Wine retail channel trends

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
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

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

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.

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