Trends in the Global Wine Industry: Beyond COVID-19
1. During the pandemic, the lack of on-premise engagements and wine sales necessitated a shift in focus to e-commerce and online engagement, which resulted in significant growth in online sales.
2. Consumer focus on health and sustainability leads to the growing popularity of wine styles such as organic, natural, and no/low wines.
3. More sustainable and alternative packaging is finding increased acceptance among young and environmentally conscious wine consumers.
E-commerce and NFTs
The COVID-19 pandemic has spurred a significant increase in e-commerce and digital engagement in the wine industry. The restriction of movement and lack of on-premise sales during COVID-19 necessitated a shift in focus to e-commerce. Large investment and recruitment into the digital space during COVID-19 resulted in significant online sales growth. E-commerce in the US, for example, has increased from roughly USD 1 billion in 2018 to USD 3.8 billion in 2021. E-commerce is expected to be the largest driver of growth in the alcoholic beverage industry over the next decade, establishing the importance of e-commerce for future growth. The online success of wine is expected to continue into 2022 and beyond due to a broadened consumer base, convenience, and increased consumer adoption of online purchases.
Non-fungible tokens (NFT) have entered the global wine market and are finding use as digital assets for high-value wines. Rare and expensive wines that need special storage conditions can remain stored in a cellar in perfect conditions and only shipped to the buyer when requested. This essentially separates the ownership rights to the wine from the physical product, making resale easier and reducing counterfeit risk. NFTs can also be sold for wines that have not been produced or released yet, realising revenue earlier and improving the cash flow of wine businesses. NFT marketplaces specialising in alcohol have started to come to market as well. NFT-based offerings are expected to become more popular in the wine industry in 2022 and beyond.
Sustainability and Health
Globally, 85% of consumers indicate that they have shifted their purchase behaviour towards being more sustainable in the past five years. The global wine industry is taking note and responding to consumer concerns making concerted efforts to reduce its carbon footprint. Areas of improvement include packaging, transportation, labour, and most importantly to consumers, the production methods of wine. Three sustainability-focused styles of wine have seen significant interest and growth during COVID-19 which are organic, natural, and no/low alcohol wines. These wines are also perceived as healthier alternatives to traditional wine, adding to their appeal, especially with increased attention paid to personal health during COVID-19.
The no/low alcohol market reached USD 1.6 billion in 2021 with an estimated 10.4% CAGR to reach USD 4.5 billion by 2031. The global organic wine market size was estimated at USD 8.9 billion in 2021 and is anticipated to expand at a CAGR of 10.2% to USD 21.5 billion in 2030. Natural wine is a subcategory of organic wine and ranks first in the Wine Intelligence Alternative Wine Opportunity Index in 2022 suggesting keen recent interest from consumers. Sustainability and health are expected to remain relevant into 2022 and beyond with high growth expected across all three wine style categories.
More Sustainable and Alternative Packaging
Despite concerted efforts from the wine industry over the past three decades, consumers still exhibit a preference for 750ml glass wine bottles and view it as a sustainable form of packaging. The reality is that a glass wine bottle, with a dry weight of 500g, accounts for 29% of a wine’s carbon footprint. With an increased focus on sustainability, influential figures in the wine industry, retailers, as well as consumers are demanding the use of lightweight glass where possible. With the rising cost of packaging materials, suppliers will seek out savings wherever possible with a reduction in bottle weight a logical starting point. With all major stakeholders in the wine industry on the same page regarding this issue, the use of lighter glass bottles is expected to become more prevalent in 2022 and beyond. Alternative and innovative packaging such as plastic bottles, box wine, wine in a can, smaller bottles, and even wine in tubes have gained traction in recent years. The focus on alternative wine packaging is likely to continue into 2022 to appeal to younger and more environmentally conscious consumers.