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COVID-19 has caused major disruptions to most industries, but the wine industry has been particularly hit due to closures of its primary sales channels, restaurants, and tasting rooms. With social distancing restrictions beginning to soften, how will this impact global wine industry trends in 2021? Below are some key factors to consider.

• Wine.com reported 217 percent growth in the first half of its fiscal year 2020.
• International Wines and Spirts Record (IWSR), the leading source of data and analysis on the global beverage alcohol market, predicted 2020 year-end online alcohol sales would increase by 86 percent to $5.6 billion.
• Drizly, the largest online marketplace for alcohol in North America, reported that U.S. e-commerce penetration experienced 10 years’ worth of growth at the pre-COVID pace in just three months between March and May 2020.
• The small wine producer saw 153 percent growth in online 2020 sales with an average order 300 percent larger than the average order in the tasting room.

But will these boosted online wine sales continue post-COVID or are they just a temporary glitch? Experts claim that online sales will continue to grow, even after consumers are able to safely return to restaurants and tasting rooms. 

According to data from Finaria, the pandemic contributed to the increase of global e-commerce users by 9.5 percent year-over-year growth to exceed 3.4 billion. This trend is expected to substantially increase in 2021, growing another 10 percent year-over-year to 3.8 billion. By 2025, there will be an estimated 4.9 billion global e-commerce users.

The online sales channel will continue to be a growing market for wine producers as well. In fact, the SVB report claims “if you are looking for incremental growth in 2021, it isn’t going to happen by waiting for the vaccine to take hold and expecting existing sales channels to go back to where they were before. Consumers are changing in permanent ways that require your reaction.” Additionally, SVB forecasts online wine sales to comprise 20 percent of total wine sales before 2030.

• Hire a professional digital consultant to train winery staff in creating and maintaining an effective online platform. Wineries that achieved the best online sales results in 2020 engaged digital marketing experts outside their company, as opposed to asking existing staff to learn e-commerce skills on their own.
• Leverage an online video platform like Zoom to conduct digital wine tastings that recruit online club members. Twenty seven percent of new wine club signups in 2020 came from online tastings, demonstrating the significant opportunity in this market.
• Create an online community for wine customers so that they can connect with one another and promote wine on behalf of the winery to other potential customers.

As much as efforts to build online sales will benefit individual wineries, they may also boost the competitiveness and marketability of the wine industry as a whole. The wine industry has struggled in recent years to compete with other alcoholic beverages due to its lack of e-commerce options and inability to appeal to a younger audience (like millennials), among other reasons (United Wine & Grape Symposium, 2020). A report issued by the IWSR shows that wine consumption in the U.S. dropped 0.9 percent in 2019, the first drop of its kind in the past 25 years.

Through online platforms, there is potential to build new wine sales among new customers. Data shows that online wine buyers are younger in age, have higher incomes, and are branching out in their wine purchasing (Wine Intelligence, 2021). Furthermore, after the onset of the pandemic, U.S. wine consumption growth was led by millennials by 28 percent (Wine Intelligence). With sharpened digital marketing efforts that promote wine to the online shopping market, the wine industry could penetrate a new and expanded consumer market.

About the Author
Jessica Vuk is a consultant with Morrison, working primarily in our Grants practice. To get in touch with Jessica, please find contact information for Morrison here.