05.14.2018  
 

The 'Next Big Thing' in Wine

Experts share thoughts on future trends at Wine Market Council's annual meeting in Napa

 
by Andrew Adams
 
hertz
 
Panelists at the recent meeting of the Wine Market Council included, from left, Nicole Bierig Jordan, Michael Osborn, Christian Miller and Geoff Kruth. Photo by Bob McClenahan.
Napa, Calif.—Lighter, more refreshing wines. Vermentino. Low-pyrazine Sauvignon Blanc, possibly from Lake County. E-commerce. Vermouth. Reds that are darker than rosé but lighter than popular red blends.

Those are just some of the guesses thrown out by a panel of wine industry experts about what could be the “next big thing” in the wine industry in the near future. “Every trend is always a reaction to a previous trend,” said Geoff Kruth, Master Sommelier and president of GuildSomm.

Kruth was the only member of the panel to think Merlot had a chance of rebounding in the U.S. market, but the other experts all generally agreed that some of the trends seen in the wider market may be reversed to some degree in 2018. The panel discussion was one session of the annual members’ meeting of the Wine Market Council on May 11 in Napa, Calif.

Big, bold red blends and Cabernets will likely continue to dominate by overall volume but Kruth and others suggested lighter, “refreshing” wines will see a surge in popularity. Kruth added varieties such as Vermentino have the potential to be popular for younger consumers seeking to avoid their parents pick of Sauvignon Blanc or Pinot Grigio.

Christian Miller of Full Glass Research said the “big thing” usually is a product that fills a gap in taste profile or style in the market and he suspected that it could be semi-sweet white wines, lighter body reds such as Garnacha or low-pyrazine Sauvignon Blanc.

No longer just the ‘other’ category
Michael Osborn, founder and vice president of merchandising for wine.com, said the website used to just have “other whites” or “other reds” to classify anything other than Chardonnay, Cabernet Sauvignon or the other major varietals. Now the website does list those lesser-known varieties such as Verdejo, Gruner Veltliner, or Gamay Noir because they are in demand by consumers. “Somms have been saying this for years, but the impact is now,” he said.

The growth of e-commerce in general is what Nicole Bierig Jordan, vice president of commercial strategy and analytics for Southern Glazer’s Wine & Spirits, said she expects to be the next major trend. “That’s where the future is, where a lot of growth is, it’s the 8,000-pound gorilla in the room,” she said.

Another product that will have an effect on the wine industry, but it’s hard to know exactly how, is recreationally legal cannabis. None of the panelists indicated legal marijuana will have zero impact on the wine industry, but they’re just not sure exactly what those impacts will be.

Osborn said he thinks the biggest effect will be felt by wine brands priced less than $20 as consumers exchange some of their budget for everyday wines for everyday cannabis products. But because wine pairs so well with meals, Osborn said higher priced, premium wine should be better insulated from losing market share to cannabis.

Impact of cannabis 
Bierig Jordan agreed, saying based on the preliminary tax information she’s reviewed from states where recreational cannabis is legal, the biggest impact appears to be consumers eliminating the “pre-dinner” drink in favor of a cannabis product. “That’s what we’re seeing in the first cut of data,” she said.

The traditional path of consumers trading up in the market from cheap beer to premium wine as they age and acquire more purchasing power could also be impacted by legal cannabis. “I would be really concerned about the impact of cannabis on the next generation,” Bierig Jordan said.

Kruth said he is a little skeptical about cannabis having a major impact on the consumption patterns of wine, but he said there is little chance it will not have a major effect on labor and farming costs. Increased demand for workers will only make it costlier to grow grapes, driving farming costs up faster than wineries can adjust pricing to account for them.

Miller said those in the wine industry need to be careful of wide-ranging pronouncements of how cannabis will impact wine because it’s far too early to really tell. He said early market research has been a bit “shaky” in terms of methodology and sample sizes and it’s hard to get a handle on the U.S. marijuana market as it’s so new and regulated so differently than beverage alcohol. “It’s not fitting into the existing structures that are fairly rigid the way wine, beer and spirits are,” he said.

In a session on the council’s recent research efforts, there was more information on declines in wine consumption among “occasional” wine drinkers. A separate study by the council found that 29% of these consumers are drinking less wine.

More than 51% of those surveyed reported they are just drinking less alcohol in general and for those in their 50s it was because of health reasons. About a third said they are participating in fewer “wine drinking occasions” and 26% reported they have less money to spend on wine. The study also found that while they may be drinking less wine, about 60% were opting for a non-alcoholic beverage rather than choosing beer and spirits. Of the 27% of consumers who said they did switch to beer, most of these were younger men in their 20s.

In a survey of how high-frequency wine drinkers use their smartphones or other devices to interact with wine, the council found 64% use them to find information on wine brands, 52% use them to “take action” such as sharing a brand on social media or looking up a review and 36% use them to purchase wine.

Karen Daenen, the research and consumer insights manager for Jackson Family Wines, described the 36% that buy wine with their smartphones as a “huge opportunity” for increased e-commerce sales.

Kevin Webster, senior manager of consumer insights at Constellation Brands, agreed about mobile devices and added e-comice and mobile platforms will only be more important as younger consumers are able to purchase wine. Using his teenage children as examples of future consumers, he said, “This is unavoidable, it’s just native to them.”

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