Wine drinkers across key consumption markets have been turning more often to wine during the Covid-19 pandemic, spurred by new ‘lockdown’ occasions and more drinking outside of mealtimes; however, this new data raises concerns about the sustainability of this growth, given the deteriorating economic environment and pressures on household finances
Six months on from the unprecedented lockdown of the global economy to combat the Covid-19 virus, what can we learn about consumer behaviour and attitudes in the new Covid era? And what is the direction of travel?
These are the two questions addressed in the Wine Consumer Trends in the Covid-19 Era report published this week by Wine Intelligence, which tracks wine consumers from April to August 2020 in seven key wine consumption markets around the world and compares their behaviour with what we knew from BCE – ‘before Covid era’. The answers represent some reassurance for the wine category, but there are growing concerns about the challenges that lie ahead.
First, the silver lining. Despite the closure of much of the on-premise, combined with limited socialising, travel and vacation opportunities during 2020 – or perhaps because of all of the above – wine drinking occasions have proliferated in many markets, particularly the US. Consumers have been switching into wine from other beverages, particularly spirits. They have found new occasions in the Covid era to indulge their wine habits – outdoors (increasingly using single serves, though this is growing from a low base), online with friends, and then the unwinding, solitary drinks in front of Netflix in the evening. On the other hand, the initial trend towards day drinking or wine with lunch has subsided.
Who is driving this growth? The answer is people who already have wine fairly prominently in their lives. These ‘heartland’ drinkers have doubled down in the category, though in many markets, they have done so by reducing their per-bottle spend, so as to stay broadly within a budget. They have turned more towards tried and tested brands, and – where available – domestically-produced wines, as reassurance, trust and familiarity have become more paramount in the purchase decision.
The extraordinary growth in the online sales channel over the past few months has been well documented by Wine Intelligence and others, and the evidence from this report suggests that the momentum from earlier in the year is being sustained – possibly enhanced – as consumers become more comfortable with the idea of ordering wine online, and have no problem accepting deliveries as they are most likely to be home during the day. This report also looks more at who is driving the online sales surge and in which markets the online channel will fare best.
So much for the good news. The tracking data we have collected and analysed offers several warning lights for strategists, particularly arising from the wider issue of consumer confidence and the outlook for major economies over the next few years. Broader consumer attitudes to life are becoming less upbeat and more cautious in most markets though 2020 as the reality of the Covid-19 world becomes increasingly clear.
Desire to spend money on little luxuries, which surged in April, is subsiding, as consumers focus on shoring up their finances for a period of employment and income uncertainty. There are exceptions to this in Germany and China, where optimism about the future appears to be growing, and they are also the only two markets where the idea of a foreign vacation is accepted as a sensible priority for the future.
The initial shock of lockdown and on-premise closures have given way to a more profound habit of reducing visits to bars and restaurants, with the ‘informal meal’ occasion suffering the biggest loss. Spend levels on wine when in the on-premise have also fallen. More worryingly for the on-premise, and again with the exception of China and Germany, most markets will not see on-premise footfall rebound for some time after the pandemic risk recedes. Instead, wine consumers are planning to do more smaller scale at-home and outdoor socialising with friends and family, with the growth in outdoor socialising being an enduring legacy of the pandemic.
The news for wine could be a lot worse – as it surely is for those deeply invested in sectors such as travel, hospitality and commercial property. Wine, and alcohol generally, appears to be benefiting from enforced behaviour change and some short-term improvement in household budgets unburdened by the cost of summer vacations, commuting and going out. The big variable for 2021, therefore, will be whether household finances stabilise, and the broader economic picture improves, with the most likely catalyst for this being the deployment of a viable vaccine at scale.