It’s no secret a wine glut is building as sales growth is slowing, most recently to around 1%, down from 3% or more in recent years.
Rabobank‘s analyst team led by Stephen Rannekliev, takes issue with the usual response, which blames the “sober-curious” movement. But if sober-curious the villain, why are distilled spirits growing at a spirited rate (pun intended)? Indeed, Rabobank notes, calculations by bw166 show overall units of alcohol consumed by LDA adults has remained flat for 10 years.
“Unless bourbon and tequila are considered part of a sober lifestyle, the sober-curious movement is not the main cause of wine’s woes,” the report notes, dryly.
The next 10 years “will become increasingly painful for wineries that fail to find ways to effectively connect with younger consumers,” it adds.
Rabobank believes wineries need to make two major changes. First, they need to embrace e-commerce. Wine’s two major channels – on-premise and grocery – were negative in 2019, it notes. And growth in direct-to-consumer sales, while still positive, have slowed.
There’s opportunity online, Rabobank says. It notes that bev/al represents 5% of a typical basket at brick and mortar stores, but just 0.8% online.
Rabobank suggests wineries beef up their e-commerce business and develop a strong presence on e-commerce retail platforms such as Wine.com.
With younger consumers becoming the largest segment of the LDA population, Rabobank also argues that brand strategies need to be updated. The new 4 P’s of marketing are “purpose, presence (on social media), personality and packaging.”
Brands might consider aligning with a bigger mission, using influencers to become a social media powerhouse that builds sales, developing a clear sense of personality, and adopting alternative packaging formats.