The winning and losing wine countries as consumers wine tastes change
By Richard Siddle
No matter which part of the industry we work in we will all have had our own targets and goals over what we wanted to achieve in the last 12 months. For those in corporate life those targets are normally set by sales, revenue figures and profits, where your year-on-year performance can be easily assessed.
When we look at the bigger picture, however, it then becomes a little more complicated and harder to determine how a particular sector is doing overall. That is until we start getting the end of year results and comparative charts coming in from our trusted analysts and drinks industry research bodies.
The fact your own personal sales of Chilean, Argentine, or South African wines have been particularly good, will quickly look out of step with overall industry trends if the bigger analysis shows we collectively have been buying and selling less of those countries’ wines.
In fact, when it comes to analysing the performance of particular countries it is actually more accurate to look at how they have been doing over a period of years, rather than take a relative snap shop of 12 months which can be so affected by the size of a particular year’s harvest.
Which brings us to the latest report from the Wine Business Solutions ‘A Seismic Shift in Wine Tastes’ that looks at how all the major wine producing countries have been scoring, as it were, in terms of listings in restaurant, bars and hotels in four key influential global markets: the US; UK; Canada; and as the report is published by an Australian research body - Australia.
Winners and losers
The results make surprising and interesting reading. The big winners and losers over the last five years? Well, it’s time to look away if you happen to have placed your bets on the Australians or Chileans in particular. But those who have backed Italy, Spain or New Zealand have enjoyed some remarkable successes.
Let’s break them down in more detail. The biggest success story is Italy which has seen dramatic growth across these four markets. Between 2013-18, Italian wine listings increased by nearly 50% in Canada and almost 20% between 2015- 2018 in the UK. Whilst they have jumped by a third in Australia and by 50% in the US, in the last year alone.
It means Italy has the biggest share of wine list space in Canada, at 27% compared to 18.3% in 2013. In the US Italy is second only to domestic sales (down 15%) with a share of 26.1% up from 17.4% in 2017. In The UK Italy is second to France with 24.1% share up from 20.3% in 2015. Whilst in Australia Italy is the largest importing country with a 10.7% share now compared to 8.1% in 2017.
Elsewhere Spain has seen a 47% increase in Canada in the last five years, a 32% jump between 2015 and 2018 in the UK and a 20% increase in the US in the last year.
By contrast, Chile is down 51.7% in Canada over that five year period, is 19% down in the UK over the last three years, and it has fallen 19% in the US in the last year.
Australia is down 46.5% in Canada over that time, 12% in the US, and 24% in the UK.
OK, both Chile and Australia can both point to booming exports to China, but that is on the back of free trade deals to what it very much an emerging and not mature wine drinking country.
What does it mean?
So what’s the reason for these mixed performances? Wine Business Solutions puts it down to the styles of wine the winning countries are increasingly producing. Those that have predicted and listened to changing consumer tastes for lighter, more refreshing, lower alcohol style wines are the ones that are reaping the rewards. Those that have stuck to their tried and tested and relied more on price, promotions and brands to shift large volumes of supermarket focused wines, rather than what the wines ultimately taste like, are missing out.
Which is largely bad news for the multinational brand owners that have not diversified and introduced a wider range of brands that appeal to a broader set of both existing, and more importantly new consumers.
You only have to look at the big wine success stories of not just the last five years, but past decades to see how global tastes have changed. In that time we have seen the boom in Italian Pinot Grigio, derided by many in the trade for being harmless and tasteless. But that’s exactly the point. Pinot Grigio has been enormously successful because it hits the taste profiles that consumers want, even if they could not articulate it.
Following hot on the heels of Pinot Grigio have been the explosion in other lighter, neutral, mostly white grape varieties first from Italy, but then from Spain with its Albarinos, Verdejos and Godellos. Which, in turn, has seen the continued rise in demand for lighter red styles - the kind you can keep in the fridge.
Lighter, fresher, fizzier
And then there is the Prosecco phenomenon. If that has not told the wine industry what the world’s wine consumer wants to drink then nothing will. It’s not just because it’s cheap and plentiful. It’s taking the lighter, fresher taste profiles of Pinot Grigio and the like, putting some light fizz in it and charging just enough to make you feel good about yourself, but not so much you have to think twice about buying it. A winning ticket all day long.
Yes, it is easy to sit five years down the line and look back with the benefit of hindsight. But it is not as though we were not told this might happen. Major wine figures were speaking out in the mid-2000s about what they saw as the changing of the guard and the demand for lighter wines to replace the oak, laden, extracted fruit bombs that had been selling by the bucket load. Dan Jago, head of wine at Tesco at the time, famously told a retail conference in Australia in 2007 that times were changing, and Australia risked being on the wrong side of where the rest of the world was going.
The clues have been there all around us, in all other aisles of the supermarket, if only parts of the wine industry could get its nose out of the wine glass to smell what is really taking place amongst consumers. From morning to night we have been looking for lighter, reduced calorie, no fat, products to buy and eat. Be it the butter on our low-grain bread, or the sauces we make for our brown rice or pasta.
Consumers have been calling for everything to be toned down, be it less sugar, salt, meat or additives. It makes perfect sense, therefore, that the wines that are more about what does not go into the production process are the wines, people increasingly want to drink.
It does not mean going the whole way and following the no sulphur, natural wine agenda, but stripping everything back in the cellar so the focus is on the grapes and how best to use their acids, skins and flavours to make bright, breezy wines that are lovely and easy to drink, and don’t give you a headache by the third glass.
Look at the countries around the world that are building sales and gaining in popularity and then look at the styles of wine they are making. Those are the countries and producers that will be hitting their targets and getting their bonuses when the 2019 end of year results are in.