How bulk wine can leverage technology to capitalise on growth in the US market

In 2021, the United States was the world’s third largest importer of bulk wines by volume according to data presented last month by the Spanish Wine Market Observatory (OEMV) in Geisenheim, Germany. But whilst the US’ status as the world’s most eligible wine market remains undisputed, the route-to-market can be a rocky one. One channel, though, is emerging as a potential saviour for bulk wine exporters.

This week, the World Bulk Wine Exhibition travels for the first time to Santa Rosa in California, an aptly-chosen destination considering that the State is one of the country’s largest wine consumers, and that its prominent producers often import and package bulk wines from overseas. But having chosen the target market, how can bulk exporters leverage growth opportunities and secure a sustainable future there? One solution that is increasingly being cited is e-commerce. “E-commerce is a healthier business opportunity in the long term for bulk suppliers”, claimed Andrew Porton of UK-based company The Wine Fusion, speaking at the WBWE in Amsterdam last autumn. “E-tailers are less promiscuous, they want to build a story over the long term, make advance commitments, don’t just focus on low prices but have a premium range too, and can work with smaller volumes. E-commerce for bulk offers profound value for producers and consumers”. As inflation rates soar and cost of living concerns rank high among consumers, the cost-effectiveness of bulk shipments is undeniably an argument that will be music to the ears of e-tailers, as well as other distributors and retailers.

?Private labels spread online and to hospitality outlets

The growth in e-commerce sales of beverage alcohol has been widely documented and its development expedited by the global pandemic. The IWSR forecasts annual growth of about 20% for online beverage alcohol sales in the United States through to 2025, making it the top global market by value. “Covid and lockdown meant that conversations started to happen in social spaces that never happened before, and the boundaries have shifted massively”, explained consultant Polly Hammond at the WBWE last November. “Millennials are shaking the tree of tradition. This means that business models can be created that speak to a much narrower audience”. Private labels are not just the prerogative of large bricks-and-mortar supermarket stores – some e-tailers are also practitioners of these branded alternatives and grocers themselves are selling them online. In the transparent and sometimes fickle world of online sales platforms, private labels allow e-tailers to avoid price comparison and to develop customer loyalty. Restaurants and hotel chains have also been quick to spot their advantages, with examples including Hyatt Hotels’ partnership with Folio Fine Wine Partners under the Canvas brand. And as celebrities, too, enter the fray, the need for bulk wines becomes patent. “More hospitality groups, celebrities and sports stars are releasing their own labels, and they need bulk”, commented Felicity Carter, executive editor of wine discovery platform Pix, at the Amsterdam exhibition.

?The far-reaching impact of online sales and digital technology

Back to online sales, although wine is increasingly being challenged by spirits, it still accounts for around 11% of US off-premise wine sales, according to Dutch agribusiness bank Rabobank. Stressing the urgency for the wine industry to overcome its engagement issues with younger consumers and concurrent shift in distribution channels, Rabobank claims that “investing in e-commerce with be a critical component of wine’s ability to connect with and understand an evolving consumer base”. The scope of possibilities for wine producers online is vast. At a recent conference in New York, Mike Osborn, founder and executive vice-president of Wine.com, pointed to a staggering 52,000 SKUs bought in a year on the platform, emphasising the kind of variety consumers are looking for. But digital technology is not just broadening the choice of products for the end consumer, it is also influencing sales in other channels and purchasing choices by trade buyers from a variety of backgrounds. This cross-channel trend offers some clues as to future development for wine sales online with some analysts citing pairing wine with other products sold online such as food as a big opportunity for the future.

Sharon Nagel