As with all industries, COVID-19 had a profound impact on the wine and spirits market. Despite the new obstacles and systemic complications presented by the pandemic, wine saw a significant surge in sales as people adapted to working remotely and social distancing. The transition to online shopping had the surprise benefit of providing wine suppliers and distributors with an increased supply of real-time data surrounding consumer buying trends. Moving forward, it appears that many of the trends identified during the pandemic could be here for the long-haul.
Ecommerce is here to stay
The onset of COVID-19 triggered such a dramatic increase in online alcohol sales and digital engagement that ecommerce is likely to persist long after the country emerges from pandemic. According to data from Nielsen, online wine sales spiked a whopping 234% during the pandemic in 2020. Although the increased demand was driven largely by social distancing and a sudden transition to drinking at home, the growth in online sales can also be attributed to many countries and states relaxing their buying and shipping laws.
Fueled by the unique circumstances of the pandemic, innovation in digital platforms led to a new era of convenient and user-friendly online shopping. In addition to providing customers with a safer means of acquiring their alcohol, ecommerce demonstrated society’s demand for increasingly practical and labor-saving services. By allowing consumers to compare, review, and discover products from the comfort of their own homes, ecommerce readily complemented the diverse nature of the wine industry. Furthermore, the increasing complexity of alcohol distribution and retail has opened up new opportunities for innovation in other industries as well, especially in logistics and data governance.
Sustainable and ethical practices are no longer optional
Younger generations of consumers want the brands they put their money behind to share their overall values and consider the environment in their production. More sustainably minded than prior generations, millennials and Gen Z have driven a substantial surge in sustainable practices amongst alcohol suppliers and distributors. Investments in greener and more environmentally friendly operations have paid off for many organizations with an increase in sales and access to newer, younger demographics. The consumer demand for more authentic products from businesses has demonstrated that many consumers care not only about the product, but the producer as well.
Outside of the marketing and sales potential associated with greener practices, winegrowers are also taking steps to protect their livelihood as climate change increasingly threatens the long-term sustainability of their industry. With many wine regions experiencing unprecedented wildfires and droughts, vineyards have had to make serious evaluations concerning their water management. Farmers across the planet have begun investing in state-of-the-art irrigation and water conservation systems to make the most of their resources and reduce waste. Some farmers have even ditched irrigation systems entirely in favor of dry farming and employing better soil management.
Resurgence of entry-level wines
With the economic downturn and lowered incomes of the pandemic, many wine-drinkers no longer had access to the same disposable income as before. This spurred a renewed interest in entry-level wines as consumers sought to maintain their established alcohol preferences without breaking the bank. Boxed wine in particular saw significant growth during the pandemic due to its cost-effectiveness, convenient packaging, and recent improvements in quality.
This trend is likely to persist beyond the lockdown as consumers become accustomed to their more price-conscious buying habits and are forced to endure the slow recovery of the economy. Additionally, the preference for budget-friendly wines will also extend to on-premise drinking as consumer confidence lags behind the reopening of bars and restaurants.
Consumers are exploring newer formats for drinking
Driven by changes in shopping and drinking patterns during the pandemic, alcohol providers have shifted towards a more diverse selection of packaging formats like bag-in-a-box and cans. Even before the onset of COVID-19, canned wine was seeing increased acceptance across consumer markets. The success of canned and bag-in-a-box products is heavily associated with regions that already possessed a strong market for read-to-drink beverages, such as the US, UK, and Australia. Additionally, canned beverages traditionally do well with younger demographics who are drawn to the convenience, environmental friendliness, and trendy marketing strategies associated with the format.
Not only has wine itself witnessed an exploration of different styles, but so has the way its consumed. The inability to go out, excess time for meal prep, and propensity to treat oneself during the pandemic drove consumers to experiment with different at-home occasions. Sparkling wine in particular has experienced success as consumers broadened its use from celebratory events to more casual formats. Rose and lighter wines in general have also seen moderate success as consumers seek its versatility in drinking across a diverse spectrum of occasions.
Looking to the future
Although the world is still in a transitional stage due to the recent events of COVID-19, it’s critical that we keep an eye on emerging trends to better understand how the wine market is evolving. To learn more about the state of the industry following the pandemic, check out our whitepaper 5 Trends in the Beverage Alcohol Industry for 2021.
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