It’s a widely accepted fact in the global wine trade that the retail
channels through which wine gets sold to consumers are in an
unprecedented state of flux. A more urbanised and wired global wine
drinking population are changing their shopping habits, and these
demands are reshaping the way retailers operate and merchandise in
the wine category and more generally. The core question is how these
changes are manifesting in terms of observable trends in key markets.
Which channels are winning and losing? Which retailers are doing
better than others? And perhaps the most important question of all:
are there discernible patterns in the channel trends across different
markets which would allow us to draw more broad conclusions about
the way wine is sold globally?
Study scope: markets representing 50% of world’s wine
consumption
The organisers of ProWein, the leading fair for the international wine
and spirits sector, commissioned Wine Intelligence to address these
questions. The scope of the report encompassed 8 markets which,
between them, represent a substantial and meaningful cross-section
of the world wine market. Using existing published data, plus Wine
Intelligence’s own databases, this report publishes for the first time
estimates of growth trends in retail channels. Data from the United
States, the world’s largest market for wine, and from Germany and the
UK, respectively #1 and #2 in terms of imported wine volumes, were
analysed. Add to this Japan and Australia, both of which have been
showing healthy wine volume growth of late; and finally three markets
where wine has traditionally sold in huge volumes, but are in long-term
decline: France, Spain and Italy.
Between them, these 8 markets account for over 12 billion litres of
wine consumed in 2013 (source: IWSR), or around 50% of the
approximately 24 billion litres of wine consumed globally (source:
OIV). It follows therefore that any changes in these markets, either
suddenly or over time, will feed back into the global supply chain and
eventually affect both producers and consumers.
8 markets: some themes, many differences
Those looking for a single, unifying theory of wine retail trends may be
initially disappointed by the content of this report. Each of the countries
under scrutiny appears to be its own ecosystem, with different
regulatory and business climates. Popular business notions of
globalisation and “convergence” of business models don’t quite square
with the reality of wine retail environments which are subject to
different legal structures and different consumer expectations. While in
most cases changes are taking place, some of far-reaching
proportions, the pace of change is generally quite slow. This should
not come as a surprise: consumers are creatures of habit, and tend
not to go in for radical shifts in where they buy their groceries and
beverages. Equally, the “installed base” of incumbent retailers have a
natural advantage over any new channel or retailer type: they occupy
the best sites, have the greatest legacy brand awareness, and benefit
most from consumer inertia. In this climate, traditional business
models can persist, while new ones can struggle to gain traction in the
short term.
The convenience revolution: frequent shopping, smaller baskets
Having thus recalibrated expectations, there are some interesting
multi-country trends that have been uncovered by this report. Perhaps
the most noticeable in several of the key markets is the consumer
trend towards buying groceries more often, in less quantity, and
including wine in this behaviour. Broadly speaking (because channel
definitions at a country level tend to have subtle differences) this has
meant the “convenience” channel has been growing in importance for
wine in countries like the UK, United States, France and Spain.
The drivers of this trend are reasonably well known, and arise chiefly
from the increasing urbanisation of population, falling car ownership
and car usage levels in some markets (itself driven by rising oil prices
and motoring taxes). This urbanisation-austerity model is especially
true in Spain. In some markets, the beneficiaries of this trend are the
same retailers who already dominate other channels. This is especially
true in the UK and France, where “local” versions of the main
supermarket brands have migrated back into towns and cities over the
past 10 years, having spent the last decades of the 20
th Century persuading consumers that grocery shopping was best
done at large out of town stores with car parking. In other markets,
such as the USA, recent liberalisation of Prohibition era laws to
allow drugstores (in effect, a convenience store which also
contains a pharmacy) and grocery stores to sell beer and wine
have boosted the “convenience” channel.
Online models proliferate
Another multi-country trend worth noting is the growth of direct-to-
home, or online-based shopping models. These also come in several
guises, from the UK’s advanced online grocery shopping networks, to
the growing “click and collect” systems in France, and the specialist
direct-to-home retailers (including wineries) in the USA. In these
countries and, to a certain extent, in countries such as Australia and
Spain, the new communications technology has spurred a change in
consumer channel usage to the more remote, but information rich,
zone of the online shop.
Consolidation remains a strong trend
A long-standing trend in global retail – consolidation – remains a force
in some markets. The displacement and /or acquisition of owner
operator and small chain wine retailers by national, or trans-national
chains, often supermarkets, remains influential in markets such as
Germany and Italy. In Germany powerful hard discount chains have
been the main driver, however recently the trend has developed a new
aspect, which is the drive by mainstream supermarkets to occupy
more premium market space, and put specialist wine shops under
pressure.
Conclusions: polarisation of needs between convenience and
information-rich channels
What, then, are the implications of these multi-country trends for
producers and brand owners? The first, more general point, is for them
to recognise that retailers are having to balance two arguably
divergent changes in their consumers’ behaviour. On the one hand,
the growth of convenience purchasing could mean that this channel
needs a smaller range of wines in general, with a greater proportion
being strong, visible and reliable wine brands, which lend themselves
easily to a quick, low-involvement purchase decision. On the other
hand, the growth of online and remote shopping suggests a
corresponding need for a broader and more information-rich range in
this channel – less brand, perhaps, and more about the provenance
and story.
In terms of specifics, the trends suggest that wine businesses need to
adopt differing product and service strategies to these growing
channels, while recognising that in some markets, the same
customers that have dominated the routes to market of 10-20 years
ago are also controlling the newer channels. In other markets, such as
the USA, there are new channels and new supply chain customers
(chiefly the convenience store chains) which are looking to grow their
share of market at the expense of liquor stores and traditional
supermarkets.
A summary of the report will be presented to participants in this year’s
ProWein on Monday, March 16 at 10.15-11.00am in the ProWein
Forum in Hall 13.
Blog-Weinmarktplatz 