The pandemic has affected the wine and beverage sector significantly.
As we have also seen for other sectors covered in this column, restrictions have led to a contraction of life outside the home and a drastic reduction in social interactions, thus the discontinuation of sharing moments such as aperitifs and dinners out. Added to this is also the decline in tourism and consumption in the horeca (Hotellerie-Restaurant-Café) sector.
The decrease in wine and alcohol consumption is partly due to these trends.
According to Nomisma research commissioned by Assobibe (the Italian association of Confindustria that brings together producers of soft drinks and spirits), in 2020 consumption of soft drinks saw a -8.4 percent drop, while spirits saw a -8.3 percent drop, significantly impacting the 3,300 companies that are part of the sector. Consumption in restaurants and public establishments lost an average of 250 million euros per month.
Particularly in the horeca sector, the COVID-19 emergency resulted in a loss of 34.4 billion euros in 2020, marking a -35 percent compared to 2019. But the most impressive figure is the balance between businesses born and ceased during the pandemic, which is -13,060.
Increased e-commerce sales in the wine market
According to the joint report by the SACE Study Office, Mediobanca Study Area, and Ipsos on the Italian wine and spirits sector (marked by the analysis of Italian and international markets and the study of socio-cultural dynamics of consumption), the data show us that major Italian wine producers closed 2020 with a 4.1 percent decline in sales, specifically a -6.3 percent for the domestic market and a -1.9 percent for the foreign market.
In particular, sparkling wines, typically those most used for cocktails and aperitifs, lost more ground (-6.7 percent) than still wines (-3.5 percent).
In terms of purchasing channels, the large-scale retail channel saw an increase of 2.3 percent, from 35.3 percent in 2019 to 38 percent in 2020, while the horeca lost 32.7 percent, dropping from 17.9 percent to 13.4 percent. Slightly better were wine bars and wine shops, which still saw a loss of 21.5 percent: they dropped from 7 percent to 6.7 percent.
As is easy to imagine, however, it wase-commerce that was the channel that saw a real explosion in sales:
- +74.9% on owned web portals;
- +435% on dedicated online platforms;
- +747% on generalist marketplaces.
Prior to the lockdown, 71% of Italians had never purchased online on Cantine sites and 74% had never purchased on a wine shop’s e-commerce, while today these shares have dropped to 64% and 69%, respectively.
This trend led to a 55.8 percent increase in digital investment by major wine producers in 2020, compared with a 13.4 percent decline in advertising spending and a 14.3 percent decline in overall investment.
New consumption trends for 2021 in the wine industry
Also according to the report by SACE, Mediobanca and Ipsos, in 2021 the largest wine producers in Italy expect the sector to grow by 3.5 percent, which for exports could reach as high as 4.6 percent. On the other hand, the spirits sector is expected to see a 5.4 percent growth in sales (slightly lower for exports, with a 4 percent increase).
GDO remains the preferred channel for buying wine, but the propensity to buy in supermarkets has declined, from 58 percent pre-COVID, to the current 52 percent. In fact, Italian consumers are now showing greater attention to the search for quality wine, seeking to select unique bottles with specific characteristics.
This new consumption habit introduced by the pandemic is confirmed by another trend: a 6 percent increase in the number of Italians who turn to wine stores, wineries, or specialty stores to purchase wine. Women in particular are the ones who see the percentage of those who have never turned to a wine shop to buy a bottle of wine dropping from 52 percent before the pandemic emergency to a 44 percent in 2021. This new wine consumption trend has also touched other segments of society, affecting young people of various age groups (Millennials, Gen X, and Baby Boomers).
In terms of individual bottle costs, however, a weakening of the middle price range in favor of the lower price range was seen.
According to CIA (Confederazione Italiana Agricoltori) and UIV (Unione Italiana Vini), 40 percent of consumers who purchased wine online during the lockdown (52 percent did so) will continue to use the e-commerce channel for purchasing, with an expected growth of 75 percent for specialized portals and corporate sites.
In 2022, it will be necessary to be mindful of these new consumption trends in the wine sector in order to sustain the post-emergency pandemic recovery.
