As we enter 2024, the global wine market sees crucial changes that are dynamic and have been persistent in other categories of spirits as well. E-commerce growth remains to be a strength even though there continue to be challenges along with volume declines in major markets. Nevertheless, wine’s maturity over time has resulted in some key changes and trends in the market.
- Structural Declines
Specific to traditional markets, wine volumes have fallen amongst key markets, particularly in Asia Pacific. Valuable markets such as France, US and Italy are also facing similar declines. Additionally, the switch from wine to beer post pandemic led to reduced popularity of wine categories however, data suggests that the market will make a comeback by the year 2027. A general decrease in alcohol consumption amongst individuals is also a common factor for all markets to witness a decline in this category – the moderation trend has decreased the percentage of participating individuals for alcohol categories thereby leading to an increased competition with RTDs and other no/low beverages. - Recruitment Challenges
The wine category overtime, has witnessed generational-preferences making it extremely reliant on the older consumers of the population. There is difficulty recruiting the younger LDA consumers in certain markets since today’s Gen Z consumers are on a road to explore other non-conventional segments and categories of alcohol beverages. In some markets like the US, millennials are being recruited easily due to their openness for beverages. However, it is important to note that such consumers are rarely loyal to the category since they are discovery-oriented but could trade up if offered a premium quality product. - Knowledge & Involvement
Due to younger, experimental minds, Gen Z and Millennials tend to show an incline towards wine. According to common observation across generations, the younger consumers have always been more inclined towards wine than those over 55 but recent trends due to moderation indicate increased competition amongst different categories and more difficulties for the wine market to prosper. Even with the end number of options for consumers, the engagement levels related to wine are certainly very high within various markets like that of Germany, UK and France. Knowledge still seems to be lower among consumers since newer wine drinkers face difficulties related to retaining a lot of information because of the use of smartphones. Apart from that, there is greater dependency on curators to produce interesting products for customers thereby disregarding the thinking part for them. - Inclination towards premium wines
While premiumisation of wine continues to increase, the pace is surely steadier. India and China are amongst the brightest markets where premium and above category volumes continue to rise and on the other hand, standard and below wine categories decline faster. Ageing populations and preferences of the younger populations to consider other alcohol beverages are major factors for the same. - Domination of No/Low Alcohol Wine
Wine already dominates the low-alcohol category but recently, along with inventions and categoric changes, countries are focusing more on creating wine products that consist of better health attributes such as zero sugar, reduced carbs, low on calories etc. Along with that, there is also an increase in the consumption of no-alcohol wine which is facing turbulence due questions around its quality and taste, but is still growing gradually in some markets. Bad quality no-alcohol wines with no credibility are pushing consumers to switch to other no/low categories of beverages. - E-commerce Related Growth
Due to increased competition, there is an increase in the e-commerce segment of the wine category however, it continues to have a slower pace. The share is divided across various alcohol-beverage categories with wine facing the largest value drop. According to a long-term perspective, wine brand owners should continue to invest in the category as it will allow them to enjoy the share of the total off-trade in the future. - Climate Related Challenges
With climate change and increased risk due to extreme weather events, there is also a huge impact on wine production. Climate discrepancies affect the fires, frost, harvest thereby leading to reduced quality. This factor is prompting individuals to inculcate sustainable practices and techniques making it a priority for two-thirds of wine drinkers as well. Increasingly, premium tier brands are joining the alternative packaging trend and have begun to offer their products in larger and different packaging formats.
