Consumers will continue to change their wine consumption due to climate change – contrary to the climatic changes in the wine
Retailers are already now noticing climate-change induced changes in consumer behaviour.
CLIMATE CHANGE AFFECTS CONSUMER CHOICE
In hot summers, for example, wine consumption drops, and demand for heavy red wines dwindles. In future, retailers also expect demand for other wines (63%) and other beverages (47%) to go up. This means production and demand will develop in an opposite direction. Climate change means the production of heavy wines richer in alcohol and at the same time fuels consumer demand for lighter and more refreshing wines. More than half the retailers (57%) therefore urge producers to apply new oenological practices to come up with the existing wine profiles despite climate change.
The widening gap between production and domestic consumption has led Spain to become the country with the largest volume of wine exports, of which it has a global market share of 20.5%. Wineries in Spain have, in recent years, undergone important transformation and modernization processes, while their customers have simultaneously acquired more power than ever before owing to both the availability of information and the technological means required to access that information.
The wine sector has, in recent years, undergone an evolution marked by an increase in market competition. In 2017, global wine production fell to 250 million hectoliters (mhl), a decline of 23.6 mhl when compared with 2016 production, while consumption increased a little to 243 mhl (OIV, 2018). A more detailed analysis shows that the diﬀerence between production and consumption is noticeable in traditional wine-producing countries. For example, production in Italy, France and Spain in 2017 was 42.5, 36.7, and 32.1 mhl, respectively, while consumption was 22.6, 27.0, and 10.3 mhl. This important diﬀerence between production and domestic consumption has changed the way of competing in these countries, which have started to export in order to sell their products on international markets. This widening gap between production and domestic consumption has made Spain the country with the largest volume of wine exports (22.1 mhl), with a global market share of 20.5% (OIV, 2018). Wineries in Spain have developed important processes of modernization and transformation during the last years. It is estimated that, since 2000, more than 130,000 hectares have been restructured and converted, with investments of more than 800 million euros.
Customers have simultaneously acquired more power than ever before owing to the availability of both information and the technological means required to access that information. It is, therefore, imperative to understand why and how consumers interact in this new environment. The customer accordingly now plays a new role in this new quick change scenario, which involves aspects such as the intensive use of technology, advances in communication, digital transformation, etc.
Digital transformation is a relevant issue. The adoption of the Internet has become an important aspect of the renewal process required by the wine industry.
Digital transformation is a relevant issue. The adoption of the Internet has become an important aspect of the renewal process required by the wine industry. It has moved rapidly into a new step of consumer interaction and inﬂuence via social networks, blogs, podcasts, and online virtual communities. This fact has implications for many sectors, but the wine industry is one that is particularly suited to this new tendency. Social media have grown dramatically over the past decade, signifying that it is important for ﬁrms to learn how to interact with consumers via these new channels. This phenomenon has signiﬁcantly altered the way in which customers communicate and interact with each other and with company. This is particularly problematic in the consumer product sector, because consumers communicate about brands online, regardless of whether those brands respond or not. A lack of response in public social media can harm companies. Social media have consequently led to a shift in power to consumers, as they move from passive receivers of marketing strategies to active participants in the brand message. Social media usage has been found to have a positive effect in brand performance and customer loyalty.
Earlier studies has suggested that wineries that have a presence in social media will achieve low-cost beneﬁts such as increased sales through word of mouth, loyalty and ongoing relationships with customers. The socialization aspect of social media allows consumers to exchange information and encourage others to try different wines, signifying that it is a key channel as regards influencing and affecting the purchase of wine.
The changing consumer habits are accompanied by the fact that wine per se, due to the enormous increase in recent years, has an extremely complex range of categories that significantly influences the purchase decision. And here the label plays a dominant role. More dominant than with many other products. This is due to the diversity and the different target groups.
Globally, consumer engagement with the topic of wine is increasing. With an increased focus on culinary delights, we see that consumers are dealing with the topic much more than ever before. The growing importance of food culture goes hand in hand with wine pairing. What strongly influences consumer behaviour at the POS is the fact that we have a typology of two different wine buyers: Those who deal with wine and have knowledge – let’s call these experts and those (this is mainly the younger generation) who do not have specific wine knowledge.
With over 100,000 different wine labels/sub-brands/types in Europe alone and over 16,000 individual labels in Australia (for example), the consumer is faced with an almost impossible task, the right choice in front of the supermarket shelf, unless he or she is a “connoisseur”. After the number of metres of wine on the shelves has increased tenfold over the last 15 years at the expense of speciality shops where tasting was still possible and the decision making process was based on olfactory experiences, a strong need for information has arisen. A survey by Mauren Aurich (NOVA Business School) also shows that consumers are very much in search of information when it comes to the wine category:
“Approximately, 37% of the respondents assess themselves as having a medium knowledge about wine and 22% evaluate their wine knowledge as good. This suggests, that the respondents have experience with wine and have a certain knowledge, which, in turn shows that the data is valid and relevant. The data supports Leigon’s (2011) statement, as 37% seek their information about wine they intent to buy from friends and family and 23% from online research. This indicates that the trend for consumer behaviour tends to go digital. Additionally, 63% of respondents use digital channels (e.g., social media) for purposes related to wine. The analysis concludes that respondents trust their peers the most if they decide to buy a wine. More than half of the respondents rated their friends and family as the most trusted source, followed by experts like sommeliers. These results provide evidence that awareness about a wine brand needs to be established using digital channels, as the consumer’s social network is a trusted source of information when it comes to a buying-decision. Also, social media can be used to initiate conversation and information exchange about a winery’s product in order to be mentally available in the minds of consumers. The results show that digital is the preferred medium to obtain information for buying decisions.”
Among the more recent developments are augmented reality technology, but above all various RFID solutions. For example: In a gourmet shop in Switzerland, shoppers can now learn more about the grapes from which their wines or foods that go well with a particular vintage are made. One store there has an RFID-based shopping assistant that provides wine lovers with additional information and even videos. Shoppers move a bottle with an RFID tag near an information pod, and interactive information appears on the screen.
The arrival of Wine 2.0 – which includes components such as social networks, blogs, vlogs and interactive e-commerce – has the potential to change the way wine consumers interact with wineries, wine merchants and other wine consumers. This will not go unnoticed by label printers. After all, the developments described above will become increasingly rapid. In particular, this will be favoured by the strong personalisation and individualisation of labels. This calls for hybrid technologies that are adaptive and future-proof and for greater digital integration in upstream and downstream supply chains.
∗ (Source: Partial extracts from the study of: Rosa M. Muñoz1, M. Valle Fernández2 and Maria Yolanda Salinero2
1Business Management Department, Group for Research in Organizational Knowledge, Innovation and Strategy, University of Castilla-La Mancha, Ciudad Real, Spain
2Cofinanciación de la Unión Europea a Través del Fondo Europeo de Desarrollo Regional, Ciudad Real, Spain)