's talk about a market close at a home. What's happening in the UK market, pulling? Well, it's a hard one because I hear a lot of different echoes, and it depends who you listen to. But most of the companies we work with are quite happy again with it, 2024. It seems that Christmas was really good as well, better than expected in some situation. And I remember that was exactly the same thing in 2023. People were quite worried until the end of the year, and then it worked quite well. The only people that really worries are the people that heavily depend on the secondary market investors, because this has been quite gloom this year, and we all know that the entrepreneur campaign wasn't the most successful one. But let's listen now to Pierre Mansour. Pierre is the wine director for the wine society, so one of the oldest and most respected retailer in the UK. So for wine in particular, we've got two big, big changes coming next year in 2025. The first is a new structure or new methodology for alcohol tax and calculating alcohol tax. So the way that the UK's alcohol tax banning has historically worked is made up of about three different bands based on whether your wine is a still wine, a sparkling wine, or a fortified wine. So you have three alcohol bands for those. Which is quite classic in many countries. It is organised like this as well. Yes, absolutely. What we've got coming from the first of February is a new tariff system, which introduces over 30 different tariffs based on alcohol percentage in point one increment. So every wine, depending on its alcohol level, will have a different tax level to it in point one increment. So the objective of the government is to encourage lower alcohol or better tax, more reduced tax on lower alcohol versus the higher alcohol. Which is fine. The thing that they haven't really understood and we lobby the government through the WSTA, which is the organisation in the UK on this. So this is something that we talk actively about. But what they haven't really understood is that unlike any other alcoholic beverage, wine is an agricultural product and therefore every vintage, the same wine can have a different alcohol level. So the operational complexity. And the 0.1 percent is like it's ridiculous. I mean, even if it had been 0.5, but that would definitely not be the case. more technically correct and you know something that people can actually guarantee but at 0.1 difference is just how do you think they are going to enforce that? The government. Good, that's a really good question Pauline. It's still relatively unclear. Our understanding is that there will be spot checks but these spot checks happen on stock that we have and that we're currently selling. We don't believe there will be checks when goods are moved when we're importing from other countries but there will be spot checks. But I think that the enforcement could be very difficult for the government but nevertheless the legal requirements for us as a retailer, we will adhere to those legal requirements. There is quite clear guidance there around different thresholds. There's the added complexity that for EU produced wines we are able to accept EU labeling which is in 0.5 increments which is fine. So there is this sort of threshold to play with. What it's doing to so all a lot of the big retailers here, the supermarkets, what we do know is they are actively looking at ways to reduce the alcohol level of the wines that they sell. How much is going to be a how much extra for a bottle of let's say £10 so that's easy. But £10, 13.5% or 14% how much is the increase going to be like the exact increase is going to be so basically at the good news is anything at 11.5, 12 and 12% will actually be marginally lower at about for 11.5% 12 people bottle. The area that's really going to be hit is 14% up to 15%. So 14 to 14.5 where you've got 43p on a bottle at 14% and 54p on a bottle of 14.5%. So a £10 bottle yeah would go up by 24p yeah which is which is plus that's on the 54p so yeah yeah yeah yeah so a bottle of 12% will be £10 12p when a bottle of 14.5 for be £10 54 and a bit plus because again you have that on that. So I'm just taking a bit of time to understand because that that will impact of course you and your business but that will impact the producers that you work with. You have to go back to your original question about what other things facing wine business is the second thing that's coming our way. You're something called extended producer responsibility which is a packaging tax and we already have a packaging tax in the UK which is called PRNs and extended producer responsibility. We thought was going to replace PRNs but actually the government is bringing it in as a second tax so we'll be paying two packaging taxes next year. That's going to increase for us. It's going to take our packaging tax increase it by about £1.5 million. We turn over about £130 million. So if you take that into account and the complexity of operating duty I think the longer term impact in the UK where we have particularly for fine wine we've got this incredible sector in the UK of specialist wine merchants, specialist local merchants who are often single businesses in small local towns. They do an incredible job in championing fine wines and championing terroir specific wines to their local community. Those small independent specialists I think are going to find it's going to be really hard. I find it hard to see a future where we've got this really vibrant specialist sector which is so critical to bringing on new consumers because they provide that stepping stone into fine wine because they're there they can hand sell they can guide and actually they can talk to people and they then become good important wine society customers too. So that sector I really worry because it's what makes the UK fine wine market so exciting and interesting. Can I be quite cynical and say well you guys already had to adapt to Brexit right so that was a huge admin cost and that was a huge change in admin and importing loads and stuff. So isn't just that you know now you're you resilient and you are and the people that survived after Brexit and that were able to introduce all those new processes will be able to you know introduce this new one. Yeah so I think I think we'll be able to introduce the new processes but it's the if you take all of that plus the government's budget which was announced in the autumn. So those businesses are not only facing the two things that are wine specific but our national insurance tax has gone up and the threshold lowered business rates have gone up so if you if you own brick if you are running from a bricks and mortars outlet that's going to have a big impact on you or if you take all of that into consideration at the wine site that's a 25% increase in our overhead next year that's massive 25% so if you're a small business. And you don't have that much brick and mortar also because your price is not existing. No we don't. So yeah exactly so if you're a retailer that maybe has two or three shops or if you're a high street chain you know in the UK majestic is probably the the most well-known that have I I think they have 70 or 80 shops you know and that's a significant impact on on their business model. Margents Margents Margents is going to be the word for 2025. Margents indeed as somebody said on our plus podcast this year wine tastes better with margins which has kind of become our saying indeed it does it's such a good quote okay so who else did you talk to and what did you talk about. So quite logically one of the hot topic that we discussed as well and that was on everybody's mouse was the young consumers and how to get more of them through the doors of wine you know when everyone is concerned about having less consumers you need to look at who you want to get into and I guess here I might be a bit biased because as you know we are we have started a dip dive into the topic of new consumers in our tips so that has been quite a lot in our minds do. Yes and I have to jump in here and say you know as you know I read a lot of public health literature now and one of the things that that they're horrified by is how many people in the alcohol trade generally are talking about you know how can we get young people in alcohol and actually actually it's it's made me stop and think about it a bit and think we have to be we have to be really careful about how we we speak about this I think in terms of preserving culture and traditions it's really important that we you know we introduce people to it but um yeah I think it's a fine line to walk I totally agree with you but anyway in terms of handing on this great tradition of wine culture if anybody is interested in that go and listen to the first two podcast episodes of this series they're definitely worth a listen. Yeah the the new now it's the new consumers in narratives one um thank you for pointing them I learned a lot for sure um and we've we've been quite lucky that the people we interview in this series are just you know absolute legends so it makes always full variance by in conversations um but back to the new consumers um what I wanted to say is that all the wineries I mean one of again one of my positive takeaways was all the wineries and retailers we talked to are questioning their approach to the young consumers and this in itself for me is a good news because if the wine world is really putting a lot of effort in you know understanding they really want to understand they really want something to happen with the young consumers then something is going to happen you know it might take longer than in other industries but because we know it's time, but just like with new farming practices, I think best practices will spread quite quickly because when there's a world there's a way. So yes, we've discussed a lot what the different actors were doing at the moment in regards to young consumers and we are going to listen now to Eduardo Bejo, who's another master of wine and who's in charge of the luxury portfolio at Gallo, a very, very small winery. For 2025, we even built a very ambitious plan. So I strongly believe that you need to support your partner, you need to support your distributor and to invest during crises to gain market share. So it was quite challenging, but I presented a very robust plan for 2024 requesting more INP investment and it had been approved by the leadership team, so which is good. So it means that we know that 2025 will also be challenging, but I see a lot of opportunities for us. You know, the worst when you have crises like that is to react on the short term. So you need to have a long term vision and that the benefit of working for a family business, that the fact that you have a long term projection. So we are not obliged to react, you know, instantly. So as I explained before, I think that's the biggest challenge for us. It's to bring new friends to the wine category and the most important opportunity for our industries to attract the Gen Z, which is the largest generation alive, and we know that they are exploitive and interested in trying new products. So they are also social drinkers, creating experience and connection with these consumers is really key. So we need to meet a Gen Z in an environment which matters to them. So for me, wine tourism and direct consumer sales are nice opportunities to attract them. So one on Tuesday asked, but also younger generation are looking for memorable experiences and I want to understand better the one they drink. So emotions who vineyard tools, wine tasting, lifestyle experience, at the winery, are key to build a royalty and to reach this new consumers. So typically, again, since 2019 and the renovation of free and martini, we have invested a lot in consumer experience, making it always more exclusive or personalized. So I give you an example. The new orange swift experience, the new orange swift tasting room, so in Sant Elena, offer a unique experience to consumers, which is far from the traditional approach we can get in industry. And when you think about the Napa Valley in 2023, 3.7 million people visited Napa Valley last year. And I think that's a great opportunity to attract also the new generation. I hope this visitor wear millions and the average age is about 40. So but also what is even more interesting is the diversity of the profile. You know in the US, we can get a better vision of so you have increasing numbers of Hispanic people, Afro-American. And so it means that all these new consumers, new drinkers, are interested by the experience offered by the winery in Napa. And I believe those diversity and the quality of the hospitality service you have in Napa, there is a lot of different style, a lot of different approach, is explains this success. And for us, it's key to have a share of this business, of course. So Felicity, Matt Deller had a very cool insight to you on the topic of young consumers. And I think you are going to particularly like this one. So let's listen to Matt. I think we have a lot to learn from opera and classical music. And classical music I think has done a really good job of re-engaging with younger consumers. I take my son to back to the future screening with classical music or they love Japanese anime. So it took them to the one piece concert and things. And so classical music is in some ways having a renaissance because classical musicians have etc and saying well you know classical music has to be most gotten back and you know in Beethoven it was a full theater of 1200 kids all paying $120. It's crazy. Weedly you know the parents aren't that into it because when I grow up no one listen to classical music right? It was just now for boring. I loved it because they made it fun right? But and they had you know they were playing scenes from one piece in the background and it all made sense. But yeah I think classical music is doing a much better job of kind of bringing in you know bringing in and meeting young people where they are now and they did when I was growing up. Yeah interesting so obviously I love opera and ballet and symphonies all those sorts of things. So about 20 years ago now so I have to emphasize it was a long time ago but when I was in Australia I was doing a lot of arts reporting and I interviewed the CEO of I guess the general manager as he was then of opera Australia and also people from the Australian ballet and they told me that they take a life cycle approach to getting people interested in the arts. So what they do is they they tourist symphonies and cut down on frozen stuff to schools which obviously has no analog with wine because you couldn't possibly do something like that. But then what they do is they throw tickets at young people. They shower them with cheap tickets and they give them backstage tours and they make a fuss of them and all of that stops at 26. The reason for that is around the age of 26 is when people begin to get really serious about their careers, they've graduated, they're doing this and once that happens, funnily enough even as they're earning more money they don't have any money because they get marriage, they get mortgages though that's less than as possible these days. But they raise families and so for about 20 years they know that they won't see those people again but if they've done their job properly in the early stage then all of those people will come back about the age of 45, 46 and they'll be the best possible customers. So I always found that sort of life cycle approach a really interesting idea and wonder if there's something in it for wine. Yeah, surely, I'm sure. So Felicity in a minute I am going to ask you about your own hopes and predictions for 2025 just to give you a heads up but I wanted to talk to you about some of the things that people who are really enthusiastic about for 2025 and actually really looking forward to. And you know, of course we talked to wine people and so one of the first thing they were really thrilled and enthusiastic about was the quality of the wines and wine makers and retailers were super excited to think about all the great wines they will be able to propose to the clients. The passion has not gone, people are so passionate about their wines they propose. So let's continue with Matt Stella for a second talking about the bergen defecation of the wine world. Of course I love that that that world that words and that world as well. And then we'll jump straight after Tipea Montsour and his vision of the vision of the wine society. I think the big underification of fine wine is the biggest opportunity. They were seeing this a lot in Macquarieville and the Adelaide Hills is really micro defining our sites, kind of blocked by block and this is happening in a lot of places around the world and really understanding the nuances of geology and microclimate and things and how different blocks behave differently and express themselves differently and doing all these micro-benefications. So where are we? We have 20 to tonne, open top for mentors. Adelaide Hills were just bought 12 one and a half tonne for mentors and so doing these kind of micro-fermates of very specific, quite small parcels of fruit from very nuanced kind of plots of, you know, just sort of seven rows of vines. You know, that's the future for us and it's, you know, quite clearly the future for Macquarieville, alum and for the Adelaide Hills. It allows us to, you know, buffer what's happening in the vintage a lot or with climate change, for example, and deliver, you know, very sort of complex layered balance wines every year. But it also allows us, you know, at where we were just released a whole lot of single vignade wines and new single block wines. So it allows us to, you know, kind of really release wines that we think are sort of extremely distinctive and very specific. I guess this is, you know, as people kind of move away from wine as an alcoholic beverage, we're seeing people are moving towards wine as something special, that something unique, but they want something unique. What am I looking forward to the most? I continue to look forward to the fact that wine drinkers just are going to have so much choice again of just brilliant wines and alongside that I think there are lots of exciting new wines that are or new styles that we're starting to see. Some of those are in response to sustainability, like some experimental wines with some of those hybrid Peewee grape varieties. So I'm excited about that. I'm excited. We are working on a new fine wine plan, which are really of, you know, been instrumental in helping us think outside of the box. So we've got some really exciting initiatives that will start to roll out in 2025 around how we present fine wine, how we buy fine wine, and really sort of doing fine wine more justice than we at the wine site, he may have done so historically. So that's really energising me. I can't wait to roll some of those elements out. There is a lot of growth in our wines that we sell over 25 pounds and that is a trend that sort of started around sort of 2021, but it started to really accelerate this year and we are anticipating that will continue next year. The other element that I think is a really great thing is that certainly in the UK sustainability is becoming a default requirement for any business that sells directly to consumers. When I say sustainability, yes, of course it covers environment, but even more so now that the sort of people element and that people element in wine is critical. So we're seeing our members starting to actually not just say that they care about ethics and environment and anything that can help reduce climate change and waste. They're not just saying that they're starting to actually buy products. So Felicity, what are your predictions, hopes and dreams for 2025? Normally I'm really happy to your predictions and trends and this year I have absolutely no idea. So I'll tell you some of the things that I think are going to affect the year but I cannot see how they're going to play out. So first of all on both sides of the Atlantic we're about to see a huge push for cutting regulations. The EU has made a commitment that it's actually dropping a lot of sustainability commitments very, very quietly and it's moving to be much, much more business friendly because Europe has just fallen so far behind in terms of income and so on. The major governments in Europe at the time of recording this are an absolute crisis. The German government is not functioning. The French government is not really functioning. So the leaders of the EU are falling apart. And then we've got the Trump White House and we know that he's going to bring tariffs and he's also planning to cut lots of regulations and stuff. So I think we're at a moment of absolute economic and political crisis and so how does that play out in the past? Either people are going to go, oh my god there's a crisis, we have to rally and get our act together and make big changes. Or they don't in which case things are just going to limpa long getting more and more difficult and more and more polarized. So in the face of all of this I absolutely no idea. But on the sort of the brighter front is the EU trade deal which is coming sometime soon. We hope with South America, Mercasol which you mentioned earlier. So if that happens as it looks like it will, it's going to boost the sales of both European wines and wines from major South American producers. And probably what will happen is you'll also see even more rapid development of the Brazilian wine market. And Brazil is huge, it's got lots and lots of young people, it's got a growing middle class, it's got a growing economy so Brazil could be a really, really bright spot in the future. But that won't come for a while. So I think we're going to see either an economic take off or not. But in terms of wine, the wine market is definitely going to get even more competitive. We're watching as a lot of baby boomers and are retiring, they're trying to offload their properties and they're discovering that it's not that easy because what they thought was a wine brand but it turned out just to be a lifestyle business that nobody else necessarily wants to pick up. I think we're going to see a lot of acquisitions and consolidations and sadly I think we're going to see the disappearance of lots of vineyards and lots of wineries being turned into something else. So at the commercial end of the market I think there's likely to be even more turmoil but that's going to drive a lot of innovation. So I think by the time we do this, this time next year we'll be talking about lots of amazing new products. And I think what's most interesting is that the luxury market has taken a big hit. And you know, the last couple of years people just assumed, including me, that this was the bright spot that was just going to keep on keeping on. But it's not, it's all slammed into the wall. So it looks like we're entering a period of back to basics, maybe even a slight period of austerity where people won't buy things anymore just because of the name and the prestige. So that means this is a market for people who are offering genuinely high quality at reasonable prices. So that's my way of saying I have no idea. What about you pulling? Well, yeah, I'm not that sure about predictions either. But maybe just a final insight that I wanted to share because as we mentioned, I spent a lot of time thinking about this question of the young consumers and I've talked to a lot of people over the last three months about this to frame the study that we are going to do this year. And I'm really convinced that there is a big change coming up in the way we build wine events. So of course it's a bit more practical than you'll take on the global economy but maybe something a bit more actionable. So I was leading a workshop recently in Sicily with leading distributions, distributing actors across Europe. And one of them said and it really stayed with me, you know what, we understood that women might be more comfortable sometimes in women on the environment. So we created women on the wine events. But we never really created young people on the event. So I know that in other part of the world it has happened like Pellusa and all the great initiatives that have been coming from Australia and New Zealand. But here in the UK, in France and Europe in more traditional markets, not that many, we never really think about a young person's motivation when you're going to a wine event. And for sure, a young person's motivation is not to sat next to a 75 year old, you'd love you as we say in French, who will spend the whole dinner telling you about all the bottles he drank in his life. And you know, it's a good old days when the home of the economy was 85 in France and everything. So what I would like to see more of in 2025 is really this is people creating wine events that are for young people and have young people in mind. And no, then I'm not saying experience. Like this experience usually means something super fancy and very works in every detail. And you know, something extremely creative. But I'm just talking about regular wine events, but where we change the metrics of success, for example, and I think we forget big motivation of every night out when you are young, when you usually under 30 is you go out because you want to make friends and if possible with benefits, that's a huge part of your motivation in going out. So you know, what if we were creating wine events where we will have actually curated the rooms so well, like some of the top restaurants do, that at the end of the event, the metrics of success will be, do people want to WhatsApp each other or not? Have I created enough magic tonight that people will remember it not because of the food or how grand the place was, but how amazing the people I met there were. So we know that the younger generation has trouble building connections in real life. So what if we were, they're match makers and let them remember that every time they met a new friend, a new lover, maybe a new business partner, it was through you and see how much more easy it is to get them to come back to your next event. And in the global scheme of things, let's embed in their mind that every time they had a meaning conversation with someone, there was a positive one in the table and that one got them together. Yes. So have an event that has ostensibly another motivation. Actually, this was done very well. Whenever I was worried about millennials not drinking, there was some very famous examples of people who created events around Instagramable things. So there was a Rose mansion in New York, I think, where people could go in. And so the wine was part of it, but the real lure was the attempt, was the ability to go in and take amazing photographs of things. So actually, following your suggestion, why should actually go and pair up with somebody who's an expert in relationship making and say, how can we build a relationship making price? I think the wine, well, I mean, talking to the merchants I've talked to, I think we've got those capacity in-house because it's like, when you talk to the fine wine merchants here in the UK, they usually have a very good granular understanding of who the consumers are. It's just like, I think they never pushed to what the hospitality world has been. People that have created extremely successful clubs in New York, in London, or in Paris, they spend hours every night before the doors open and curating that room and who is going to sit next to him, who is going to be seen at the center of the room. How do our pair, the genders across the room, like they put so many things in the room, so much energy in doing this. And I think we don't enough in the wine world. We could do more in thinking about, I'm not just going to propose those tickets to all of my database, but who do I want to put in the same room because I think there will have a good time being together. And of course, we've heard about those events that the end all you want people to Instagram and you want, that's the metrics, how many people took photos. I guess one of the metrics could be, how many, what's up message happening? How many babies are producing? How many Christmas we get invited to? Exactly. Okay, so I think on that note, that sounds like we've come to the end of our conversation. So once again, thank you to everybody who participated in the Aurenie Podcasts this year. It's been a series of unbelievably fascinating conversations. And thank you Felicity, what a way to start the year. Happy New Year, Pauline. Thank you for listening to this episode of Aurenie Global in Conversation. Aurenie Global is a think tank dedicated to the future of fine wine. And when we're not podcasting, we are publishing reports, white papers, articles and marketing sites. So if you are interested in the global conversation around fine wine and what the future holds in terms of adoption, distribution and consumption, add over to our website www.urenie.global. That's A-R-E-N-I, and subscribe to our newsletter, all the links are in the show notes. Because whether you are producing or selling fine wine, you need to know what's happening in the world so you can make informed decisions. Until next time, cheers.