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The wine category in 2019 - just-drinks' Review of the Year, Part I - FREE TO ACCESS

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As the year draws to a close, just-drinks takes a look back at the stories that have made the headlines across the global drinks industry over the last 12 months. Here, Ben Cooper picks out the highs and lows for the wine category.

just-drinks considers the forces that have shaped the wine category in 2019

just-drinks considers the forces that have shaped the wine category in 2019

Even its staunchest advocates would concede the wine sector has tended to be somewhat sluggish when it comes to moving with the times. However, that's certainly not the impression one gets when looking back at what has been happening in the category over the past year. Indeed, if anything, the last 12 months reveals the wine sector to be dynamic and forward-thinking.

Whether by dint of rules to protect geographical denominations or because wine producers are inherently cautious or conservative in outlook, change happens gradually in wine. Responding swiftly and creatively to changing consumer demands is a challenge. However, the plethora of innovative product launches during the past year, including flavoured wines, wine and spirit fusions, canned wines and wine-based RTDs, not to mention low-alcohol variants, shows things are changing.

Broader NPD horizons

Notable launches include Pernod Ricard's introduction in September of a tea-infused wine brand in Australia. The Tea & Wine range comprises two variants, an unoaked Chardonnay infused with organic Egyptian camomile tea and a Cabernet Sauvignon infused with organic Sri Lankan chai. Also in September, E&J Gallo Winery added three fruit-flavoured extensions to the Barefoot wine brand's Moscato range in the US, comprising apple-, peach- and strawberry-flavoured variants.

Spirit and wine fusions have proven an attractive area of new product development for wine companies in 2019. Both Accolade Wines and Treasury Wine Estates have sought to capitalise on the current popularity of gin when developing fusion products. Accolade launched Echo Falls Rosé Wine & Gin Fusion in February, with TWE introducing Blossom Hill Gin Fizz a month later. Blossom Hill Gin Fizz comes in two variants: Lemon & Rosemary and Rhubarb. 

Accolade added a second spirit fusion to the Echo Falls range with the launch of Echo Falls White Wine & Coconut Rum Fusion in June. The following month, UK-based wine consultancy Litmus Wines extended its Ginking gin- and wine-based RTD.

Chilean wine producer Concha y Toro, meanwhile, borrowed from the spirits sector by using age statements for its new Casillero del Diablo Travel Retail wine range, launched in May.

Canny thinking

Packaging innovation has also been much in evidence over the past year. In June, UK-based Garçon Wines entered a partnership with Naked Wines, offering subscribers to the wine club a Cabernet Sauvignon in a flat 75cl "letterbox-friendly" bottle made from recycled PET.

There was a steady stream of new canned wine products hitting the market during 2019, reflecting the growing popularity of this packaging format which offers convenience and sustainability benefits when compared with glass. In May, Gallo introduced a slim can format for two of its Barefoot varietals in the UK, while Concha y Toro launched a canned wine spritzer under the O'jos brand. Later in the year, Greencroft Bottling Co unveiled a US$2.5m wine canning line, the first large-scale wine-canning unit to open in the UK. 

In the US, A to Z Wineworks added a canned version of its Rose Bubbles brand, while Californian wine company WX Brands launched two Chronic Cellars wines in 37.5cl cans. Accolade, meanwhile, launched canned variants of four Echo Falls wines in Global Travel Retail. In March, California-based Vintage Wine Estates acquired wine-in-a-can producer Alloy Wine Works.

A further area that saw significant NPD activity during 2019 was the low-alcohol wine category. In June, Pernod relaunched the low-alcohol Brancott Estate Flight, having withdrawn the brand extension four years ago, in response to rising demand for low-alcohol wines.

In April, TWE added three 0.5% wines to the Lindeman's range across Europe, comprising a Chardonnay, Cabernet Sauvignon and a sparkling blend. The month before, Accolade had launched the first non-alcoholic wine under its Hardys brand in the UK.

San Antonio Winery extended its Stella Rosa range of Italian flavoured wines with a low-alcohol variant in June. Later, in September, UK start-up Wild Life Botanicals launched two low-alcohol sparkling wines. Australian Vintage followed suit in November, releasing the McGuigan Zero range of five alcohol-free wines in the UK.

The New Normal

just-drinks wine commentator Chris Losh has compared the wave of innovation currently being seen in the wine sector to the New World wine boom 30 years ago but actually considers the degree of disruption now being witnessed as far greater. The way in which New World wine producers disrupted Old World orthodoxies was "tame" in comparison with what is being seen at the moment, Losh writes.

Moreover, Losh believes that what has been happening in the wine sector is not a moment of change but the new normal, anticipating "many more years of flavourings, colours and category-transgressing launches". 

Anheuser-Busch InBev acquired canned wine brand Babe with its purchase of Swish Beverages in July and, by October had agreed a sponsorship deal with the US National Football League (NFL) for the brand, announcing Babe to be the "football wine we've all been waiting for". Molson Coors tested a range of wine spritzers in the US in March as it sought to take "more risks" with innovation beyond beer.

While Constellation Brands has reiterated its commitment to the wine category, the company has been looking to re-focus its wine activities towards the higher-value end of the market. The sale of around 30 wines and spirits brands to E&J Gallo for US$7.1bn, lined up in April, was part of this process but the two companies have spent the rest of the year awaiting clearance for the deal from the US Federal Trade Commission. A decision is expected by the end of the year.

While waiting, Gallo announced in November the acquisition of Pahlmeyer Winery in California's Napa Valley for an undisclosed sum. Pahlmeyer's wines retail in the US for between US$30 and $350 a bottle, underlining that Gallo is also looking for value growth to respond to the less-but-better trend in wine consumption.

Growth potential in Asia, particularly in China, was another factor providing positive mood music for the wine sector during 2019. In an interview with just-drinks in August, TWE chief executive Michael Clarke said Asia is now the group's biggest profits contributor, having been a loss-making part of the business only six years ago. Indeed, Australia overtook France as China's leading wine importer by value in the first five months of the year, according to new figures from Wine Australia. 

Clarke also confirmed that TWE had acquired Bordeaux wine company Cambon de la Pelouse as part of its plan to become the largest supplier of French wine into China. More acquisitions are to follow, he promised.

Two months later, TWE made the surprise announcement that Clarke, who has overseen the recovery of the company during his five years at the helm, would be standing down in 2020, for family reasons. Clarke will be succeeded by chief operating officer Tim Ford. It was also announced in July that Australian Vintage CEO Neil McGuigan is to step down after nine years in the job.

Attention throughout the year has been focused on Pernod, with rumours persisting that the group intends to withdraw from wine, having sold a raft of wine assets in Argentina to Chile's VSPT Wine Group in January. Speaking exclusively to just-drinks in September, however, Pernod CFO Hélène de Tissot reiterated the company's commitment to the wine category, emphasising how the company's continued involvement in wine provided routes to tapping into some notable current consumer trends, "such as low-alcohol, female consumption and the meal occasion".

One of the chief reasons why multinational spirits companies over the years have found it so difficult to combine wine and spirits interests effectively is because historically the wines and spirits categories were so different from one another. The current disruptive trends in the wine sector, most notably in product innovation, suggest the category is less idiosyncratic than it once was. In particular, it is far more brand-focused today, with considerations around provenance and appellation featuring less prominently in how wines are marketed.

TWE's decision to opt for a multi-country supply base for its Squealing Pig brand, which it launched in the UK in July, speaks to this shift of emphasis in wine that has been reflected so vividly over the past year. The six-wine range will comprise varietal wines from five countries. The disparate provenance of the liquid in the various bottles is not problematic, because the brand identity common to all six will be the focus not only for the company, but also, in the main, for consumers.

The group's European senior brand manager for luxury & Millenials, Peter English, hits the nail on the head: "Millennials don't necessarily care about vintage, varietals or terroir. They care about storytelling."

For Pernod, its remaining wine interests - including Jacob's Creek, Brancott Estate and Campo Viejo - are essentially a group of very strong international beverage brands, which just happen to be wines.

just-drinks Review of the Year 2019 - December Management Briefing


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