Tradition and Evolution of the UK Wine Market w/ Katy Keating, Lay & Wheeler

Drinking wine since Roman times, the UK market for wine is both mature and competitive. Changes happen slowly, and old traditions remain as the market evolves. Katy Keating, Managing Director of Lay & Wheeler, one of the UK’s oldest wine merchants, gives a deep dive into the UK wine market. She explains the history of wine drinking, its impact on wine purchasing, the up-and-coming wine regions, and the fragmentation of the UK wine retail marketplace.

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Detailed Show Notes:

Lay & Wheeler (“L&W”)

Fine wine merchant, storage, and broker
Founded in 1854, after Berry Bros & Rudd (1698), Justerini & Brooks (1749), Corney & Barrow (1780)
Owned by Wheeler Family until 2009, when sold to Majestic
Never integrated into Majestic, it was a breakeven business doing ~£10-15M/year
Had access to the best wines in the world and a loyal, long-standing customer base
2016 - started turnaround to put L&W back on the map
2019 - L&W sold to a private family, expanded the team, and brought MWs to buying team
Mission - “Connect the right people with the right wines.”

UK Wine Drinking

Very competitive and mature market - drinking wine since Roman times, customers know a lot about wine, buying is very relationship-driven
2nd largest wine importer (20% from France, Italy)
70% of households buy wine regularly
Beer & spirits are also big - pub culture
~50% on-premise, ~50% off-premise
Commercial wines - ~75% by volume, grocery stores mostly
Fine wine - ~25% by volume, ~40% by value, UK is ~33% of £5B fine wine trade
UK drinker drinks wine more mature (the US drinking 2009s & 2010s, UK equivalent is 1990s, early 2000s)

Wine storage is mostly in bonded warehouses

Popular regions / varieties

Old world love - history with Bordeaux
Fine Wine - L&W is 40% Bordeaux and Burgundy
Appetite for Burgundy is “insatiable” - high pricing has driven renewed interest in Bordeaux and some intrigue with Oregon PN
South Africa has been growing last 5-6 years (L&W has seen a 50% CAGR over the previous 5 years)
Champagne growing
Fortified wines - Port is most relevant for traditional settings (including Christmas, which is significant in the UK); Sherry & Madeira are not as popular

Organic/biodynamic not asked about by fine wine consumers

UK trends

Wine for investment
UK wine production - growing overall pie for sparkling, not taking from Champagne (L&W is <0.5% the UK sparkling vs. 10% for Champagne)

UK retail market - very fragmented

No 3-tier system, merchants can buy direct from producers and sell to consumers
Consumers need to go to 5-7 merchants to get everything b/c of exclusivity with producers (fine wine)
Exclusive relationships often occur when a merchant sells to private clients and restaurants
UK wine trading is standard; L&W gets ~25% of revenue from trading
En Primeur/Futures - a big part of L&W business for Bordeaux, Burgundy, & Italy
Low end - very competitive on price, grocery dominates
Online is slow to be adopted, and many still don’t have online ordering

DTC from Europe