Recent trends in the global alcoholic drinks industry have strongly featured disruption and innovation, blurring product definitions and even category boundaries. These trends have significant implications for wine, broadening both the opportunities and the scope for competition.
A proliferation of flavours and styles
According to International Wine and Spirit Record (IWSR, 2017), consumers no longer associate specific occasions with particular alcoholic drinks and are increasingly open to trying new flavours and products. This has led to a proliferation of flavours, styles and products both within and across categories. New within-category products include the explosion of craft beers, flavoured whiskies and vodka, and rhubarb-flavoured cider, while cross-category examples include hybrid beers containing spirits (e.g. Lion Beer’s Tequila and Lime Roam beer) and Smirnoff Cider. Wine cocktails including frosé drinks[1] are becoming increasingly popular in mature markets such those in North America, Europe and Australasia.
A recent Australian example of innovation in this area is James Squire’s The Wreck Preservation Ale, which has been created in Australia from yeast salvaged from a 200-year-old shipwreck. The appeal of this novel product is in its story as well as its flavour.
The wine sector globally has seen huge success with rosé and Prosecco, which have both grown exponentially in recent years from very low bases.
The cross-category blurring of lines creates new opportunities for wine but also means that it has to compete with a much broader range of products, as consumers become less loyal to the category.
New ways of packaging and presenting products
Alternative packaging options are being driven by environmental concerns, convenience, novelty and the same category convergence trend identified above. In the United States of America (USA) in particular, wine in cans is becoming more widely available, while beers and ciders are being offered in 750ml bottles designed for sharing (IWSR, 2017).
As well as cans, wine is being made available in single serve bottles and larger bottles (1.5L). However, this share of the market is very small. In the United Kingdom (UK), only 29 per cent of regular wine consumers indicated that they would consider buying wine in a 1.5 L bottle, while the percentages for single serve bottles and cans were 25 per cent and 7 per cent respectively (Wine Intelligence 2018). Younger consumers were most likely to consider buying alternative packaging formats.
Casks are increasing in popularity in some markets (including the UK and the USA) after a long declining trend. According to Amazon, sales of cask wine in the UK increased by 212 per cent in 2017, which Amazon attribute to the convenience of transporting casks and the perceived environmental benefits of the packaging compared with glass. In the USA, IRI off-trade data showed that 2 of the top 10 wine brands were casks and 1 grew by 28 per cent in the year ending January 2018. This is contrary to the trend in the domestic Australian market, where cask sales have been in a long, steady decline and casks are often associated with lower quality wines.
Lower and no alcohol products
The global ‘wellness’ trend discussed in an earlier market bulletin means that consumers are motivated to seek out healthier products, which in terms of alcoholic drinks means either drinking less, or looking for lower alcohol options. Increased social and regulatory pressure to restrict alcohol consumption, and lower excise duties on reduced alcohol products are additional incentives to develop this category. Reduced alcohol beers are already well established, and Euromonitor International has forecast that this category will grow by 50 per cent between 2011 and 2021, at the expense of full-strength beer. IWSR notes that the popularity of low alcohol (and low calorie) options is partly due to their lighter style, which is another trend in flavour preference.
Wine and spirits are also starting to develop products in this category, but the trend is in its infancy. Winetitles (2018) notes that, in the case of wine, consumers are more likely to switch to ‘mocktails’ or other drinks rather than wines if they are looking for a low-alcohol option. There are also definitional (or labelling) issues; in the European Union, products below 8.5 per cent alcohol are generally not allowed to be described as ‘wine’, and products above 1.2 per cent alcohol are not allowed to be described as ‘lower alcohol’.
Winetitles’ research has shown that the market opportunity for reduced alcohol wine is strongest in Australia and New Zealand. This opportunity has been recognised in Australia with a significant investment in research into the development of methods to decrease the alcohol content of wines, without significant effects on wine quality.
A word of caution
The generation of a multiplicity of new products is leading to considerable complexity in the marketplace. According to IWSR, craft beer sales in the USA are now starting to plateau as a result of consumers become fatigued with the overwhelming range of choices on offer. Winetitles observes that too much complexity causes confusion, and leads to (wine) consumers resorting to ‘intellectual shortcuts’ to make a purchase decision. It is important that new products are not just new for the sake of it, but achieve a point of difference that meets a consumer need such as wellness, convenience or environmental responsibility. Otherwise, innovative products will be lost in a sea of sameness.
[1] Frozen rosé mixed with fruit juice and sometimes vodka