Changes in consumption

The news about consumer behaviour during the pandemic has been contradictory, with the media reporting surging online wine sales alongside stories about people giving up drinking altogether. James Lawrence talks to retailers and distributors in Europe, to get their perspectives.

Willi Klinger, Paivi Eklund, Anne J. Thysell, Rita Soares
Willi Klinger, Paivi Eklund, Anne J. Thysell, Rita Soares

Willi Klinger
CEO, Wein & Co, Austria 

Wein & Co is a leading fine wine retailer in Austria, with 21 wine shops and seven wine bars. The brand was founded in 1993 by Heinz Kammerer and subsequently purchased by the German Hawesko retail group in 2018. I accepted a position as the brand’s CEO in January 2020, after working for the Austrian Wine Marketing Board for 13 years. It has been something of a baptism of fire, selling wine in a global pandemic.
 

 

When the Austrian lockdown began and our shops and bars were closed, online sales more or less tripled. Nevertheless, our total income declined by 30% during this period; however, by the end of August we had recovered our losses and now total turnover is higher than the same period in 2019. Last year online sales accounted for 18%, which rose to 80% in April (turnover four times the amount of 2019). We’ve been running an e-commerce platform since 1998; I expect our online sales to be at a continuous level of about 25% for the rest of the year. The pandemic clearly changed overall consumer behaviour: buyers became more conservative during the lockdown. Normally, Austrian brands account for 50-60% of our total sales; consumers have been buying larger volumes and spending more on domestic wine. I think the mentality was that “I’m not eating out now, so I’m going to spend more on a familiar style of Austrian wine that I enjoy.” I have also observed an increase in the demand for Tuscan reds such as Brunello di Montalcino – some consumers are not denying themselves luxuries. But there is a bigger overall sense of support for local producers.

Of course, this is to be expected. In moments of crisis, the big and familiar brands win. Over lockdown, there were no skilled staff engaging with consumers in our retail outlets. E-commerce is good for strong individual brands, although I am not so much talking of internationally ubiquitous labels. I’m talking about strong Austrian brands like Bründlmayer. In terms of grapes and styles, Grüner Veltliner is king, more than ever. But aromatic grape varieties like Sauvignon Blanc have sold well too, both domestic and imported. Sales of Prosecco, Chianti and Rioja remain buoyant. At higher price points, we are selling more Burgundy and Pinot Noir in general. Also German Riesling and a small urban niche of natural wines. But as summer fades into autumn, we are now thinking about what will happen during the fourth quarter and Christmas period.

The problem is the dramatic loss of mass purchasing power. 

However, I expect the fine wine business to be more resilient than most analysts think. When you lack the money for bigger investments – a holiday in the Seychelles or a weekend in Paris – you still want to have a good time at home or in a nice, comfortable restaurant with a good bottle of wine. I tell my staff every week: If the cake has shrunk, then we will cut off a bigger slice of it for us. 

Päivi Eklund
Joint Owner, BBWINES OY, Finland

BBWINES OY is a family-owned company, established in 2006 and managed by my husband Peetu and I. Together with our team we supply wine to the on-trade and the state-owned retail monopoly Alko Oy. It has been a turbulent six months; when the Finnish government declared a state of emergency; restaurants closed from April 4th to 1st June, so we temporarily waved goodbye to any hospitality sales. Spring is traditionally one of the best seasons for Champagne and sparkling wine sales in Finland across the on-trade, but they obviously evaporated – yet our sales of Champagne to Alko were 14 % higher in May 2020 compared to May 2019. 

Historically, pre-Christmas sales have been one of the most lucrative periods in Finland and usually companies reserve entire restaurants by the month of August. Unfortunately, most restaurants still have empty reservation books. I don’t expect sales to this sector to recover for a while, but thankfully we are selling bigger volumes to the monopoly –the average spend is actually higher than 2019, they report. I’ve also noticed the demand for rosé climb significantly during the pandemic. Traditionally sales of rosé have been low in Finland, however, in June 2020 we sold 48% more pink wine to Alko than during the same month in 2019. We are also selling more non-alcoholic ‘wines’ compared to 2019. Quite a lot more, in fact. 

Indeed, there is a lot of going on with Finnish consumer habits. One of the most important things is that, according to consumer behaviour research undertaken by Alko, 75% of consumers have decreased their overall drinking and are eschewing binge-drinking.  In addition, 62% of consumers want quality instead of quantity, the opposite of past Finnish consumer behaviour.  The younger generation are drinking less and prefer to “invest” in quality. Overall trends and new experiences are key words, linked highly with social media. Also the background of the product is becoming more attractive. I don’t see Covid-19 having a regressive impact on these issues. It is, however, likely that with an economic slowdown the current price point will decrease. The well-known international brands will continue to draw the attention of the consumers who are more conservative.

Anne J. Thysell
wine consultant, SPAR, Austria

SPAR Austria sells up to 2,500 different wines – we operate approximately 1,600 retail outlets, in addition to selling wine via our online shop INTERSPAR. Three quarters of the entire wine assortment comes from Austria. We were actually the first supermarket to start an e-commerce wine website in Austria; we celebrated the portal’s 20th anniversary this year.

Of course, Covid-19 has had a significant impact on wine sales in the retail sector. Sales to the hospitality industry have fallen dramatically, but we have supported our winegrower partners with promotional measures to aid their recovery. We’ve tried to provide a safety net: wine sales at SPAR developed well ahead of the sector in the first half of 2020, recording double-digit additional sales growth rates. SPAR was thus able to significantly expand its market share. We were able to achieve increases of up to 40 percent at some Austrian winemakers.

We have observed an increase in demand across  all price categories, but especially for higher-priced wines and for domestic wines. We have been shaping this trend for many years and view Covid-19 as the catalyst to further promote Austrian brands. But we’re fortunate: Austrian customers are willing to pay higher prices for good wine. Within the product range, we are noticing a trend towards organic wines, which we are promoting. About 10 percent of our assortment is already organic and the trend is rising. In addition, we recorded rising demand for rosé wines as well as for Austrian sparkling wines in the summer months. The tax reduction in July 2020 on sparkling wine has certainly had a positive effect, making domestic brands even more attractive when compared to Prosecco. We have already passed this tax advantage on to our customers as of 1 June 2020. The next big question is – how will wine perform during the 2020 Christmas season? Forecasts are, of course, difficult to make in this particular year, but we assume that the demand for wine will be buoyant during the festive period.

Rita Soares
co-owner, Garrafeira Soares, 
Portugal

We have been running our family business since 1983 – we operate 22 retail outlets in Portugal and we supply over 3,000 on-trade clients. We also launched an online channel in 2017. That was our saving grace during the lockdown, when all our retail stores were forced to close. In April and May 2020, our e-commerce channel saw revenues climb by 1000% compared to 2019. Yet this is off a small base and I imagine that our online business will not represent more than two percent of our total turnover. We lost a massive amount of revenue during the lockdown; the online channel is growing, although consumers have mainly purchased cheaper wines with less margin over the past six months. New customers, unfamiliar with the online model, are definitely veering on the side of caution in Portugal and limiting their spending. That being said, we are still selling prestige labels, albeit in smaller volumes. 

To be honest, I haven’t noticed any changes in consumer preferences since the lockdown began in terms of grapes or styles. The only conclusion I can safely reach is that consumers are drinking more at home but are wary of too much experimentation or spending too much. Big brands always win in such situations. They play a very important role during a crisis because their clients are more anxious and afraid. Effective brands communicate ideas of confidence and reassurance to their customers. That’s the key to selling wine at the moment. 

Interviews by James Lawrence

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