Wine Intelligence’s COO, Richard Halstead, gives a heads up on global wine trends and what they mean for English and Welsh wines.
Global trends driving wine
Light-weighting/reducing glass packaging weight
Despite many worthy efforts over the past three decades, the wine industry has yet to find a way of peeling consumers away from their love of a 75cl glass bottle. Part of the problem is that glass bottles work so well from a consumer point of view: they seem more environmentally friendly than plastic, they convey reassurance by reflecting the values, tradition, and quality of wine, and they look good on a table. Our consumer research shows that 55% considered glass to be a ‘sustainable’ form of wine packaging, compared with 35% who thought that a bag-in-box was sustainable.
Why will this change in 2022?
Influential figures in the wine industry, such as Jancis Robinson MW and Tim Atkin MW, have long campaigned against heavy wine bottles. Now this powerful group of influencers is rallying a growing coalition to their cause. Crucially, this now includes major retailers, who will use their buying power (and the need to meet their own carbon reduction targets) to strong-arm suppliers into committing to lightweight glass where possible (sparkling wine will still need heavier glass to cope with gas pressure). More pragmatically, strains on the global supply chain, in terms of raw material cost increases, rising fuel and transportation costs, and retailer reluctance to pass costs on to consumers, will force producers to seek out savings wherever they are available. Unnecessary packaging will seem an obvious place to start.
Luxury wine will need to burnish sustainability credentials
Around the world, wine drinkers are trading down in volume, and trading up in quality, and luxury wine is currently one of the main beneficiaries of this trend. However, when the tide of disposable income starts to ebb, as it surely will when inflation starts eating away at household incomes and travel reopens fully in the next year, consumers are likely to become more discriminatory in how they spend their money. The usual quality-and-heritage pitch will no longer be sufficient.
The premiumisation train will keep on rolling in 2022
One of the most notable silver linings of the pandemic for the wine industry has been consumers’ willingness to transfer the budgets they would have spent in going out and travel into higher quality food and beverages for the home.
Three factors will fuel the wine premiumisation train in 2022: the reluctance of some consumers – particularly the Boomer cohort – to re-engage with the on-premise and travel, which will reserve more of their budgets for at-home entertaining; the increasing influence of Millennials within most wine markets, who have been the biggest drivers of the drink-less-but-better movement; and a nasty inflationary crunch in the supply chain, combining the disastrous northern hemisphere wine harvest of 2021, which the OIV estimates reduced wine volumes by an estimated 18%, and rising energy, dry goods and transport costs.
Wine in cans will become low-alcohol wine RTDs in cans (and small bottles)
Canned wine made huge strides in 2021, both from a technical and a sales point of view, and this will continue in 2022. However, the big innovation will come from industry building new product sub-categories in wine that hit both of the growing trends of the 2020s: Wine in a portable, single serve format, with a low-alcohol formulation that turns it from wine to a wine-based sparkling drink. The continued growth of RTDs, especially in the US, is being led by an unprecedented bout of innovation in the category, and remains on course to grow substantially in 2022, according to forecasts from the IWSR. More astute RTD manufacturers are looking for ways in which they can premiumise their offering, which at the moment is largely focused around spirits-based beverages, using premium branded whiskies, rums and gins to drive consumer demand up the price ladder. There is also an increasing focus on flavour, according to the IWSR’s in-house market experts, which will see a shakeout of poorly formulated, low-value RTDs. Eventually, we think, the same logic of successful RTD innovation – marquee brands, better flavours – will be applied to premium wine products. We expect the first movers here will be the sparkling wine producers, especially Champagne houses with an eye on extending their reach into the low alcohol/single serve space.
Trends in alternative packaging formats in the UK
Significant growth for alternative packaging formats, canned wine in particular, in the UK
Younger legal-drinking-age consumers are driving purchase of wine in cans. Purchase incidences of alternative formats for wine remain fairly low compared with that of the traditional 750ml bottle. However, various alternative packaging types are seeing increases in this measure, especially cans.
The key to the can’s success lies in three Ps: portability, portion control and preservation, all of which appeal to Millennial and Gen-Z legal drinking age consumers. More than 1 in 10 consumers aged 18-34 years-old have recalled purchasing wine in a can over the last six months, three times more than for those aged 55+ and double that of the average UK regular wine drinker.
Trends in English and Welsh wines in the UK
English and Welsh wines (E/W) are experiencing increases in terms of both awareness and purchase, mainly driven by sparkling.
More than ever, English wine is in the spotlight. Benefiting from a multitude of socio-economic factors, and a Covid-era desire to buy local and support local businesses, awareness and purchase rates of E/W wine have risen.
One of the immediate effects of Covid-19 has been a shift towards local production, partially for a strengthening sense of belonging but also for accessibly. In this context, supply constraints for imported wines, including Champagne, has favoured English and Welsh still and sparkling wines.
Simultaneously, English and Welsh wine has become more available and hence more visible, with offerings developing through diverse distribution channels. This includes premium outlets, but also at specialised wine retailers.
Trends in wine drinking in the UK
Trends in English and Welsh wines in the UK