The wine world has changed vastly in the last six months due to COVID-19, and has affected all parts of the distribution network, from producer all the way to consumer, and everything in between.
Lallemand Oenology organized a webinar to try to understand from a market point of view how things are shaping up, how the wine market is affected and what is next. Four experts in the field participated to this exclusive event. Sam Harrop MW and consultant in Spain, Chile, Japan and New Zealand, Jane Masters MW, wine consultant in the UK, North America, and Spain, Dirceu Vianna Junior MW, Wine Consultant in the UK, Croatia, South America, Spain and Portugal and Sarah Benson, Wine Buyer – Coop in the UK.
Starting with wine producers, people in the Southern Hemisphere had little time to adapt to the changing landscape and were forced to become efficient and strategic about how they were to successfully produce wine this year. Sam Harrop MW discusses how producers in the Northern Hemisphere will have to be efficient throughout the production process, to prevent workers from becoming ill, but also how to streamline production processes to ensure a high quality yet cost-effective products.
His main area of focus is on fermentation management – as when fermentations are done correctly and efficiently there is less risk later during the production process. In order to achieve that, it is paramount to control the fermentation with proper yeast rehydration with Go-Ferm Protect Evolution™ and also complete nutrition regime during Alcoholic Fermentation (AF). A stuck fermentation is something to avoid. This will help reduce costs, ensure quality, and increase efficiency in the production facility.
To ensure a safe and efficient ferment Sam suggests not changing your wine style greatly this year and focusing on letting the fruit express itself. Lalvin Persy™ is a new yeast for red wine that does not produce SO2, which will let the fruit be expressed. Sulphur as quickly as possible post AF, and co-inoculate with wine bacteria, particularly L. plantarum, (ML Prime™) and Lalvin VP41™ for the most efficient and secure way to complete MLF. Sam proceeds so even with his most premium red wines.
Preserving the quality and freshness of wines will also be paramount in the future as supply chains can be hit with delays due to COVID. Sam suggests ensuring low dissolved oxygen levels (DO) wherever possible. This can be achieved through the use of inert gas (nitrogen) to limit O2 exposure, but also keeping sulphur levels high enough, and also using inactivated yeasts, such as Pure-Lees™ Longevity which can scavenge excess oxygen.
Consumers, as mentioned by Jane Masters MW, and Sarah Benson, are also concentrating more on buying sustainable and organic products, since COVID-19 began. Moving winery production towards sustainable and finally organic production, as was trending before, will become even more important in future years if your specific wine is to be competitive. In fact, as Sarah Benson mentions, consumers have shifted from 1% of their products being ethically sourced to 21% since COVID-19 began – this should raise a warning bell to those producers who are neither organic nor sustainable. It should be noted that most of our products can be used in an organic winemaking process. Many non-chemical solutions exist in order to cater to this market requirements such as bioprotection from Brettanomyces by early inoculation with malolactic bacteria, biocontrol of spoilage microorganisms with selected non-Saccharomyces yeast such as Gaia™ or acidity management with Laktia™ to maintain freshness in wine.
Consumers have also, in the UK, shifted the format of production. People going to the shop less frequently are now buying Bag in Box (BiB) more often (103% increase), and rosé sales are up 17% YOY. The trend towards BiB specifically is something that producers and distributors alike should take note of as sulphur levels, DO levels and shelf-life are all going to become more important and specific inactivated yeasts such as Glutastar™ and Pure-Lees™ Longevity, are essential tools to overcome those issues. The new yeast Lalvin Persy™ with no to low SO2, H2S and acetaldehyde production with bring forth the fruit aromas sought after in those wines
Moving further down the production chain – once wines leave the winery, how are they now being distributed? Many on-trade sales have plummeted, with the UK reporting a £9 billion reduction in turnover in the on-trade.
However, there is some hope; Sarah says that £3 billion of that on-trade loss has moved to off-trade sales; many of which are now online. Jane Masters MW discussed how online wine sales have increased five-fold since the pandemic began in the USA, and alcoholic beverage purchases online in the UK have increased 95%. This is not just due to the added convenience and perhaps people seeking lower prices, but people are actually becoming more involved in wine, they want to become more engaged with wine, learn more about the producers, the product, and how it was made. WSET can confirm this as they have had a boom in online wine courses.
Wine intelligence, a research and insights agency, found that in March and April of 2020 the people driving this increase in online sales were core wine drinkers increasing their consumption of still wines. Who are these consumers? 55-65% male, 65% from generation Z or Millennials, those who are good with technology, and fall into the highly involved in wine category.
Millennials, as they seem to be important in driving the increase in online sales trend, are also important because they are highly proficient with social media, and can therefore, especially with influencers, shape and change brand image quite quickly.
As Dirceu Vianna Jr MW mentions, these interactions with customers, perhaps through education on video conferencing tools, or through a shared experience online, or the telling of stories, are very important for the continued survival of companies during COVID. Brand loyalty will be paramount as people spend less on volume and focus more on quality and value.
The importance of egalitarianism is also something that is now at the forefront of consumers’ minds. How key workers are treated in wineries, distribution networks, and other parts of the supply chain, should, and will become more important for maintaining trust with consumers.
This links back to sustainability as Jane Masters MW mentions – consumers are not just interested in sustainability in the vineyard, but also in the supply chain – “how ethical is your company?” is a question that will most likely be heard often in the future, and this will affect purchasing decisions.
What will happen to those who aren’t able to adapt? Dirceu mentions that there will be losses, and mergers in some cases; some have already started. However, not all the news is bad. There are some green shoots of growth amongst distributors who are working together with people in their supply chain, to strengthen their relationship with their clients, either through online education (Liberty who is 70% on trade is helping educate sommeliers who are currently not working), or through encouraging community support by giving away free bottles of wine to heroes of the community.
Direct to consumer sales, wine clubs online, and subscription packages are also becoming more important as people are wanting to use the extra time they have to learn about wine with other people. This is creating a new “occasion” that never really existed before and is actually a significant opportunity for producers. Now producers from all over the world will be able to connect with consumers through online video conferencing. Though this was possible before, it was not the norm. Having these direct ties to the consumer, as Dirceu discusses, cannot be easily broken, and is very positive for brand loyalty.
Finally, what can people in the industry do going forward? As Benjamin Franklin said, “By failing to prepare, you are preparing to fail.” Sam Harrop MW stresses this, especially to winemakers and people in production – by preparing and making contingency plans you will have a better chance in these difficult times.
Dirceu Vianna Jr MW says that staying positive is something that will be very helpful, and ensuring you reach out to your community to maintain or create ties. Jane Masters MW and Sarah Benson discuss that online sales, sustainability and organics, and a shared sense of community are going to be important going forward in order for the industry to be successful.
At Lallemand Oenology we continue to bring to winemakers solutions to face those new challenges, new opportunities and new objectives so that they can keep bringing to consumers the wines that they enjoy.