Wine Intelligence’s Industry Predictions for 2022

Beverage alcohol has proven to be one of the most resilient product categories in the world in the Covid era, in part thanks to the drinks industry’s ability to innovate and pivot from a largely restricted or closed channel – the on-premise – to more accessible channels such as e-commerce and convenience retail, where regulation allowed.

The challenges that face the wine industry next year and beyond will be similar to those facing beverage alcohol as a whole and consumer goods generally: keep costs down while persuading consumers to trade up; improving the substance as well as the image of the category in light of increasing demands from governments for a step-change commitment to environmental and social responsibility; and making the product relevant to the next generation of legal drinking age consumers.

Here are Wine Intelligence’s five predictions for 2022:

  1. Global wine will get serious about ‘light-weighting’ – reducing glass packaging weight

Despite many worthy efforts over the past 3 decades, the wine industry has yet to find a way of peeling consumers away from their love of a 75cl glass bottle. Part of the problem is that glass bottles work so well from a consumer point of view: they seem more environmentally friendly than plastic, they convey reassurance by reflecting the values, tradition, and quality of wine, and they look good on a table. Last month, we reported consumer research that showed 55% considered glass to be a ‘sustainable’ form of wine packaging, compared with 35% who thought that a bag-in-box was sustainable.

Why does this matter? A standard glass wine bottle, with a typical dry weight of 500g, accounts for 29% of a wine’s carbon footprint, according to a 2011 study by PE International for the Wine Institute of California. However, there are many bottles for still wine out there which tip the scales at substantially more – with a dry weight of nearly a kilo in some cases, which pushes packaging’s share of wine’s carbon output to close to 50%, and the total carbon output up by around 10%, according to the same PE study. A lightweight bottle reduces packaging’s share substantially – by roughly 1g of carbon per gram of glass, depending on the proportion of recycled glass used, and that’s before any transportation saving. Remove the aluminium foil capsule, throw in a natural cork (and count the full benefit of carbon sequestration in a cork forest, as calculated by a study from EY, commissioned by cork manufacturer Amorim in 2019), and you have a product who’s packaging is almost carbon neutral.

Why will this change in 2022? Influential figures in the wine industry, such as Jancis Robinson MW and Tim Atkin MW, have long campaigned against heavy wine bottles. Now this powerful group of influencers is rallying a growing coalition to their cause. Crucially, this now includes major retailers, who will use their buying power (and the need to meet their own carbon reduction targets) to strong-arm suppliers into committing to lightweight glass where possible (sparkling wine will still need heavier glass to cope with gas pressure). More pragmatically, strains on the global supply chain, in terms of raw material cost increases, rising fuel and transportation costs, and retailer reluctance to pass costs on to consumers, will force producers to seek out savings wherever they are available. Unnecessary packaging will seem an obvious place to start.

  1. Luxury wine will need to burnish sustainability credentials

What does luxury mean today? Chewing over this topic at a gathering organized by upscale Provence wine producer Chene Bleu in London’s Linley Gallery a few weeks ago, Lucia van der Post, the leading style guru and Financial Times columnist, was unequivocal: “luxury will have to show that it is sustainable to appeal to younger consumers”. Her thesis, and that of Xavier Rolet, co-owner of Chene Bleu and former CEO of the London Stock Exchange, was that luxury brands will need to work out how to align their values, and actions, with those of the next generation of consumers. In practice this means committing as much to acting sustainably – both in human and environmental terms. The challenge for luxury brands in general, and luxury wine in particular, is to do this while not compromising the quality of the product itself.

How will this play out in 2022? Around the world, wine drinkers are trading down in volume, and trading up in quality (see also Prediction 3, below), and luxury wine is currently one of the main beneficiaries of this trend. However, when the tide of disposable income starts to ebb, as it surely will when inflation starts eating away at household incomes and travel reopens fully in the next year, consumers are likely to become more discriminatory in how they spend their money. The usual quality-and-heritage pitch will no longer be sufficient.

  1. The premiumization train will keep on rolling in 2022

One of the most notable silver linings of the pandemic for the wine industry has been consumers’ willingness to transfer the budgets they would have spent in going out and travel into higher quality food and beverages for the home. After an initial blip during the first period of lockdown, the premium and super-premium price categories of wine, which in the US context means wines selling for USD 10-20 and over USD 20 per bottle respectively, have bounced back by +2-4% in volume terms in the first 6 months of 2021, according to IWSR data. At the very top end, the Liv-Ex Fine Wine 100 Index, which measures the prices of the most sought-after fine wines in the secondary market, hit an all-time high in October, capping an impressive 17 month run of increases.

The trend to spend a bit more has of course been with us since well before Covid, and is closely linked with the trend to drink less volume of wine. Wine Intelligence data shows that 39% of consumers in key consumption markets around the world are actively moderating their wine consumption, rising to over 50% in markets such as Netherlands and Switzerland. Wine producers have also been innovating and promoting their premium offerings assiduously, as the profit margins on these products are orders of magnitude higher compared with low-priced wines, thanks largely to the impact of fixed value taxes that are levied on alcohol by volume.

Three factors will fuel the wine premiumization train in 2022: the reluctance of some consumers – particularly the Boomer cohort –to re-engage with the on-premise and travel, which will reserve more of their budgets for at-home entertaining; the increasing influence of Millennials within most wine markets, who have been the biggest drivers of the drink-less-but-better movement; and a nasty inflationary crunch in the supply chain, combining the disastrous northern hemisphere wine harvest of 2021, which the OIV estimates reduced wine volumes by an estimated 18%, and rising energy, dry goods and transport costs.

  1. Wine in cans will become low-alcohol wine RTDs in cans (and small bottles)

Canned wine made huge strides in 2021, both from a technical and a sales point of view, and this will continue in 2022. However, the big innovation will come from industry building new product sub-categories in wine that hit both of the growing trends of the 2020s: wine in a portable, single serve format, with a low-alcohol formulation that turns it from wine to a wine-based sparkling drink. The continued growth of RTDs, especially in the US, is being led by an unprecedented bout of innovation in the category, and remains on course to grow substantially in 2022, according to forecasts from the IWSR. More astute RTD manufacturers are looking for ways in which they can premiumize their offering (tapping into the same trends as discussed in Prediction #3, above), which at the moment is largely focused around spirits-based beverages, using premium branded whiskies, rums and gins to drive consumer demand up the price ladder. There is also an increasing focus on flavour, according to the IWSR’s in-house market experts, which will see a shakeout of poorly formulated, low-value RTDs. Eventually, we think, the same logic of successful RTD innovation – marquee brands, better flavours – will be applied to premium wine products. We expect the first movers here will be the sparkling wine producers, especially Champagne houses with an eye on extending their reach into the low alcohol / single serve space.

  1. Wine industry needs to do battle for global talent

Most of the wine industry would agree that it is a fun place to work. Unlike most other industries, wine can offer a unrivalled mix of intellectual challenges. What other industry requires its leaders to be part-farmer, part-chemist, part-production expert, part-salesperson, and part-marketing guru? In recent years it has attracted talented, well-educated and passionate people from the Millennial generation, drawn by its vast complexity, heritage and multifaceted work challenges, as well as the romantic notions of working in harmony with nature that wine still manages to conjure.

That’s the good news. The more troubling news is that there are now many other exciting things for the next generation of global talent to work on. The war for their services is taking on a new dimension, driven primarily by the rise of global technology giants backed by vast quantities of investment cash. True, working for TikTok may not offer time in a field, bottling line or upscale retailer, but the financial rewards can be astounding. For the moment, the battle for talent is being fought in other sectors – global accountancy and financial services firms are finding their conveyor belt of talent picked apart by the top technology firms, who can offer starting salaries of well over USD 100,000 per year, according to research published by Payscale.

In on-premise, a field much closer to the wine industry, a corresponding re-valuation of talent is already happening. A survey of its own job postings released in June 2021 by Reed, the largest recruitment agency in the UK, found that hospitality and catering staff jobs were being advertised with salaries 18% higher on average in May 2021 compared with the previous year. The most eye-opening number in this survey was the 43% increase in salaries offered for restaurant kitchen staff.

While wages are obviously important to workers, they are not the only thing that matters. Surveys of younger workers from the Millennial and Gen-Z age cohorts focus on consistent requirements from employment: being part of an ethically sound business, transparency and fairness in the workplace, purpose, autonomy, and opportunities to develop. As with many other industries, wine is going to need to up its game in 2022, not just in terms of money, but also in its ability to offer more holistic rewards to its workforce.

#winetrends #wine #winelovers #instawine #winenews #wineeconomics #winebusiness #wineintelligence #finewine #luxurywine #rtds #wineinstagram

The 2021 Fine Wine Market Report [Liv-ex] 

2021 has been an exciting year….

All previous records set in 2020 have been broken and surpassed in 2021, marking the most successful year ever for the secondary fine wine market.

Fine wine trading continually broke new ground in terms of the value of wine traded and the sheer breadth of wines now active in the market. Liv-ex Fine Wine 100 index, the industry benchmark (tracks the price performance of 100 most-traded wines in the secondary market), reclaimed and then exceeded its decade-old former peak, while the Liv-ex Fine Wine 1000 rose for 18 consecutive months.

Fine wine collectors returned in force to both classic labels and regions, even as the market base continued to broaden and diversify.

The recent publication of the 2021 Liv-ex Power 100 report explains many of the reasons behind this year’s results. After a challenging start to 2020, the impetus from the latter half of last year continued, unabated, throughout this year.

Key findings in the report:

  • 2021 sets new records for secondary market trade.
  • Fine Wine outperforms FTSE100 and gold.
  • Champagne is the top-performing region.
  • Burgundy’s share of trade hits a new high.
  • Bordeaux trade dips but First Growth share rises.
  • Blue-chip labels rule the roost though the market continues to diversify.

Link to the full report with charts:

https://www.liv-ex.com/2021/12/new-report-fine-wine-market-2021/

#livex #wine #finewine #wineinvestment #alternativeinvestment #winenews #winelovers #winecollectors #champagne #bordeaux #burgundy #winereport2021 #finewinelovers #winestorage #wineindustry #winebusiness #winetrade #trading #trends #winetrends #wineonline

Drinks E-commerce to grow exponentially in three years – IWSR Report

The total value of the e-commerce sector in headline markets is expected to grow at an unprecedented rate between 2022-2025, according to IWSR.

Over the next five years e-commerce sales of alcohol across key global markets are predicted to expand by +66% to reach more than US$42 billion, according to a comprehensive strategic study published by IWSR Drinks Market Analysis.

Among the 16 focus markets examined in the IWSR report (Australia, Brazil, Canada, China, Colombia, France, Germany, Italy, Japan, Mexico, Netherlands, Nigeria, South Africa, Spain, the United Kingdom and the United States), e-commerce value increased by about +12% in 2019, and then by almost +43% in 2020 during the height of the pandemic.

The report states: “Looking ahead to 2025, e-commerce is projected to represent about 6% of all off-trade beverage alcohol volumes, compared to less than 2% in 2018. The greatest forecast e-commerce value growth will come from the US, thanks to average annual growth in the country of about +20%, which will see it become the top global market for online beverage alcohol.”

The newly released IWSR study also found that online business models for alcohol sales are becoming more diverse, leading consumers to increasingly shift between channels and retailers according to their specific needs at any given time.

“In general terms, the online beverage alcohol space can be perceived as two distinct, but overlapping, worlds: more ‘traditional’ e-commerce – often omnichannel or online specialists – accessed via websites and used by older consumers seeking good prices and known brands and who are prepared to wait for delivery; and more ‘modern’ app-driven e-commerce – often on-demand or marketplaces – used by younger legal drinking age consumers willing to pay for rapid delivery and looking for interesting/premium brands,” the report states.

Guy Wolfe, strategic insights manager, IWSR Drinks Market Analysis, commented: “Given the pandemic and overall changing consumer shopping behavior, it’s certainly not surprising that alcohol e-commerce is growing very quickly. But what’s interesting is to see the significant variations that have developed both across and within markets in how different consumer groups shop via e-commerce and what their priorities are.

“E-commerce has clearly become engrained for many consumers, cementing its place as the third sales channel for beverage alcohol purchase,” confirms Wolfe.

 

#digitalmarketing #ecommercebusiness #onlineshopping #ecommerce #onlinedrinks #socialmediamarketing #onlineshop #onlinestore #onlinewinestore #ecommercebusiness #onlinewines #wineshoponline #winesonline #winetrends #winenews #drinkstrends #branding #wineclubs #winesubscriptions

“OIV must embrace the digital revolution to stay relevant” – Pau Roc, OIV Director General

 

Pau Roc, the Director General of OIV has alerted the global wine industry to quickly embrace the opportunities afforded by new technologies, in order to stay relevant in a fiercely competitive world.

Speaking at the recent inaugural symposium on the Digitalization of the Vine and Wine Sector, Pau Roca, Director General of the International Organisation of Vine and Wine, said “digital tools and data sciences are driving the most innovative changes seen in our lifetime, transforming societies and the world economy.”

Rau Roca continued: “It is important to be mindful that these new technologies will offer invaluable opportunities – they will transform viticultural analysis. In order to remain relevant to our stakeholders, we need to expand our influence, reach new horizons and enhance cooperation amongst the main actors.”

Roca further added that the OIV needed to accept “a paradigm shift” towards embracing digital innovations.

“The next generation of OIV experts will continue this work, building on the foundations we lay today,” said Roca.

The symposium brought together leading experts from the academia, governments, international organizations and the private sector from different countries: Dr Adriaan Oelofse the Research, Development & Innovation Manager at WINETECH who spoke about the concept of smart vineyards, the professor expert in Artificial intelligence Dr. Bernard Chen from the University of Arkansas, professor at the Comillas Pontifical University and Blockchain expert Dr.Javier Ibañez, Mr. Fabián Torres who is a Principal Consultant at SICPA and also an expert in Digital Transformation and Guidance, and Mr Olivier Oram, expert in Blockchain and founder of Chainvine, a business that helps to reduce the cost of trust in moving wine all over and around the world.

 

#wineindustry #winetrade #wine #instawine #winesymposium #oiv #digitalmarketing #digitalinnovation #vin #vine #vineyards #OIV #smartvineyards #winenews

Masseto, Ornellaia, Tenuta Luce and CastelGiocondo to open offices in Bordeaux       

The prestigious Tuscan estates and the first wine estates in Italy to make such an investment, Masseto, Ornellaia, Tenuta Luce and CastelGiocondo are opening representative offices in Bordeaux during the first quarter of 2022.  These new offices will be set-up for the purposes of strengthening their worldwide sales network, starting with the French stronghold of fine wines.

Masseto, in 2009, was the first Italian wine to be distributed through La Place de Bordeaux. Ornellaia followed suit in 2015. In the wake of their success, in 2019 Tenuta Luce and in 2021 CastelGiocondo Brunello also embraced the international distribution of La Place de Bordeaux. Since 2009, this choice has resulted in ever-increasing results. The Négociants boast a centuries-long history of the sale of fine wines at an international level.

“Making top-tier wines is not enough,” explains Giovanni Geddes da Filicaja, CEO of the Frescobaldi Group. “Knowing how to communicate this quality and choosing the perfect distribution is essential. By considering these years with La Place de Bordeaux as the first step and examining potential sales growth, it now seems logical for us to open a representative office in Bordeaux. Our goal is to strengthen our position by developing a deeper and more integrated relationship with the Négociants, no longer working from a distance, but in close contact with our partners.”

This new venture has been entrusted to Patrick Lachapèle, who will take on the role of Director of the representative office, returning to France after 16 years in Asia where he worked as the Asia-Pacific Export Manager for Baron Philippe de Rothschild and then as Director, Asia-Pacific, Middle East, Africa and South America for Ornellaia and Tenuta Luce. Patrick will work alongside the commercial directors of the four estates, which will remain individually managed.

Masseto wines are available to all markets through La Place de Bordeaux with the exception of Italy, United States and Canada where Masseto retains direct distribution. Ornellaia wines are available as well through La Place de Bordeaux with the exception of Europe, United States and Canada. In the case of Tenuta Luce, La Place de Bordeaux holds the distribution in Asia (with the exception of Japan), Africa and Middle East; meanwhile, CastelGiocondo is available with the Négociants in China only.

#tuscanwine #winebusiness #tuscany #toscana #wine #winelover #vino #sangiovese #chianticlassico #winery #italy #chianti #instawine #tuscanygram #winestagram #supertuscan #vinoitaliano #winenews #bordeaux #Masseto #Ornellaia #TenutaLuce #italianwine #CastelGiocondo