Whether its wine spritzers, mimosas, crisp whites, sweet pinks or full-bodied reds, there’s no “w[h]ining” about the multitude of flavors and options in the $12.8 billion wine category, which grew 11.4 percent in multi-outlets and convenience stores for the 52 weeks ending Nov. 29, 2020, according to data from Information Resources Inc. (IRI), Chicago. Sparkling wines/Champagne saw year-over-year (YoY) growth of 28.7 percent and sales of $1.6 billion, IRI data reports.
Carolyn Lemoine, senior project director for New York-based Beverage Marketing Corporation (BMC), notes that the U.S. wine market for domestic and imported wines had been flattening out the past several years, culminating in a slight downturn in volume in 2019.
“The industry has been facing the challenge of having an oversupply, as well as flagging consumer demand,” Lemoine says. “The good news is that sparkling wines, especially Prosecco and Rosé, had healthy growth, and the entire category was benefiting from a premiumization trend, as consumers traded up.
“2020 has been a tough year for wine,” she continues. “BMC estimates that while only about 19 percent of total wine volume is sold in the on-premise (restaurants/bars, etc.), a whopping 41 percent of wine’s retail dollar sales comes from this channel. With the shuttering of restaurants and bars due to COVID-19, the industry suddenly lost a large part of a major source of category dollars.”
Smaller brands that benefit from consumer trial of an unknown wine when purchasing “by the glass” on-premise lost valuable sales as purchasing shifted to quick trips to off-premise grocery stores and wine shops, Lemoine adds. The suspension of travel and tourism and the shutdown of tasting rooms also negatively impacted wineries, which showcased their creativity with online happy hours and tastings to reach consumers.
In 2019, the wine category experienced its first downturn in 24 years and still has not fully recovered, with fierce competition from beer, flavored malt beverages (FMBs) and spirits. Domestic wine, which comprises 75 percent of U.S. sales, and imported wine saw minimal growth of 2-4 percent, says Scott Scanlon, IRI’s executive of Beverage Alcohol Vertical.
Yet, COVID-19 has led to “a strong rebound, driving growth rates of four times of that of recent years, Scanlon says. “Dollar sales and volume per trip are up, while trip frequency is relatively flat (i.e., stock-ups). There’s been a strong shift to eCommerce with these ‘trips’ up 130 percent and sales nearly 3.5 times higher than a year ago.”
There’s no denying the dichotomy of wine and Champagne sales on- and off-premise before COVID-19 hit, experts note.
In its September/October 2020 report titled “COVID-19 Beverage Alcohol Insights,” New York-based Nielsen states that total wine grew 18.9 percent in off-premise channels. Table wine was up 15.1 percent, while sparkling wine grew faster than the previous COVID time period, up 35.7 percent compared with last year, driven in part by strong double-digit growth in Champagne, up 71.3 percent, the report states.
For the same timeframe, off-premise alcohol dollar sales grew 17.1 percent YoY. Broken down by category, spirits, at 26.3 percent, led off-premise growth, while wine was up 18.9 percent and beer/FMBs/cider generated an increase of 13.9 percent.
In contrast, prior to COVID-19, dollar sales for wine was up 1.1 percent in multi-outlets and convenience stores for the 52 weeks ending Nov. 29, 2020, Nielsen states. Spirits were No. 1, with increased sales of 5.4 percent; total alcohol was up 3.5 percent; and beer/FMB/cider was up 3.8 percent.
Nielsen’s December 2020 “COVID Impact on the Alcohol Industry” report details the volume share of serves pre- and post-COVID, with only a minuscule variance. Pre-COVID beer and spirits volume was 45.6 percent and 41.7 percent, respectively, and wine volume was 12.6 percent. Post COVID, volume was 46 percent for beer, 41.1 percent for spirits and 12.9 percent for wine.
When it comes to the type of wine being consumed, red wine is No. 1 at around 46.7 percent, slightly eclipsing white wine at 45.5 percent and pink wines at 5 percent, the report states.
Cabernet Sauvignon, Chardonnay, Sauvignon Blanc, Red Blends, Pinot Noir, Pinot Grigio and Moscato along with sparkling wines are doing well. There’s also been a resurgence in sparkling wines driven largely by Prosecco, IRI’s Scanlon says.
For flavor trends, wines polarizing between sweet — think berry and peach — in still and sparking varietals and bold flavors, including dark fruit and cocoa, in dark red blends are trending. Low-calorie wines, sulphite-free wines, single-serve packaging and canned wines also are creating attractive points of entry for new consumers and creating a cross-category bridge, he adds.
Scanlon also notes there are some parallels between age and consumers’ wine preferences, for example, baby boomers gravitate toward the healthy attributes of red wine. “Yes, there is somewhat of a correlation of light to dark with younger to older. However, most consumers buy four-plus varietals throughout the year,” he says.
When it comes to the size and depth of the wine category, consumers have myriad options from which to choose. In Chicago-based Euromonitor International’s September 2020 “Wine in the US” report, the market research firm suggests that wines perceived as offering value, mid-priced wines and private-label brands will perform best.
In order to differentiate themselves from a sea of options, wine brands that have celebrity endorsements/partnerships, digital campaigns, interactive product labels and emphasize sustainability are doing well, experts note.
Leading the clean wine conversation and adding transparency to the label, Avaline wine co-founders Cameron Diaz and Katherine Power released Avaline Red in October 2020. The 14.5 percent alcohol-by-volume (ABV) light- to medium-bodied wine blends Grenache and Syrah organic grapes with delicate aromas that are balanced by the perfect touch of spice, the company says.
Made in Rhône, France, Avaline Red joins the company’s clean, vegan-friendly varietals White and Rosé, which sold 120,000 bottles in the first 90 days of release, it adds.
“Avaline wines are meant to be everyday wines, no matter the season,” Diaz said in a statement. “Our red is light enough to enjoy in warm weather but has enough body to cozy up with on a winter night. We know that’s how people drink now. It's not really based on seasons or meals, it's based on mood.”
Providing a lower-calorie wine alternative with 70 calories a glass and 7 percent ABV, Kim Crawford Illuminate Sauvignon Blanc and Rosé are scheduled for national distribution in April. Made from New Zealand sun-soaked grapes by winemaker Anthony Walkenhorst, Kim Crawford Illuminate reflects the brand’s signature quality and crisp flavor while providing a lower-calorie wine that is a reflection of the trends seen in lighter beer and hard seltzers, the company says.
In addition to lower-calorie wines, canned wines and boxed wines can make wine stress-free. Based on IRI data, three of the Top 10 table wines are boxed. At No. 3, Franzia Box had sales of $401 million, an 11.3 percent YoY increase for the 52 week ending Nov. 29, 2020. Botta Box and Black Box had sales of $317 million and $305 million and YoY growth of 48.4 percent and 15.6 percent, respectively.
Founded in 2005 by vintner Joseph Carr in honor of his dad, Josh, the California-based Josh Cellars, a brand of Deutsch Family Wine & Spirits, with 40.5 percent YoY growth and priced between $11-$14.99, generated the largest growth trajectory among 750-ml wines while producing sales of $365 million, IRI data states.
In sparkling wines/Champagne, Stella Rosa had a 83.9 percent Yoy growth and notched sales of $88 million. At No. 1 and No. 2, market leaders La Marca and Korbel saw sales of $203 million and $136 million and Yoy growth of 32.8 percent and 14.4 percent, respectively.
Wine shines online
Although online purchasing of alcohol has slowed from the 553 percent growth experienced during COVID-19’s peak pantry-loading, off-premise alcohol purchases are outpacing other consumer packaged goods at a rate of 59.8 percent compared with 53.2 percent pre-COVID. Online, wine continues to shine, with a dollar share of 68 percent, compared with spirits (18 percent) and beer (13 percent), Nielsen’s December 2020 report states.
BMC’s Lemoine concurs, noting that even before the pandemic hit, wine already had the biggest online sales presence because of consumers’ familiarity with ordering wine online.
“Wine made up 55 percent of sales, while beer made up 15 percent and spirits made up 30 percent,” she explains, citing the December 2019 Rabobank’s Alcohol E-Commerce Playbook which studies the online alcohol marketplace including Drizly and Instacart.
“In online grocery (i.e., Walmart, Kroger, etc.), wine made up 50 percent of sales, beer made up 40 percent and spirits made up 10 percent,” she continues. “Finally, in online liquor stores (i.e., Wine.com, Total Wine & More, etc.) wine made up a full 90 percent of online sales while spirits made up the other 10 percent.”
In Chicago-based Mintel’s “Wine: Inc Impact of COVID-19” report, Beth Bloom, associate director of US Food and Drink, writes: “… In the near term, wine brands will need to define and own drinking occasions in an environment that limits the social interaction historically core to the drinking experience, double down on its health cred, and nurture inclusivity to an increasingly diverse consumer base — all of which will help provide value.”