The anatomy of a wine scandal

Whenever a new wine scandal surfaces, it reminds me of a call that came through while I was munching on a pizza during the Verona wine fair with half a dozen wine producers from all over Italy.

Whenever a new wine scandal surfaces, it reminds me of a call that came through while I was munching on a pizza during the Verona wine fair with half a dozen wine producers from all over Italy. My then editor wanted me go to Bergerac to cover a scandal that had just blown up. Apologising for having to leave early, I explained that I had to report on a wine scandal. Each of them piped up anxiously: do you mean the one in our region?

This time one of the two latest scandals does come from Italy, while the other has emerged in South Africa. Just before Christmas, we found out that green pepper essence had been added to certain Cape sauvignon blancs to give them a more 'authentic' sauvignon flavour. Hot on its heels comes a pinot grigio scam in which 8 million bottles of a humble table wine were fraudulently labelled as Sicilian pinot grigio. The fact that Sicily hardly produces any pinot grigio at all should have been a warning sign, but if it was, a blind eye was conveniently turned.

Although thousands of miles apart, the two scandals have a common cause. In both cases, producers cheated because of the pressure to cut corners. The South Africans were trying to supply a demand for cheap sauvignon blanc in the UK, a market in which good sauvignon has become an increasingly scarce commodity. In the case of the pinot grigio, soaring demand has created a shortage and prices have inevitably gone through the ceiling.

A less-publicised aspect of the Cape affair is that supermarkets, in their pursuit of cheapness, are gaining more and more power and putting pressure on winemakers to keep prices down. Last summer there was a change in South Africa's wine regulations. There, wines must pass a taste-test by the Wine & Spirit Board, but supermarkets have become more involved. If a wine fails the test because it lacks sufficient varietal character, the producer can now appeal with a letter from the buyers (eg, a supermarket), stating that they've tried the wine and it's exactly what they're after. The board says it doesn't automatically lead to the wine being okayed, but it certainly introduces the possibility.

In another instance of supermarket interference, one supplier recently complained that his supermarket customer had announced, after encouraging him to install an expensive screwcap bottling line, that it was going to be bottling his wine itself to save costs. "They may claim it's being done for the benefit of the consumer, but the bottom line is that they're cutting costs to undercut their rivals," he says.

The latest manifestation of this is the growing promotion jamboree which is feeding our habit for the bargain. As Steve Daniel, former head buyer of Oddbins, points out, "the problem of discounting is that the producer will put in a cheaper wine to compensate for the discount. It's far more important to get the quality right at the intended price."

Retailers are having to balance the demands of bargain-hunting customers on the one hand and profit-seeking shareholders on the other. The end result of the cheapness fix though is to sell the supplier and customer down the river.

"We've created a generation of promotion junkies," says David Gleave, managing director of the importer Liberty Wines. "I think there's a long-term risk of a downward spiral in which people start to lose faith in the wine industry." Perhaps they already are. According to Nielsen, the market-research firm, the wine market is shrinking outside of the top 20 brands. Do the supermarkets realise they're skating on thin ice or will they have to fall in to find out?