Consumers are becoming more confident but less knowledgeable about their wine choices, possibly because of the way technology is affecting the way in which we access, store and filter information to inform our purchase decision, and also because wine retail environments are getting more sophisticated. If this is the way things are going, who stands to benefit – and who is in trouble?
The way that consumers think about wine is changing. Since 2012, our wine confidence index – calculated based on the extent to which consumers feel confident about their wine knowledge – has shown an increase of +4.3 in Canada and +3.6 in the US. Similarly, in Europe, the last two years have seen an index changes ranging from +1.7 in Germany to +4 in Spain. Many factors are likely to be influencing this change, including smaller, more curated ranges in supermarkets, ease of purchase and an improvement in Point of Sale information – all providing quick choice cues friendly to consumers in a hurry. Consumers can therefore shop for wine with the reassurance that information is available if needed from supermarkets or their own mobile devices. This builds confidence and reduces the threat of overloading an already crowded mind-space with difficult decision-making.
However, at the same time as confidence is growing, we observe that general wine knowledge is decreasing. For example, in the US, our wine knowledge index has seen a significant drop of -5.5 since 2015. This trend has also been noticed in markets such as China and Australia, with decreases of -6.1 and -3.7 respectively. Based on recalled wine knowledge, this means that wine consumers are reporting less awareness of wine-producing countries, wine-growing regions and wine brands.
But why is wine knowledge starting to decrease, when confidence is increasing? One hypothesis that is gaining traction in our qualitative research is the confidence brought on by having the most powerful search engine in history sitting in your pocket, plus some astute, simple signposting at the point of sale.
Once the acceptable price range has been determined (in most cases, before you have even entered the store), consumers are faced in store with an intimidating array of choices, to which they need to apply some basic heuristics (or short cuts) to get them swiftly to a purchase decision. While there is a lot of nuance (and segmental differences), at a basic level, consumers’ biggest worries at the point of purchase boil down to two factors: 1) “will I like the taste?” and 2) “will my friends like it / think I’m clever?”.
The relative importance of each of these factors varies depending on occasion. Informal at home occasions = Factor 1 is in charge; more social / public occasions = Factor 2 leads. Both factors are very well served by in-store sampling, which is why sampling is one of the biggest game-changers of off-premise sales (though the costs and logistics of this form of promotion can often be prohibitive). Similarly, a positive mention by a trustworthy expert on television can also clear shelves, because it ticks both Factor 1 and Factor 2 boxes.
In the absence of an in-store tasting table or an enthusiastic endorsement from a TV chef, the phone in your pocket can help, by offering star ratings and scores, often from peer review, or by giving you a more user-friendly tasting note than the often cryptic words on the back label. However no human behaviour system operates in a vacuum, and there is some evidence to support the idea that shrinking ranges, better shelf layouts, and the growing sophistication of point of sale materials directed at giving you guidance on taste (Factor 1) and popularity / reassurance (Factor 2) are combining with the encyclopaedia in your pocket to produce a much more supportive environment for buying.
Perhaps because of this increasingly benign purchasing environment, the need for consumers to retain long-term memory information about brands and products is in long term decline – its effects have been confirmed across multiple markets by international Wine Intelligence studies (mainly Global Wine Brand Power Index 2019 and Global Trends in Wine 2019). Whilst this may be positive for consumers, where does it leave brand owners, and indeed the wine industry in general?
One hypothesis we have been exploring is the idea that, in a world of greater safety and lower objective knowledge, visual cues are becoming more important. Our data is showing an increasing importance given by consumers to the packaging of a product, especially among wine purchasers under the age of 35. Strong visual identity is a well understood concept in other consumer goods categories, but wine packaging must toe a very fine line between being recognisable and being reassuring. Wine brands that offer garish colours and non-traditional imagery are easy to see from a distance but risk alienating consumers; meanwhile deeply reassuring, traditional labels can become anonymous in a shelf full of lookalikes.
As always, the consequences of changing consumer purchase pathways offer opportunities as well as downsides. A decrease in consumer knowledge but increased confidence (and therefore open-mindedness) provides niche and alternative brands, which offer innovative and memorable branding, packaging and storytelling, with a far greater opportunity for consumer engagement. Shoppers will have less pre-loaded knowledge and expectations about countries, regions and grapes, which means they may be more easily persuaded to try something new if it fits their Factor 1 (taste) and Factor 2 (social acceptance) drivers. In this new world, big brands can also thrive if they can establish strong awareness levels and maintain distinctiveness through their recognisability or use of icons.