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Wine Industry Expectations for 2021-22

Posted on April 19, 2021 by Admin

The future for the wine industry can be summed up in two words: Direct-To-Consumer Sales.

The curve ball for the industry in 2020 was the COVID pandemic which had a sizable impact on wine sales. Wineries had to quickly change tactics in response as tasting rooms and restaurants went dormant. In a nutshell, sales shifted dramatically to online and direct-to-consumer purchases.

What to Expect for 2021-22:

Improved demand from consumers as hospitality, cruise lines, travel, concerts, sports and the like reopen, in addition to deferred events such as weddings.

How Wineries Can Make the Most of the Changed Sales Landscape:

Opportunities for marginal growth will be found by investing in ecommerce and digital strategies.

How Vineyards Factor In:

What’s critical is a balanced harvest supply in the West. Supply is the West is largely balanced going into 2021 but with low growth rates, a large harvest will put supply back out of balance. However, as California appears poised for a drought in the summer of 2021, over-supply appears unlikely.

In conclusion, the wine industry will need to continue to adapt in sales channels, strategies, tactics, and messaging to be successful in meeting the post-vaccine demand.

 

 

DIRECT TO CONSUMER CHANNEL MOVEMENT: Channel shifting was the byword for 2020 in grocery, smaller producer and direct-to-consumer channels. With tasting rooms’ closure in March, the consumer adapted and went online to purchase. The shift replaced lost tasting room sales. Online is now the greatest opportunity for producers in 2021.

 

 

 

 

 

 

OFF PREMISE VOLUME AND VALUE CHANGES: 2020 began with declining volume measures and discounting due to an acute oversupply of wine and overall flattening consumer demand. March lockdowns moved consumers to a panic-buying phase for wine, spiking wine sales growth above 60 percent. By the end of the year, total wine sales were about even with the prior year.

 

 

 

 

 

AVERAGE WINERY SALES CHANNELS PRE-COVID AND DURING COVID: Restaurants and tasting room sales made up about 43 percent of the average winery’s sales in April 2020, when the government issued shelter-in-place orders, closing both channels. Resilient producers immediately evolved to phone sales, ecommerce, Zoom tastings and curbside pickup, among other tactics. By November, the magnitude of the shift was apparent, with online sales showing the greatest total change.

 

 

 

 

ECOMMERCE TRENDS IN ALCOHOL: With consumers sheltering and working from home, online sales became important for all alcohol producers. Growth in delivery company accounts for companies like Drizly and Instacart exploded. We believe there is a permanent consumer shift to more online purchases of wine, which will expand with the coming of age of millennial consumers.

 

Information sourced from Silicon Valley Bank State of the Wine Industry Report for 2021: https://www.svb.com/trends-insights/reports/wine-report

 

Market Update for Wineries and Vineyards

Posted on March 18, 2021 by Admin

The global wine market is projected to grow at a CAGR of 4.28% during the forecast period 2021- 2026.

Product premiumization is one of the prime factors expected to fuel the growth of the global market for fortified wine in the upcoming years. Leading market players are concentrating on the development of new flavored fortified wines, to cater continuously to the changing consumer preferences. Marijuana-infused wines are gaining high popularity, specifically in markets, like the United States. It is possibly the most significant trend influencing the alcoholic drinks market, globally. Mostly, markets across the world witnessed consumers trading-up to higher-value products, primarily across a wide range of categories. This trend is prominent in the developed markets, like the United States. Consumers are keen to explore unique and interesting alcoholic beverages.

Asia-Pacific is leading in the demand for wine, with China dominating the market in the region. Notably, the consumption of red wine is more of a tradition in China, as the colour red is considered lucky in the country. Owing to this factor, China is one of the leading markets for red wine consumption, giving tough competition to France and Italy. Australia is second in the consumption of wine in Asia-Pacific, followed by Japan. Also, India is the fastest-growing country in terms of wine consumption and registered a growth rate of approximately 7% along with the Philippines, South Korea, and Vietnam are the other potential wine consuming markets in Asia-Pacific. Hong Kong has no import tax for wine, which is a driving factor for the market. 

Brazil and Argentina are other key countries, reflecting the future growth prospects in the wine market. The two nations are majorly driven by an expanding middle class, coupled with marketing campaigns run by major importers, such as Expand Importadora and Interfood Importação, which are aiming to promote the culture of wine drinking, particularly in the case of Brazil.

In August 2020, Californian winery Limerick Lane Cellars has launched a new wine brand in the United States, packaged in aluminum bottles.

In December 2019, E. & J. Gallo Winery announced to modify its agreement with Constellation Brands Inc. announced in early 2019, for the purchase of a portfolio of wine brands, along with six winemaking facilities located in California, Washington, and New York.

In February 2020, India got its first canned wine in the brand name of Dia Sparkler. The new canned wine has been launched by Sula Vineyards, which one of India’s most popular wine brands, in leading stores across India.

As per Mordor Intelligence analysis, COVID-19 made a major impact on the wine industry due to the forced closure of on-trade wineries in various countries such as the United States, United Kingdom, India, and others in order to control the impact of the pandemic. However, the current environment may provide an opportunity for the wine industry to recapture lost consumer attention. As per the analysis, the total wine volumes are up year-over-year as more people purchase wine to enjoy with meals at home majorly in European and North American countries. On the other hand, there is uncertainty if the current boost in the off-trade will continue after pantry loading depletes, the on-trade slowly reopens and consumption behavior returns to pre-Covid-19 levels.

Moving forward, the wine market is driven by increasing demand for wine, due to its health benefits and premiumization of wine products, coupled with innovation in flavor and more advanced distribution networks, globally.

Changing tastes and new preferences among consumers, along with increasing demand for new and exotic flavors, such as Riesling wine and other tropical fruit wines are expected to fuel the growth of the wine market.

–Article information obtained from Mordor Intelligence

https://www.mordorintelligence.com/industry-reports/wine-market