Times of crisis and rapid change force us to find new ways to adapt and innovate. Just as the world has shown incredible resilience to the pandemic, so too has the wine industry. Hanna Halmari reports on what some wine industry insiders say are key lessons to be learned so far.
Amidst fear and confusion around a deadly virus, lockdowns and closed borders, uncertainty and mixed messages, 2020 has certainly been an incredibly challenging year on both a personal and professional level.
The Covid-19 pandemic has hit the global economy hard and the wine industry has been no exception. The industry has been faced with labour shortages, impacting production, distribution, and the livelihoods of seasonal workers.
The hard stop in the hospitality industry has resulted in a massive downturn in the on-trade business and wine tourism. On the other hand, the rise in off-trade demand has been met with logistical difficulties.
On top of that, add a looming uncertain Brexit and increasing wine tariffs and no wonder the outlook has often appeared gloomy.
As many of these challenges remain and the pandemic unfortunately appears far from over, it is important to consider what we have learnt so far. Just as the world has shown resilience by adapting and innovating during the pandemic, so too has the wine industry.
In the spirit of the saying ‘never waste a crisis’, what are the key learnings the wine industry can take away from the pandemic?
To get a better understanding of the positive trends, changes, and learnings that have emerged from Covid-19 in the world of wine, Sustainable Wine spoke to a few experts from different sectors of the industry. These interviews produced four key insights:
Insight one: The importance of rapid digitalisation
With global lockdowns enforced and social distancing measures in place, businesses had to quickly turn to digital solutions for business and communication. This forced the historically traditional wine industry, significantly less digitalised than other industries, to rapidly realise the importance of up-to-date technology.
Despite the sector’s pre-existing lag, “[it] has been incredibly quick to adapt to this new digital world we are in,” shares Lauren Holman, export sales manager for Château Léoube in France. Whilst “the agricultural work remains somewhat the same, the [form of] communication has definitely changed,” agrees Heidi Mäkinen MW, importer/distributor for Viintie Ltd in Finland.
With face-to-face contact no longer a possibility, online channels became vital for communicating with customers. Social media channels stood out as especially important.
As UK based wine educator Richard Bampfield MW notes, the pandemic even saw the creation, marketing, and selling of a new rosé brand solely through social media. To successfully connect and engage with customers through digital channels, businesses needed to come up with more creative and innovative approaches to content.
For example, Sally Evans, owner of Château George 7 in France, turned to engaging customers stuck at home with topical content around food and wine pairings through recipes on her website.
The revolution in wine tasting
Similar to other industries, Zoom rapidly emerged as a major platform in the wine industry. With no vineyard or wine club visits possible, wine tasting events went virtual.
The pandemic has revolutionized wine tasting as now anyone can join a wine tasting from the comfort of their own home. This incredible increase in accessibility to wine tastings is certainly one of the key benefits of online tastings. With the possibility to deliver wine samples across the globe, virtually anyone can join as potential guests are no longer restricted by location or travel arrangements.
Not only are wine tasting more accessible to customers, but the variety of wines on offer has also increased. As Holman points out, “many ‘old school’, traditional producers – the ones that are usually strictly off the books to anyone other than true wine investors and trade – [have pivoted] their business operations into opening up their cellars and doing virtual tastings.”
Having proven to be highly successful, many plan to make virtual wine tastings a permanent offering. For example, London wine club 67 Pall Mall plans to continue providing a series of virtual events in the future.
The rise in e-commerce
According to Nielsen research, off-trade alcohol sales in the US were among the “fastest growing categories in e-commerce channels.” The massive increase in demand for online alcohol sales was met by rapid investment in e-commerce channels by many wine retailers.
Companies such as Wanderlust Wine with business models built on direct-to-consumer e-commerce sales seem to have fared especially well during the pandemic. Relying solely on technology to power their operations, Wanderlust sells a range of sustainably produced wines sourced directly from small winemakers to consumers, the off-trade and the on-trade.
The spike in off-trade demand and sudden halt in the on-trade sector forced many on-trade distributors to target the consumer market. “It’s been great to see some on-trade focused distributors open up their portfolios to general consumers via e-commerce sales and other forms of B2C models sprouting up all over the industry,” Holman says.
Whether the dominance of online shopping habits persists beyond the pandemic remains to be seen, but Evans believes that “many businesses will emerge [from the pandemic] with more advanced technology and better B2C selling capacity.”
Insight two: The potential for creativity and resourcefulness
From labour shortages to premises closures, logistical difficulties to wine surpluses, the pandemic posed several significant obstacles in the wine industry. However, as evidenced by the industry’s rapid digitalisation, businesses did not come to halt. Instead, they looked for innovative and alternative ways forward, unlocking endless creativity and resourcefulness.
Adaptation and perseverance
Heidi Mäkinen notes how the pandemic forced the wine industry to “[re-think] many past habits” and how “we [have] all had to accustom to new ideas very quickly.” The importance of adaptation and perseverance in overcoming the challenges of the pandemic is further highlighted by Evans.
Faced with labour shortages, she went ahead and sprayed organic fertiliser by hand throughout her vineyard (by no means an easy or pleasant job). In response to social distancing measures, she came up with a new way for customers to experience a vineyard in the Covid-19 era, offering a ‘private vineyard for a day.’
However, she points out how the size of winery makes a massive difference in the types of challenges faced and the possibilities for navigating these. She notes how as a small vineyard owner, she was fortunate to not have to worry about costly social distancing workplace measures or furloughing of staff, for instance.
She also shares her experience of decorating the tasting room during the lockdown, reusing and upscaling furniture and fabric, noting her amazement at how resourceful you can be: “When we can’t get hold of certain things, we become more creative to make the most of what we have.”
The industry is certainly abundant with examples of creativity and resilience. For example, in Italy, the city of Florence saw the resurgence of historical ‘wine windows’ for socially-distanced wine sales, and in the UK some wineries offer a drive through wine service.
Between April and July of this year, UK wine supplier Berkmann Wine Cellars ran a fantastic initiative called Help 4 Hospitality. Consumers were given access to wines they would otherwise consume in restaurants and bars, raising £75,136 in donations to help the struggling hospitality industry.
We should aim to carry over such open-mindedness and resourcefulness into the post-pandemic world. As Mäkinen says, “we should keep thinking if we could be yet more efficient and imaginative, and not just act in a way that’s always been done without questioning the habits or searching for new possibilities and opportunities.”
In the longer-term, the impacts of the pandemic will no doubt be felt for years to come. Holman believes that “safety will [continue to] be one of the major deciding factors in doing business for quite some time.” Mäkinen also believes that “the different parts of the industry will likely be much more cautious when making investments in the long run.”
Opportunities for innovation
Among the key opportunities brought on by the pandemic have been those of innovation. Holman shares how at Château Léoube, “[the] situation helped [them] to really highlight [their] weaknesses and afforded [them] the time to strengthen [them].” She notes how the “slower than usual period of business” enabled them to “[explore] new sustainable product innovations.”
Opportunities for innovation have also extended across other industries. For example, as cooking became increasingly popular, many tapped into the rising trend. Among these was Evans with her food and wine pairings, who emphasizes how “wineries should continue to look into how to innovate across other industries.”
Insight three: The importance of diversification and agility
This need for diversification stands out as a key learning from the pandemic: businesses should never be too reliant on one market segment.
Considering this, Richard Bampfield believes that in the “longer term, businesses have a decision to take. Do they specialise in a particular area in which they believe they can add value and be profitable? Or do they spread their risk by trying to supply different sectors?”
Agility is key
Either way, businesses must ensure that they remain agile and are equipped with sufficient technology to be as flexible as possible. On emphasising the importance of technology, Bampfield points out how “businesses that had the technology in place responded quickly and admirably.
Partly in the way they communicated with their clients and partly in the methods they found to keep some sort of business going.” For example, on-trade suppliers worked with restaurants and hotels to sell wine online to the restaurants’ customers, “thus making the most of the take-home opportunities and also depleting stocks.”
Do not take wine sales for granted
Overall, this year has taught us not to take anything for granted, including the sale of wine. The pandemic has reinforced how hard it is to sell wine and as Evans stresses, “never take it as a given that wine will sell.”
Discussing the future of wine sales, Mäkinen notes how prices will likely be reduced due to grape surpluses. “This is already partly seen in Bordeaux where 2019 prices are much less compared to some of the previous vintages,” she says.
Insight four: Sustainability takes a leading place in the agenda
On a more positive note, the crisis has highlighted the importance of protecting the environment and creating a more sustainable future. As we stayed indoors to protect ourselves and others, we were forced to slow down. During this time, we saw nature re-heal as we stopped overusing it, with countries seeing a significant reduction in carbon emissions during periods of lockdown.
It is no doubt that the pandemic has united us together on a global scale. It has also re-shaped and strengthened many local communities, with people coming together to support one another both personally and professionally.
During the pandemic we have realised how much of the travel we do is unnecessary and, as Evans says, “that we don’t need to travel to the ends of the earth to get what we need.” With global supply chains disrupted, many businesses have seen the benefits of supporting local supply chains such as greater agility, increased transparency, and not to mention – sustainability.
Here to stay
The pandemic is challenging governments and businesses to reconsider ways of working for a more sustainable post-pandemic world. Sustainability has been a growing focal point in the wine industry over the last few decades and is certainly here to stay. “People are caring more for the provenance of products and where they buy their produce and wine from,” says Holman. “This focus was slowly happening before the crisis, but most definitely increased since.”
She also points to the fact that “the wine industry has seen an increased amount of sales on higher value wines than before, the theory being that people are drinking less and in moderation, but they are choosing to drink better,” opting for organic and sustainable choices.
Bampfield too believes that sustainability is here to stay. However, he raises the concern of price. “If many wine drinkers are having to watch how much they spend, there will be added pressure on price – and that might make sustainable and organic initiatives look like an expensive luxury.”
Mäkinen hopes that “seeing how our nature…re-healed after we stopped over-using it will…stay in our minds for a long time.” “We are in no way doing what’s enough yet to preserve our planet,” she says, “but I hope our industry will keep making better choices understanding there are consequences in everything we do.”
If you’re interested in sustainability in the wine industry, join Sustainable Wine’s free virtual interactive business conference on 26-27 November, 2020. The Future of Wine event will analyse the big issues facing the wine value chain with a focus on how the industry can respond with practical solutions. Register here. Places are limited.