3 potential growth opportunities for the wine business in the pandemic economy


The US wine market is generally returning to its pre-pandemic normal. This offers some real positives (e.g. improved on-site sales, ongoing premiumization trends, etc.), but wineries are also once again facing some of their pre-pandemic challenges. In particular, this includes downward trends in volumes, with wine losing shares in favor of spirits and seltzer water.

As the California wine industry looks for ways to regain the interest of an evolving consumer, it can be helpful to look for pockets of growth in the market. As RaboResearch analyst Stephen Rannekleiv recently presented for Sonoma State University’s Wine Business Institute Research Summit, there are at least three obvious growth segments worth exploring for new product development:

  1. Alternative packaging
  2. Health and well-being positioning
  3. Higher residual sugar

While not all three are suitable for all businesses, read on for some useful food for thought.

Alternative packaging

We know that the traditional 750 milliliter glass wine bottle accounts for 75% of all off-premises wine sales. Interestingly, according to data from Nielsen IQ, wine sales in this category more or less maintain their market share, while the best performing formats are the 3-liter bag-in-box offerings, cans and 375 milliliter glass bottles.

Trends such as the consumer’s desire to avoid overconsumption and the reduction in average household size have all seemed to create opportunities for packaging formats that offer fewer servings.

And, while we don’t recommend that cult Napa Cabernet brands come in 3-liter bag-in-box formats or that Russian River’s Pinot Noirs all come in cans, we do think there are plenty of wineries that would win. to explore range extensions in alternative formats.

Think of it this way: The traditional 750 milliliter wine bottle is akin to the beer brewer, a four-serving package format in which the product begins to lose quality once opened. How successful would the beer industry be if growlers were 75% of the packaging options offered?

Consumers demand health and well-being

In an episode of RaboResearch’s “Liquid Assets” podcast series, Dale Stratton, president of the Wine Market Council, said that one of the most common reasons consumers give for not engaging in wine is that ‘it doesn’t match their wellness priorities.

Along with this, we have seen the rise of low-alcohol, non-alcoholic brands in and outside the wine industry. FitVine Wine️ is currently one of the fastest growing wine companies, and Michelob Ultra continues to counter the declining trend of light beers. There is certainly a compelling case that low alcohol wines can help a business attract new consumers.

An additional point that should be made here is that in addition to simply touting a lower alcohol content, a brand’s message is of crucial importance. For example, the entire Michelob Ultra campaign is based on messages positioned around living and maintaining an active lifestyle, which has proven to be a powerful driver of consumption for the company.

Yet consumers also have a sweet tooth for wine

Beyond health and wellness considerations, the same data presented by Stratton also revealed that the main reason consumers give for not drinking wine is that they don’t like the taste. While we often hear American wine drinkers complain that they don’t like sweet wines, buying behavior actually shows us that wines with more residual sugar – to a point – are more popular than those. with less.

What may surprise is that a higher residual sugar content is not necessarily inversely proportional to the price.

In a session presented at this year’s Unified Wine & Grape Symposium, the 25 fastest growing wine brands were examined, mapping residual sugar levels and prices, and little correlation was found between the of them. Two-thirds of the brands on the list had 5 grams per liter (G / L) or more of residual sugar, and the seven brands with 6 G / L or more had an average retail price of almost $ 40.

This suggests that testing options for wines with slightly higher residual sugar at higher prices could prove successful for some brands in attracting a wider range of consumers.

The spirits and hard soft drink categories continue to attract new customers by introducing alternative products that adapt to different lifestyles. And there’s no reason wineries can’t do the same by taking an in-depth look at varied offerings that might make sense for their business models and brand identities.

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