Our annual predictions for the first year of the next decade enter the stage to sombre mood music, reflecting the challenges our industry faces over the next 12 months
Wine is a risky business. It remains an agricultural product, dependent on the increasingly chaotic will of nature and on the discretionary spending patterns of the world’s consumers. Nature hasn’t been kind to the wine category of late, and – according to the latest climate science – is unlikely to revert to benign predictability anytime soon. Discretionary spending depends largely on consumer confidence. That too is starting to look wobbly, undermined by recent bouts of civil unrest in France, Chile, Spain, and Hong Kong, plus the spectre of economic recession in the Eurozone, the US and China, not to mention the old favourites Brexit and chaotic US trade policy.
Having said all that, our five predictions for the next 12 months assume global consumer spending does not fall off a cliff, and the weather does not cause any more mayhem than it does in any typical year. Instead we see the continuing arc of some existing behaviours, and the appearance (or re-appearance) of a few others.
- Wine volume consumption will decline at a global level
In almost a cut-and-paste from last year’s predictions, we believe the developed world will drink less wine in 2020, and any increase in the developing world’s wine habit will not compensate. In some respects, this is good news for wine. Those drinking less wine have compensated by spending more on the wine they do buy, with the characteristic result that prices per bottle have been rising considerably for several years now in major consumption markets. Even the German wine market, long enamoured of wine below €3 a bottle, is learning to trade up, albeit only for special occasions.
On the other hand, the consolidation of this trend spells trouble for many wine producers and brand owners whose business models are dependent on the old model of selling more bottles for tiny margins, and have allowed their marketing or brand management muscles to. Consumers are now starting to treat wine in the way that the category’s champions have always dreamed of: as an aspirational, thoughtful and culturally interesting product. Isn’t it time the industry caught up?
- Sustainability and other responsibility signalling will get more critical scrutiny
How do you work out if the wine you are buying is “sustainable”? Our evidence suggests that, for most consumers, it’s a case of reading the word (and any accompanying description) on a wine label or shelf blurb and choosing to believe it – and not really worrying too much more. Their encounter with SOLA wines (Sustainable, Organic, Lower Alcohol and Alternative, the latter of which covering such things as Natural, Biodynamic and Vegan wines) is typically an occasional purchase for personal preference, or as a talking point. However, we also notice a smaller but growing minority of purchasers are more fundamentally committed, typically for a combination of environmental, ethical, social or lifestyle reasons.
Next year I expect this latter group to be more zealous in their scrutiny of winemaking or viticultural claims, and more willing to call out what they see as transgressions or unacceptable standards. Their whistleblowing and/or criticism of environmental claims will typically be made on a social media platform, and in so doing, potentially dissuade less engaged purchasers either from specific brands, or to question the validity of the entire sustainability concept in wine.
The trouble with ‘greenwash exposés’ is that it is remarkably easy to pick holes in virtually any sustainability claim. For instance, there is no single accepted definition of organic wine, nor any universal rulebook on ‘Biodynamic’ or ‘Natural’. And, of course, the word ‘sustainable’ can cover a number of virtues, and equally hide a number of sins. For instance, speaking at the Porto Climate Change conference this year, Adrian Bridge, CEO of the Fladgate Partnership, claimed that organic viticulture has a worse carbon footprint because of the increased energy inputs, echoing similar claims made by Miguel Torres Sr. Earlier this December, in an Op-ed piece for the New York Times, prominent Natural wines campaigner Alice Feiring bemoaned the fact that ‘with no legal definition [for Natural wines] the door is open for knockoffs,’ before she reviewed the various contentious debates currently raging within the natural wine movement on the addition of sulphur dioxide and the use of machine harvesting for example. Consumers will want to do the right thing with their wine choices in 2020, but if faced with a blizzard of finger-wagging, they may just shrug and choose a kombucha.
- CBD wine will start to appear more frequently on shelf where it’s legal
I was not alone in succumbing to cannabis drinks boosterism last year. As with many things in our industry, cannabis drinks products remain at the mercy of regulators in most jurisdictions, not to mention some serious product development and taste optimisation challenges. Though we are not anticipating the mainstream acceptance of cannabis wine-based drinks (or any other cannabis-based drink, for that matter) in 2020, we are predicting that more examples will start to appear on shelves in the coming 12 months. This will begin the creative destruction process where certain products will quickly fail because they don’t deliver on one or more of the 4Ps (product quality, price, place of sale, promotion activities), until we start to see one or two champions emerge from the hubbub to become more acceptable, though initially as more of a novelty product for now. It’s also worth noting that even the most seemingly explosive drinks trends take time. This year’s breakout product, hard seltzer, has its modern origins in 2012, and spent several years as a niche product – even now, after hitting the headlines as the must-have drink of 2019, total US sales by value for hard seltzer are the equivalent of around 2% of the US beer category.
- It will be a renaissance year for some of the less high-profile wine producing countries: Germany, South Africa, Portugal, Greece
Coco Chanel once said: ‘Fashions pass, style remains’. She was talking about the world of couture, but she could easily have been referring to the wine category. For all the noise and excitement about new regions and varietals, the world still largely drinks wine from France, Italy and Spain, and varietals that will have been familiar to our parents’ generation – Cabernet Sauvignon, Merlot, Chardonnay, Pinot Grigio. Even recently fashionable styles such as Provence rose, Prosecco and New Zealand Sauvignon Blanc have spent decades (or even centuries) as widely recognised styles.
That said, the wheel of fashion does turn in wine – perhaps a little slower than the Milan catwalk, but turn it does. We believe 2020 will be a year where some old styles become new again to the next generation of consumers – high quality German Riesling, the refreshing whites and great value red blends from South Africa and Portugal, and the fascinating array of lighter white wine styles coming from countries such as Greece. Fresh premium rosé wine styles will also advance, probably from outside the Provence region where their success is starting to constrain supply. What is the common thread? All will be meeting the growing consumer needs for more aromatic, fresh, lower alcohol whites, and lower tannin but interesting reds. Full disclosure: I am a personal fan all of the styles and origins above, so this prediction may be rather self-serving.
- More businesses will invest in visually appealing packaging and serve formats
Technology-enabled innovation is coursing through the wine industry, from better winemaking techniques, flavour management, alcohol management and product stability in transit with less sulphur dioxide (see also Natural Wine, above). However, perhaps the most exciting area of change is in packaging and serve formats. Our prediction is that we will see far more innovation in packaging coming to market next year than we have in the past few years, driven by the needs of business to reduce carbon footprint, to offer more recyclable containers, and to offer serve sizes that fit an age devoted to lowering volumes but increasing values.
Allied to this, the more astute brand owners will double down on investing in labelling and design that successfully treads the delicate line between distinctiveness and centrality in the wine category. Watch out for more creative bottle shapes, icons and colouring – all designed to stand out to time-poor and more visually oriented consumers, while retaining enough of the classical aesthetic to stay reassuring.
COO Wine Intelligence