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Sparkling wine continues to bubble through COVID-19

Market Bulletin | Issue 229
04 Dec 2020
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As we reach the end of a very turbulent year, wine consumers in Australia and around the world will likely reach for a glass of sparkling wine. However, this is not just the effect of seasonal cheer; the latest data show that sparkling wine sales in some markets have continued to bubble away throughout the COVID-19 pandemic. 

Before we dive into the numbers, we would like to clarify that while in Australia we distinguish the methods of production – e.g. sparkling (traditional method) vs carbonated (includes frizzante) – this is not always the case with some data providers. For the purposes of this article, references to sparkling wine from data suppliers other than Wine Australia are presumed to combine all wines that have bubbles.  

Australians still love Australian sparkling

In Australia, more than a third of Australian sparkling and carbonated  wine sales (by volume) in the off trade are made in the last three months of the year. 

To date, there has been positive growth for Australian sparkling in the March and September 2020 quarters (although at a slower rate than imported sparkling). Our bubbles made up around 81 per cent of sales by volume, but only 57 per cent of sales value, because the average price per 750ml bottle is much higher for Champagne.

Figure 1: Growth in domestic off-trade volume sales of sparkling wine by quarter during 2020 and for the year ending 4 October 2020

Source: IRI Market Edge MAT 4/10/20

Wine Intelligence’s latest survey, conducted in July this year, shows that 2 in every 5 Australian regular wine drinkers have consumed sparkling wine from Australia, which has held relatively steady since March 2020, while around 1 in 4 had consumed other types of sparkling and had declined on previous survey periods. This could be associated with the significant increase in trust of domestic wine that was also identified in the survey, along with a desire to support local businesses.

Overseas markets for Australian sparkling wine

In the year ending September 2020, export volume of sparkling  and carbonated  wine combined grew 13 per cent to 1.3 million cases and value grew 6 per cent to $69 million, leading to a fall in average value of 6 per cent to $52.00 per 9 litre case free on board. 

Carbonated wines were the main driver for the increase in the combined sparkling/carbonated result, with volume up 29 per cent to 609 million cases and value up 18 per cent to $32.7 million. 

Sparkling wines contributed to just over a half of sparkling/carbonated exports and increased 2 per cent in volume to 715,000 cases, but down 3 per cent in value to $36 million.

The product styles of sparkling/carbonated that contributed to the increase in volume came from semi-carbonated white, semi-carbonated rosé and semi-sparkling white.

Figure 2: Export volume of sparkling and carbonated wine since 2018

Source: Wine Australia

Combined, the growth of the sparkling/carbonated wine segment outperformed overall exports, where volume remained steady and value grew 4 per cent. However, it is important to keep in perspective that sparkling/carbonated wine only made up 2 per cent of exports.

Several markets contributed to the increase, namely Canada, mainland China, the United States of America (USA), Sweden, Norway and Thailand. Exports to destinations including North America and Norway appear to have been ramped up to meet demand generated as a result of the pandemic, with a large increase during the September quarter, which was significantly larger than shipments made in previous years.

Figure 3: Export volume of sparkling/carbonated wine to top 20 markets in year ending September 2020 and change on the previous year

Source: Wine Australia

Canadians are looking for more affordable bubbles

Along with an increase in exports to Canada, data from the Canadian Vintner’s Associations show an increase in consumer demand, with sales of Australian sparkling up 1 per cent for the year ending October 2020. The sparkling category overall has performed well and is up 5 per cent, driven by increases from most countries of origin. Italian sparkling had the largest share while Australia held a 4 per cent share. Ontario, Manitoba and Nova Scotia were three provinces that contributed to the increase.

The growth in Australian sparkling sales was encouraging given the strong growth in domestic sparkling wine sales, fueled by the desire to support local products. Wine Intelligence reports that the quality perception of Australian/New Zealand sparkling has improved over the years.

Wine Intelligence has observed that, as a result of lockdowns, Canadians are reluctant to spend money and are opting for lower-cost sparkling wine options. There has also been an increase in monthly sparkling wine drinkers with the population size increasing by 200,00 in one year to 4.4 million in 2020 and these consumers are prioritising holding celebratory events at home with sparkling wine once the danger of the pandemic has passed.

Figure 4: Future priorities – immediate

Source: Wine Intelligence Canada, June 2020, n = 1,000 all Canadian drinkers of sparkling wine who drink sparkling wine at least once a year

Sparkling wine in the USA defies odds

According to Shanken’s Impact Databank Review & Forecast, sparkling wine is said to be the only segment to grow in volume in 2020 despite the expected decline in overall wine consumption. The reason behind this is driven by its evolution from an occasion-driven drink into much broader usage. Wine Intelligence also supports this, noting through its survey that more people are drinking sparkling wine with the population of sparkling wine drinkers growing by 5 million in 1 year to 50.6 million in 2020. This was even greater for monthly sparkling wine drinkers, up over 7 million to 32.9 million. It also notes that there appear to be future opportunities as excitement is growing about lower calorie, rosé and fruit or flavoured options.

Off-trade sales reported by IRI show sparkling wine sales volume increasing by 15 per cent across the USA in the year ending 27 September 2020. However, Australian sales did not contribute to this with numbers down 11 per cent. Regardless, there was growth in Australian sales recorded in the California and Midsouth grocery channels as well as the Colorado, Georgia, Massachusetts and New Jersey liquor channels.

Gin’s rise has come at the expense of sparkling wine in the UK

The United Kingdom (UK) has typically been a large consumer of imported sparkling wine, although mostly Italian Prosecco. Up until 2016, it was the number 1 destination for Australian sparkling, but by the year ending September 2020 the UK had dropped to sixth place following a 35 per cent decline in export volume. Wine Intelligence has observed that demand for sparkling wine was waning even before the pandemic. It asserts that sparkling wine drinkers are switching categories in favour of gin, beer (including craft beer) and – to a lesser extent – ready-to-drink alcoholic beverages. Further to this, since the pandemic, consumers are turning to local sparkling wine to support businesses, much like Australians have been doing. The market for imported sparkling wine is not forecast to recover. 

Figure 5: Alcoholic beverage repertoire of UK sparkling wine drinkers
% who have drunk the following in the past 12 months

Source: Wine Intelligence, UK, June 2020 (n=962) UK drinkers of sparkling wine who drink sparkling wine at least once a year

More growth forecast for sparkling

Looking out to 2024, the IWSR has forecast that sparkling wine consumption will recover much faster in not only the USA and Canada but also Brazil, Colombia and Poland and that premium-and-above sparkling wines, not including Italian Prosecco and Champagne, will experience volume growth over the next four years compared to 2019.

For more information on this growing category, get in touch with the Market Insights team 

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This content is restricted to wine exporters and levy-payers. Some reports are available for purchase to non-levy payers/exporters.