Wine in the Portuguese market was a success story pre-pandemic, but has suffered from closure of the on-trade and lack of tourism during Covid. Wine is expected to recover strongly over the next five years. In the post-Covid world, the challenge for brand owners in wine will be retaining relevance and value.
Portugal’s wine market had positive momentum in the 2010s, where volume grew steadily, led by increasing interest in domestic wines, and value also grew (though from a relatively low base). The impact of Covid-19 has led to reduced volumes across all beverage alcohol categories including wine. However, the price per bottle has continued to increase through the pandemic – as it has done in other markets, reflecting a broader trend of lockdown savings being repurposed to personal treats and therefore category premiumisation.
What kind of wine market will return in Portugal once the pandemic recedes? So far, the signs are mixed. Wine volume will recover, but the premiumisation trend may taper as cost of living increases start to bite. The tourist industry will recover, but “Covid caution” amongst leisure travellers will hold back numbers.
Spend per bottle of wine in the Portuguese market in both the off and on-trade has increased steadily over the past 3 years. A minority of consumers see wine as an expensive drink, and this proportion has increased since Covid. Increased spend per bottle, combined with decreased volumes, is also a trend across many markets.
Portugal’s wine drinkers are getting older, as the shutdown of the on-trade during Covid hurt recruitment of younger LDA drinkers to wine. Older drinkers are generally more value conscious and less experimental compared to younger LDA drinkers, and are less likely to value wine as a lifestyle enhancer.
The short-term increase in mature wine drinkers (aged 65+) may be partly responsible for the decline in wine involvement, with consumers in the Portuguese market becoming less experimental with their wine selections, and less connected with the category.
At the same time, the major retailers are gearing up to compete for the attention of Portuguese wine drinkers. Brands that are exclusive to major retailers have been growing in importance in Portugal and show increasingly similar awareness and usage levels to mainstream brands. Many retailers are relying more on exclusive label wines at value prices to drive footfall, which may threaten the leading wine brands.
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