Flux, Turmoil and Equilibrium
While hysterical proclamations suggesting the imminent breakdown of supply lines and production capabilities under the enormous – and all too real - weight of emerging market consumption growth will continue to provide material for panic-stricken headlines, a tight equilibrium remains the most probable and realistic scenario in the short to medium term. There will be no wine shortages.
China’s terrestrial gravitational pull will inevitably exert severe pressure on existing stocks and vineyards, but production does not merely remain static. As wine consumption continues to shift eastwards, wine production will continue to expand northwards, both as an indirect reaction to creeping climate change and due to blooming if still embryonic industries in emerging markets themselves.
However, profit margins will have to face a different kind of problem. Expected macroeconomic ripple effects emanating from the imminent unwinding of the massive US stimulus programme will be hitting the shores of a large number of emerging nations, with severe exchange rate volatility raising its ugly head again after years of relative calm.
Mind the Generational Gap
As the boomer generation is taking one last extravagant bow before quietly exiting the stage, millennials are finally coming of age, claiming the role of the key protagonist in the industry’s evolving narrative. They tend to be far more experimental and adventurous, actively looking for authentic and unique experiences that question rigidly defined concepts of regionality, established grape varietals, packaging innovation or promotional strategies. They are instinctively adverse to the category’s stuffy traditionalism and simmering elitism.
Unfortunately, and to the detriment of most industry pundits’ simplistic projections, they are also largely broke, unemployed or unable to independently support themselves, facts which combined with their demonstrated disdain for brand equity necessitates a radical rethinking of the category’s future positioning, pricing and aspirations. From sweeter taste profiles to controversial flavour sophistication initiatives and from celebrity endorsements to canned offerings and social media interactivity, Generation Y is already implicitly or explicitly reshaping wine. The ‘Cupcake’ effect, the ‘Moscato Madness’, quirky, tongue-in-cheek labels and a plethora of apps are forming the vanguard of the ongoing shifts. However, the offspring of the Great Recession will have to remain thrifty for the foreseeable future and affordability concerns should not be discounted lightly.
Healthier, Better, Less
While the proverbial storm in a fermentation tank instigated by the disciples of the natural movement appears to gradually subside, interest in lower manipulation techniques and sustainability drives will continue to gain traction. Lower ABV offerings might remain niche but will secure a stable, if still small, following while lower calorie extensions will most probably be limited in their scope and be more of a celebrity-fuelled fad – as was bitterly proven by the sobering trajectory of the Skinnygirl series in the US. The ‘drink local’ mantra that also forms the pillar of the microbrewing and microdistilling movements will finally trickle down to wine, while reducing sulphite content could well prove to be the next Holy Grail for health-spinning marketers.
Glimpses of the Future
Beyond mainstream megatrends driven by demographics, evolving drinking rituals, macroeconomic fundamentals and cultural factors, there are also hints as to which categories will make waves in the short to medium term.
A new generation of gadgetry will drastically reshape perceptions, positioning, storage and maturation techniques. Coravin, a simple yet groundbreaking contraption that allows the pouring of wine without pulling the cork and hence avoiding oxidation and taint, and the Wine Wizard, a device using electro-magnetic and acoustic waves to increase the wine's pH, reducing acidity and sulphite levels (essentially accelerating maturation within minutes), are only some of the examples that will usher in a new era of innovation and experimentation.
Niche categories such as icewine - ideally positioned within the realm of luxurious rarity -, port and sherry - capitalising on the cyclical return to tradition and a hipster-led revival in key Western metropolitan centres - and mead - boasting one of the grandest and most colourful mythologies and already quietly booming in the US - should be on manufacturers’ watch lists.