Welcome to our annual end-of-year venture into the world of “foresight”
Futurology is big business these days, and – as I discovered recently – has a new and important-sounding name nowadays: “Foresight”. I much prefer this term, as “futurology” feels disconcertingly close to “astrology”. Unfortunately, a lot of predictions by those in the foresight game can have about as much validity as those of newspaper astrologists. As such, it is always uncomfortable for a, er, foresight-ist, to evaluate how well their previous predictions turned out.
So it was with some trepidation that I revisited our widely-shared Network News article from December 2017 offering 5 predictions for 2018. Reading it back, it’s clear we were hedging our bets somewhat. We said that climate change would throw up “unexpected challenges”, and sure enough they did – but not all in the same direction. At the start of 2018 South Africa and New Zealand reported lower yields due to drought and (for NZ) storms; but as the year wore on the northern hemisphere experienced one of the best harvests this century.
We also said that Brexit “was going to hurt the UK consumer”, which it has done, through reduced spending power on wine as the continued political chaos caused Sterling to depreciate further, though I’m not sure the most pessimistic soothsayer would have predicted the level of uncertainty now gripping the world’s fifth largest economy about its place in the world.
We said that sparkling wine would continue to grow at a global level, as new consumption markets caught on to the category. As of today, 21 of the top 25 sparkling wine markets in the world are in growth (for comparison, only 7 of the top 25 still wine markets are growing), and the biggest growth areas for sparkling are China, Brazil and Canada.
Last December we argued that alternative packaging would make strides in 2018. Sure enough, the big packaging story of the year has been the advance of single-serve cans as a viable, and increasingly premium, offer in white, rose and sparkling wine. We also proposed that organic and sustainable wines would matter more in 2018, and here too the data suggests that growing numbers of consumers in multiple markets are taking such factors into consideration when making purchasing decisions.
Emboldened by our 2018 prediction record, we have decided to repeat the exercise, but this time in two components. Below, you will find five prophecies for next year. Then, in January 2019, we will be producing a new report, Global Consumer Trends in Wine, which will explore some of these themes (and a number of others) in more detail.
- Alcohol intake will continue to fall in developed world markets
As an industry we have all become familiar with the health lobby’s freewheeling relationship with medical facts. However the underlying message – that some people are drinking too much alcohol for their long-term health – will continue to filter into behaviour in 2019. Currently this trend is embodied in the under 35s, who are drinking less often generally, and less often to excess than both their older peers and compared with previous cohorts of under 35s in recent history. We believe this overall decline will extend to older consumers in the coming year, in a number of bellwether markets (UK, US, Germany, Australia). We think the main change in 2019 will be those in their 40s and 50s, who have so far resisted the trend, joining the moderation bandwagon. Our confidence in this trend stems partly because it has multiple engines beyond the media scare stories: more consumers are consciously adopting a more healthy lifestyle; they are exercising more and watching what they eat; and more well-designed low and no-alcohol alternative drinks are emerging to compete with traditional alcohol.
- Overall knowledge levels about the details of wine and where it comes from will decline
Over the past couple of years we have started to see an interesting and counterintuitive trend. More people in more markets around the world are saying they care about wine, that the category is important to them, that they take their time when buying wine – sentiments which we bundle up into a collective measure called “involvement”. At the same time, overall objective knowledge about the category – understanding of grape varieties, countries of origin, regions, and so on – has been in decline: people know fewer things about wine any more. Knowledge, involvement and spend per bottle have traditionally been strongly correlated in wine. Yet now we are seeing the emergence of consumer segments who care a lot, spend a lot, but have low knowledge levels (for instance, Engaged Explorers in the most recent US Portraits report), and high spenders with limited knowledge and middling involvement levels (Contented Treaters, again from US Portraits). We think this is partly the evolution of consumer needs in the category, but mostly we’re starting to think that people on the whole aren’t carrying lots of knowledge around with them in their heads compared to a few years ago because they don’t have to – that’s what their smartphone is for. Other contributory factors may be the competing demands for our brain space imposed by the increased complexity of adjacent categories such as craft beer, gin and whisk(e)y, and the generally increasing complexity of life. All of these factors will be growing in importance in 2019.
- Vegan wine will become a thing
Our consumer work in the past year suggests that most wine drinkers, and indeed most wine drinkers who are vegans, think the wine they buy is a vegan-friendly product. It might be, but it is more likely not to be. Most wines use fining agents derived from milk, egg whites, animal and fish proteins to remove cloudy particles from wine prior to final bottling. While all of these agents are removed from the final product, their presence in the process renders the wine non-vegan. Other, inorganic, fining agents such as charcoal can do the same job – it’s simply a choice made by the winemaker. Most vegans we have talked to in the past year are unaware of this issue. However: the social media world is starting to catch on, younger and more involved (and Twitter-using) consumers are becoming aware of the vegan wine offer, and a number of vegan-only or vegan-friendly wine lists have been introduced in the past couple of years in major urban areas to cater to those in the know. The issue of wine’s vegan credentials will not remain on the fringes for very much longer.
- Wine brands with sustained investment strategies will prosper at the expense of second-tier competitors
If there’s one lesson to be drawn from our Brand Power Index report released earlier this year, it is that brands, and branding, matters a great deal in the wine category. Our world may not have the simplicity of some other grocery categories, but the basic rules of consumer behaviour and brand relationships still apply. If anything, they are even more relevant, as brand is a very quick and easy way to navigate a complex purchase decision. “Brand” in wine can still include descriptive words such as varietals and regions, but increasingly it is becoming about reassuring, recognisable and uplifting visual cues – or to put it another way, what’s on the label. Over the past 3 years we have seen bigger brands with sustained and meaningful marketing investments grow and become more successful, while mid-tier brands that are trading on price or coasting within a successful sub-category are going backwards on key measure such as awareness, consideration and affinity. Part of the issue could be the same brain-is-full factor we have noticed in Prediction 2 above; another cause might be the increasing tendency of retailers to see all but the most well-known brands as substitutable, or replaceable with own-label product.
- A mainstream producer will introduce cannabis-infused wine
Seismic changes in the treatment of cannabis by governments in the developed world in 2018 will cause growing ripples in the wine category in 2019. The opportunity, in Canada’s newly legalised market for cannabis and its derivatives, is to broaden the occasions and delivery mechanisms for cannabis and its key active ingredients, THC (the psychoactive component) and CBD (a non-psychoactive relaxant which is widely thought to have medical benefits). The “edibles” category of cannabis will become legal in 2019, and a number of companies, particularly Canopy Growth, are looking at how to incorporate cannabis into cocktails. A number of companies are also looking at cannabis-infused beer. Canadians we spoke to in focus groups in Toronto last year were very sceptical about the idea of using cannabis in a traditional, smoked format – for a variety of lifestyle and health reasons – but seemed more open to the idea of cannabis infused drinks. Our view, for what it’s worth, is that the occasion for wine usage (social setting, relaxed, with food) appears to align better with a relaxant and /or psychoactive properties of the cannabis plant.
Happy Christmas and best wishes for 2019 from all at Wine Intelligence.