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08 October 2020

Changes in consumption styles and boom in online sales

The wine market in the United States is changing outlook in response to several factors: above all, Covid-19 has changed consumption styles rather than volumes (which are substantially stable), although customs duties have indirectly helped Italian wine become more competitive compared to French, Spanish and German producers. One thing is certain: the future of Italian wine in the USA - and probably worldwide - cannot ignore digital experience, be it social media, e-commerce or online master classes. Whatever the case, the digital factor will increasingly be a constant aspect.
These are some of the indications that emerged during the webinar organised by Vinitaly and Wine2Wine Exhibition in collaboration with Colangelo & Partners. "In the first half of 2020, exports of Italian wine to the United States," said Giovanni Mantovani, CEO of Veronafiere, "came close to one billion euros, up by 1.8% compared to the same period 2019, posting an increase on a trend basis of 2.9% in volume. The USA confirmed its status as a landmark market for Italian wine and the webinar we developed together with Gino Colangelo is intended as a tool for understanding how the sector across the Atlantic is reacting and what action can be taken to win new space on the market."
"The Wine2Wine Exhibition, scheduled in Verona next 22-24 November," Mantovani went on, "will host master classes through digital connections with Italian embassies in Washington and Tokyo to promote contacts with two strategic markets for Italian wine."
Although the pandemic has changed consumption patterns, Gino Colangelo - founder and president of Colangelo & Partners, the leading wine and spirits communication agency in the United States with offices in New York and San Francisco - pointed out that "appreciation of Italian wine remained high and, in particular, focused on all Italian wine-making regions. In the wake of the pandemic, sales of quality wines have grown, especially for Italian labels."
Many purchases are made online, as confirmed by two leading operators. The Vivino app - with 46 million users, 131 million dollars in sales in 2019 and forecasts for 250 million in revenues from wine sales this year - is the most important in terms of sheer numbers in the USA. "Covid-19 has boosted interest in buying wine, so much so that the second quarter of 2020 was the strongest ever with increases for April, May and June of 57%, 137%, 140% respectively, while July and August also saw a significant growth trend, up by 114% and 107%."
Average expenditure per bottle has also increased, reaching $28 - a significantly higher level than for other countries worldwide with the exception of Hong Kong, Singapore and Canada. Tuscan reds, Amarone and Brunello are in high demand, while Sicilian wines have also appealed to consumers.
Confirmation that wine consumption styles have changed also came from Aaron Sherman, owner of SevenFifty, one of the largest wine distributors in the United States with a network of more than 300,000 trade professionals, 120,000 registered buyers and over 50 million products searched in 2019.
The pandemic has obviously had an effect. "Off-premises consumption grew by 44%, with constant growth between March and August of more than 20% on average, while on-premises consumption fell by 33%," said Sherman. Even during the Covid-19 phase itself, Italian wine help up its market share, stable at around 16%."
Growth trends were also confirmed by Michael Osborn, founder and executive vice president of Wine.com. "The number of users who purchased wine online during the pandemic grew from 24% to 88% and the upward trend is still being confirmed today," he said. "We took urgent action in response to the boom in sales during the acute phase of Covid by hiring 500 people for customer service, shipping and live chat. In addition, we tripled our marketing investments on Google, Facebook, Instagram and Youtube."
Another yardstick for growth comes from the number of people who are still reluctant to buy online. "Before the pandemic, 51% of people never purchased wine online," said the founder of Wine.com, "a percentage that dropped to 6% during the pandemic and which we believe will drop further to 4% in post-Covid period."
The average cost per bottle "has grown to as much as 27 dollars".
At this juncture, knowing how to communicate is fundamental. “Digital is the new normal," said Kristine Kelly of Gallo Winery. Logically, communication will also have to adapt to a new platform, to online story-telling, Instagram and other digital information formulas. It is an opportunity to promote products, organise tastings and make them known to a huge number of enthusiasts and consumers, perhaps even by combining food and wine."
There seems to be every reason to hope for success. Confirmation also came from Alison Napjus of Wine Spectator. “During the most severe phase of Covid-19, we saw an increase in visits to our site," she said, "because people wanted to understand, get to know and obtain information about products. Italian wine boasts a complexity and biodiversity that has to be explained and knowing how to communicate all this is a challenge." Advice? Be essential. “Less is more,” Napjus suggested.