Originally published by Wine Industry Advisor.
The beverage alcohol industry is in a state of vast disruption, and wine is no exception. Forces at play come from many angles, including changing consumer preferences, tightened opportunities for distribution and a reactive retail environment. Here are a few ways we are seeing disruption in the wine industry today.
FROM BOTTLE TO CAN
We traditionally think of wine as elegant and refined, enjoyed at a dinner table or at home as an end-of-day reward. Today’s wine shelf tells a different story as producers are shifting their operations to accommodate consumer preference.
When craft beer was first packaged into cans 20 years ago, it was seen as somehow inferior to bottled offerings. Today, cans are now the predominant pack-type for beer. Research tells us that as we age, our palates lean towards wine. Millennials are now entering their 40s and becoming a large segment of wine buyers. As they enter the category, they’re bringing with them the pack-type they prefer: cans.
That’s not the only shift. Years ago, many people thought boxed wine was a bridge too far. Today, suppliers and consumers are quickly embracing wine in cans — are boxes next? The way consumers think about wine is changing, and they want to be able to take wine to the beach or on a hike, incorporating it into an active lifestyle.
HOLD THE ALCOHOL
Alcohol has always been at the center of social celebrations. But low- and no-alcohol options are on the rise across all categories.
Motivations for choosing an alcohol-free option are varied, but there’s no question the trend is picking up steam. Even Paris, the capital of quintessentially vin-focused France, has an entire store dedicated to low- and no-alcohol options.
Consumers should note that while non-alcoholic beer, wine and spirits can be perceived as more health-conscious, it’s not always true. They let drinkers join the fun without a hangover the next day, but they aren’t necessarily low-calorie or low-carb.
NEW DISTRIBUTION MODELS
As we emerge from the pandemic, the return to an on-premise environment has been slower than expected. Many consumers are still dining at home more than they were in 2019, and direct-to-consumer options are on the rise.
Through the pandemic, consumers got used to ordering food, groceries and household goods to be delivered or available for pickup. We learned how to quickly pivot our purchasing behavior.
Retailers learned, too. As an example, during the height of the pandemic, I ordered wine from a favorite shop in my city. The business owner offered to not only deliver it to my home, but also took note of the styles and flavor profiles I enjoyed to handpick bottles that met my criteria. I was amazed at the level of service given to fulfill a single order.
At-home-delivery appears to be a permanent shift in consumer behavior. All wineries should have an option for mail-order or home delivery to meet the customer where they are.
SHELF SPACE: THE FINAL FRONTIER
Consumers play a major role in product choices, but the marketplace is also in a state of flux. Consolidation has been a trend for the last 15 years, and a distributor that represented hundreds of labels in the past may represent tens of thousands of labels today.
Historically, a distributor would only be responsible for wine brands. Now its portfolio may include spirits, beer and non-alcoholic offerings as well. Since wine, beer and spirits all require different merchandising techniques, this is another point of friction in the go-to-market strategy.
In addition to changing consumer preferences and buying behavior, and consolidation at the distributor tier, crowded shelf space also affects wineries. How do retailers prepare their shelf space to appropriately reflect what consumers want to purchase? The short answer is that velocity rules the day. Products that move get better placement.
Beverage alcohol is experiencing tremendous disruption across all categories. Wine is being challenged in new ways by the preferences of millennials, who represent the largest generation group since baby boomers. The industry is also figuring out the buying behaviors of the COVID-19 years, which seem to be a new way of doing business. The only constant is change: to succeed in this market, the key is to adapt faster.