Between 2019 and 2020, the Brazilian wine market gained 3 million regular wine drinkers. Who is being recruited to wine, and what trends are we seeing in the market?
2020 has been a good year for wine in Brazil. This year has seen consumers drinking more wine due to social isolation measures, and there are now more consumers drinking wine. From 2019 to 2020 alone, the market added 3 million new regular wine drinkers — those who say they drink wine at least once a month.
The growth in the number of new wine consumers in Brazil has been phenomenal. In 2010, there were 22.4 million regular consumers. A decade later, this number has almost doubled, topping 39 million consumers in 2020, according to the most recent Vinitrac® survey from October 2020.
The Wine Intelligence Brazil Wine Landscapes 2021 report, published this week, reveals that consumers over 35 years of age have been driving this growth. In 2017 this age group represented 53% of regular wine drinkers and this number has jumped to 59% in 2020. Currently, this bodes well for the wine industry as this target consumer typically has more disposable income, but attracting the younger generations to the category remains a challenge.
Analysis of volumes for 2020 shows that, between January and June, 200 million litres of wine were sold — a record for the period and an increase of 28% over the previous year. Despite this growth, per capita consumption in Brazil remains low, leaving the country in 74th place worldwide. In addition to 39 million regular consumers, there are another 44 million Brazilians who drink wine, but less frequently than once a month. These groups, combined, make up only 40% of the total population of the country.
WINE AS A COMPANION
Similar to other markets studied in our Covid-19 tracking series, Brazilians have begun to spend more on wine since social restrictions have kept them from spending on travel, leisure, bars and restaurants. Accustomed to drinking in social gatherings or at special dinners, Brazilian consumers discovered that a glass of wine makes for an excellent companion during an afternoon at home, for a typical lunch or even while reading a good book.
Brazilians are often characterized (by themselves) as naturally curious, which we can see in the data when 70% of those surveyed say they’re open to trying new grapes, countries and producers. Among Americans, Chinese and the English, for example, this readiness to experiment falls to 51%, 47% and 43%, respectively. Brazilians continue to be open to discovery.
The level of involvement with wine, primarily in high-income brackets and those over 35, has also risen significantly in recent years. Average spend per bottle is also increasing, especially among those who drink fine wines. This has been found, primarily, in supermarkets — the channel most favored by Brazilians, especially during the pandemic.
Brazil has typically been one of the top markets for e-commerce penetration in the wine industry. However, digital channels, used by 30% of regular wine consumers, have not seen huge growth in usage incidence, despite restrictions imposed due to Covid-19. One of the possible explanations for this stability (and not increase, as expected) has to do with the profile of the 3 million new consumers. As newcomers, these consumers still do not feel mature enough to explore online wine purchasing — it seems to be an area where experience and confidence in the category is required. This raises the intriguing possibility as to whether a vibrant online wine sector can achieve the usage penetration rates of 50%+, a level once thought highly unlikely, but now achieved in markets such as China thanks to increasingly sophisticated mobile e-commerce technology.
The reality is that e-commerce maturity and penetration for wine in Brazil is phenomenal. Brazil is already the third largest market in the world, in absolute numbers, for consumers of wine online. There are over 10.6 million, trailing only the US (19.3 million) and China (27.3 million).
DOMESTIC VS IMPORTS
The standout performance for 2020 goes to domestic producers. The rise in the value of the US dollar (by around 40% in 2020), greater proximity of points of sale and a consumer that is less resistant to Brazilian wine contributed to the positive performance of the domestic sector.
Among imported products, eyes remain focused on Portugal as investments by the sector have proven effective. With growth of 17% in the 1st semester of 2020, Portugal is expected to surpass 2 million cases imported by the end of this year. The level of awareness is second only to Brazilian wines, the market leader with 73% market share by volume.
Despite the great strides being made in the market, challenges definitely still remain.
How do we migrate consumers from table wines (produced on a large scale, at low prices) to fine wines (considered expensive and sophisticated by the public at large)? How do we make newcomers to the category drink wine more frequently? What do new regular wine drinkers want and how can we attract younger people? How long will we face the effects of the pandemic and how will this affect consumption habits?
With the arrival of 2021, we can all celebrate the start of vaccinations against Covid-19, but it will also be a year of uncertainty and heightened caution as we figure out what consumer behaviour will look like.