As the UK wine industry grapples with the implications of a new duty system, Bibendum’s Wine Buying Director, Jamie Avenell, shares insights into how the company is adapting to the evolving landscape and supporting its trade customers.
Navigating the Complexity of the New Duty System
Under the newly introduced duty system, alcohol duties are now tied to a wine’s alcohol by volume (ABV), creating significant challenges for suppliers like Bibendum. Avenell explained, “Different vintages of the same wine can have varying ABV levels, which means duty rates will differ accordingly. Our task is to work closely with both our producers and customers to help them navigate these changes.”
To ensure smooth integration of the new system, Bibendum has invested heavily in upgrading its systems and processes. This investment aims to provide clarity and efficiency, ensuring that both suppliers and customers are well-prepared for the shift.
The company has also focused on providing tailored support to its trade customers. Avenell highlighted that Bibendum’s sales teams are actively engaging with clients to ensure they fully understand the duty changes and their potential impact on wine lists. Customised wine lists designed to balance value, quality, and profitability are a key part of this effort.
Anticipating Market Trends
To stay ahead of market shifts, the wine-buying team at Bibendum has been closely monitoring trends for over a year. One notable trend is the growing demand for lower-ABV wines, especially for house selections. Avenell confirmed that new wine launches reflecting this trend are expected to hit the market by spring 2025.
Adapting the Supply Chain
The new duty structure has added complexity throughout Bibendum’s operations, particularly in ensuring that all wines are landed with the correct ABV and that this information is communicated clearly to customers in advance. Avenell noted, “These changes add considerable complexity across the supply chain, and we have been planning and implementing adjustments for the past 18 months.”
The company has been particularly mindful of risks associated with prioritising lower-ABV wines over quality, which could negatively impact consumer perceptions. “Our aim is to provide complete transparency regarding how duty changes will affect our customers’ wine lists, and to help them adapt their range to achieve the best value and maximize profit,” Avenell said.
Bibendum’s website will feature regular updates, and customer briefings will continue in the new year to ensure businesses are well-prepared for the upcoming changes.
Embracing Opportunities Amid Challenges
While the new duty regime presents challenges, it also offers opportunities for innovation. Avenell emphasized the importance of Bibendum’s strong partnerships with producers, noting, “We’ll closely monitor the evolving wine landscape and ensure our portfolio evolves accordingly to meet changing consumer preferences.”
Long-Term Strategy: Aligning with Consumer Behavior
Looking to the future, Bibendum is aligning its strategy with evolving consumer behavior. Avenell observed, “Consumers are drinking less but are more focused on drinking better. They are willing to spend more on a premium wine experience and are less inclined to compromise on quality.”
To address this shift, the company is collaborating with producers to explore ways of reducing ABV without compromising on the overall quality of the wines. Bibendum is also adapting its strategy to meet the needs of customers in more price-sensitive segments, where lower-ABV house wines may become increasingly prevalent.
Prepared for the Future
Despite the administrative challenges posed by the new duty system, Bibendum’s investments in people, processes, and systems ensure the company is prepared for the changes ahead. Avenell concluded, “We are an international business, and our investments in systems and talent enable us to manage this new way of working effectively.”
As February approaches, Bibendum’s customer-first approach is set to ease the transition, positioning the company with cautious optimism as it navigates the complexities of the new duty regime.
Related topics:
