As the end of the year approaches, just-drinks takes an in-depth look at the stories that made the headlines in 2020 across the global drinks industry. In part IV, Ben Cooper picks out the highs and the lows for the global wine category.
For almost all of 2020, the wine industry has, like the people it employs and the world in which it operates, been subject to the overwhelming disruptive force of the coronavirus. Describing the pandemic simply as an event that affected the sector is clearly inadequate. It hasn’t just dominated the past year but defined it, and its impacts will continue to be felt for years to come.
A typical year for wine producers and buyers is punctuated by an almost ceaseless round of trade shows and, appropriately enough, it was the announcement in February that ProWein Singapore was to be delayed, owing to the outbreak of COVID-19 in China, that provided one of the earliest indications 2020 would be nothing like typical.
By the first week of April, ProWein in Dusseldorf, Vinitaly and the London Wine Fair had all been cancelled, with judging for the International Wine Challenge rescheduled for November.
Particularly poignant was the announcement in June that Beviale Moscow 2020, which had already been put back from March to September, would be cancelled altogether as the planned venue was being used as a hospital.
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- Fighting back through innovation
The innovation and adaptation precipitated by COVID in so many areas were certainly in evidence in the wine sector, with companies responding nimbly to the transformed consumer and business environment.
As early as March, Parallel Napa Valley launched a virtual tasting experience aimed at consumers having to stay at home. Consumers paid US$95 for the package including samples and other materials along with the 90-minute tutored online tasting. In early-April, Accolade Wines launched an online weekly book club to support its Hardys brand in the UK, as well as a daily ‘Happy Hour’ initiative for Echo Falls that encouraged consumers to share “uplifting memes, fun imagery and motivating messages” on Instagram.
Later in the month, Accolade unveiled a social media influencer campaign for Jam Shed in the UK. The company recruited influencers to post “a range of weird and wonderful crafts, as well as recipes” under the hashtag #jamshedisnotjustfordrinking, hosting “creative workshops” on the brand’s Instagram channel to engage with consumers stuck at home during the COVID-19 lockdown.
The company also had to adapt a major new push for Hardys that broke at the beginning of March, with the tagline “Certainty in uncertain times” being dropped. In the same vein, Reh Kenderman revised its relaunch of the Black Tower brand, relegating the tagline ‘Living is easy’ to the background.
Treasury Wine Estates linked up with Deliveroo in the UK in June to offer free samples of Wolf Blass wines with food orders. A month later Canadian company Arterra Wines began offering its wineries as venues for wedding ceremonies, targeting couples whose wedding plans had been interrupted by COVID-19. Meanwhile, New Zealand’s Villa Maria ran a prize draw activation in the UK, offering the winner a “luxury” viewing of the BAFTA TV awards in their back garden, along with a year’s supply of wine, a set of garden furniture and a selection of plants and flowers.
Underlining the pandemic’s continuing impact – despite the recent good news on vaccines – lockdown-themed marketing was still to be seen at the end of the year, with Pernod Ricard-owned Campo Viejo and Villa Maria both launching campaigns focusing on socialising digitally with friends.
- In the pink
There was also plenty of innovation to be seen this year in the NPD field. The rule change by Italian wine regulators in May that permits the production of Prosecco rosé paved the way for a number of pink Prosecco launches, once the new regulation came into effect in August.
Henkell Freixenet launched a Prosecco Rosé under its Mionetto brand in September, while Casa Gancia added a pink version to its namesake Prosecco range the following month.
In November, Bottega launched Il Vino dei Poeti Prosecco Doc Rosé Brut, while UK-owned Prosecco producer The Emissary announced its Emissary Prosecco DOC Rosé Treviso Millesimato 2020 would be available in the UK from January. By the end of this year, pink Prosecco is expected to account for 5% of total Prosecco volumes, despite only being available for the past four months.
The UK division of E&J Gallo Winery confirmed in May the UK launch of its Prophecy Rosé brand, the top-selling “premium” French rosé in the US, while also adding the Apothic Cabernet Sauvignon to its UK presence in August.
Other notable launches this year include the introduction of three canned wines in the UK by HUNWines in May, and the country’s debut two months later of Anheuser-Busch InBev’s Babe canned sparkling wine brand. Meanwhile, Californian winery Limerick Lane Cellars released a new wine in the US in aluminium bottles in August.
According to US alcohol delivery service Drizly, sales of premium wines in three-litre bag-in-box are increasing in the US as consumer apprehension about quality is being dispelled. Sutter Home Family Vineyards and Oregon-based Sokol Blosser Winery were among the companies bringing new bag-in-box offerings to market stateside, the latter claiming to have launched the first Oregon wine in the format.
- Going direct
The past year has also seen further development in the low- and no-alcohol wine market, with Netherlands-based zero-alcohol Vinada launching in the US and Australian Vintage adding new UK supermarket listings for the McGuigan Zero brand extension. In Australia, Constellation Brands launched a range of three lower-abv New Zealand wines.
Not surprisingly, the direct-to-consumer segment of the market has developed considerably during the pandemic. US e-commerce platform Wine.com reported in November it had more than tripled its sales in the six months to the end of September. In April, Michael Baum, the owner of Chateau de Pommard in Burgundy, who was formerly e-commerce head for Disney and Yahoo!, announced his intention to increase direct-to-consumer sales from the current 10% of total revenues, urging other wine producers to do likewise.
A few months later, Treasury Wine Estates (TWE) opened an e-commerce operation selling high-end wines online to UK consumers, while Constellation Brands acquired two US direct-to-consumer wine companies in July, namely Empathy Wines and Booker Vineyards.
- Done deals
While M&A activity in the wine sector was heavily impacted at the peak of the global coronavirus outbreak, 2020 overall appears to have been a surprisingly busy year for M&A. According to GlobalData’s deals database, while M&A activity in the second quarter of 2020 was down 87% from Q1 and 86% against the four-quarter average, the total value of drinks industry deals in Q2 still reached US$706.92m.
In some instances, the pandemic will have precipitated purchases and divestments and was cited as a factor when South African drinks group Distell announced its decision in March to offload its Alto and Plaisir de Merle wine operations in the Western Cape wine region.
In the same month, Champagne house Louis Roederer added to its California wine interests with the purchase of Napa producer Diamond Creek Vineyards, while a month earlier A-B InBev’s Argentina subsidiary, Cervecería y Maltería Quilmes, acquired Mendoza wine company Dante Robino Winery for an undisclosed fee.
Other deals included Accolade Wines’ purchase of Coonawarra winery Katnook Estate from Wingara Wine Group, and Jackson Family Wines’ acquisition of Giant Steps Winery in the Yarra Valley.
The protracted sale of a raft of wine assets to E&J Gallo by Constellation, originally announced in April 2019, continued throughout this year. Forced by regulators into a further revision of the package in May, Constellation said last month that the deal would be completed in the final quarter of its current fiscal year ending in February – some 19 months after the transaction was first announced.
Remy Cointreau announced in October that it had secured majority control of Epernay-based J de Telmont, marking the group’s return to Champagne after nine years. Earlier in the year, Campari Group entered exclusive negotiations to acquire Champagne Lallier, which, when completed, will make Campari the first Italian company to own a Champagne brand. The company also completed the purchase of the French distribution operations held by Baron Philippe de Rothschild in February. In October, Marie Brizard Wine & Spirits agreed to sell loss-making Languedoc-Roussillon rosé winery Moncigale to Grands Vins JC Boisset.
Perhaps the most eye-catching M&A story of 2020 was the announcement by Treasury Wine Estates in April that it was considering the public flotation of Penfolds. Last month, however, Treasury confirmed it had “formally paused” work on a demerger of the brand as the group absorbed the impact of a sudden imposition of punitive import tariffs by China on Australian wine. In an exclusive interview with just-drinks, Treasury’s CEO, Tim Ford, said the situation in China was “certainly a worry” and that addressing the situation in the market – one of the company’s biggest – was taking “a lot of our time and energy”.
The dramatic turn of events in China serves as a stark reminder that, while the end of the pandemic may be in sight, new threats and pre-existing challenges will have to be met and wine companies can expect little by way of respite. That said, many will be able to take strength from how they coped in 2020.
Click here for all of just-drinks’ reviews of 2020
