If 2020 was a good year for wine in Brazil, 2021 has been spectacular in terms of a rapidly increasing monthly wine drinking population. There are now over twice as many wine drinkers in Brazil as there were in 2010, with an overall penetration of monthly wine drinking amongst the adult population of around 36%, a similar proportion to the US, but around half that of mature European markets.
As with many overnight successes, Brazil’s wine revolution has been some time in the making. “For some years now, professional and innovative wine businesses – both importers and domestic producers – have been investing in good quality product and deploying the latest technology to build multiple touch-points for consumers, including world-class e-commerce operations,” remarks Rodrigo Lanari, Brazil Country Manager, Wine Intelligence.
The onset of Covid in 2020 was the catalyst for a major change in Brazilian lifestyles and the population’s relationship with alcohol. With a population reluctant – or unable – to shop and socialise in the ways they used to, Brazilians adapted to new behavioural norms. In this environment, wine experienced a multiplier effect: it was a more reflective, low-key convivial drink; it was an interesting novelty at a time when other distractions were restricted; and most importantly it was easily purchased through the array of apps and omnichannel offerings now available in Brazil. This demand prompted traditional off-trade players, such as supermarkets, to improve their wine offerings and services as well.
Momentum in any category is hard-won, and easily lost. Will it continue? To address this question, one must understand the push (supply chain) and pull (consumer) factors and think about how they might change in future.
The pull factor first. Brazilian consumers discovered during the pandemic that a glass of wine makes for an excellent companion for low-key, at-home occasions. As the country learns to live with Covid-19, and some more normality resumes, will previous habits reassert? Clearly there will be some reversion to old norms, but the evidence from this report suggests that the new recruits to wine are similarly involved in the category and using wine in a similar way to more veteran wine drinkers. The only potential disruption to bear in mind is the advance of other categories, particularly gin, and RTDs, both of which have also seen strong growth in Brazil in recent years. Gin, for example, grew by a volume CAGR of 74% 2015-2020, and is forecast to grow by 14% volume CAGR 2021-2025, according to IWSR data.
Brazilians in general may also turn back to beer as social interactions restart. Research from IWSR shows that, across the beverage alcohol landscape, people are switching with increasing frequency between beverage options or trialling new beverage categories altogether. Of 10 key countries studied, Brazil had one of the highest incidence rates of consumers trialling new beverage categories or brands in the first half of 2021.
For the push factor, it seems likely that the Brazilian wine supply chain will continue to do a very effective job of meeting consumer expectations in terms of interesting products at attractive-enough prices. Here, the headwinds may come from broader economic pressures – further devaluation of the Brazilian currency, rising input costs for domestic producers and importers alike, and rising transport costs for the latter group especially. Pricing pressures will be felt across the whole economy in 2022, and wine will have to fight hard to preserve its value proposition.
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