Craft drinks

A missed opportunity for the wine industry?

Wednesday September 06 2017 by Sharon Nagel

Jonny Forsyth, Mintel drinks analyst.Jonny Forsyth, Mintel drinks analyst. - Photo credit : DR
Last November, discount chain Aldi launched a range of ‘craft’ wines, rekindling debate about whether the concept is relevant to wine marketing or not. Should the wine industry wholeheartedly embrace the global trend for craft drinks and capitalise on a concept that seems to rightfully belong to it, or has it already missed the boat? Vitisphere asked Mintel drinks analyst Jonny Forsyth to share his feelings on the issue.

What were the drivers behind the emergence of craft in the beer then spirits industries?

Craft started as a consumer backlash at the fact that the drinks industry and beer in particular had become so hyper industrialised. It was in the hands of just a few massive players who were producing beer that was quite mild tasting and there wasn’t much to tell between the different beers. Suddenly, the foodie mentality emerged and people wanted better quality and couldn’t get it. It was a reaction to globalisation and about people wanting something more local. A few passionate brewers decided to make something more flavoursome. It was the antithesis of the industrialised approach – small batch beers that brewers really cared about with the effort and attention to detail that gets lost through industrialisation. The trend started in America and took a while to come through. It wasn’t until the late 1980s, early 1990s that it really started to kick off, and it wasn’t until around 2007 that it started to grow massively in America and then really spread to the rest of the world. This was the spur for other categories to get involved in craft. Craft spirits came next and we now see craft popping up everywhere. Market players are interested because the margins are really high and people are prepared to pay more for craft cues. Craft has tapped into experimentalism. Craft products are very innovative around flavour and people want to try lots of different flavours. That’s what the younger generation want but weren’t getting.

 

Do you see any evidence that the concept is gaining traction in the wine market?

From what I’ve seen, the craft movement for wine is just around the edges of the market. I tell my clients they can tap into it a lot more than they are doing at the moment. I think the wine industry tends to be a little more conservative and suspicious of the marketing surrounding craft. A lot of craft is about positioning. So I wouldn’t go so far as to say that wine’s gone massively craft. It could, and in my mind should, do a lot more to craft because wine is naturally a craft product. It has more inherent ‘craftness’ than beer or spirits. Wine is the definition of craft – local vineyards, small batch etc – but wine firms don’t tell that story and if you don’t tell that story then it’s hard to find resonance with consumers.

 

Couldn’t ‘craft’ for wine be perceived as a misnomer?

To some extent yes, but actually people in the wine trade tend to forget that consumers actually don’t know that much about wine. Consumers might be aware that a wine is actually craft but it’s all about bringing that story to life and telling them why it’s craft. Beer brands are doing that brilliantly with a lot less material to work on. So it’s a lot about communication and marketing and these are areas where the wine industry has traditionally not been strong.

 

What specific attributes would consumers associate with a craft wine?

Locally-made and reasonably small batch. A modern spin on tradition. What craft beers do really well is tell the story of the underdog and the personal story. It’s all about how a certain character toiled and overcame adversity and difficulties. It’s about personalising the storytelling narrative and about experimentation. Innovation goes with wine – playing around with it in the same way that beer plays around with hops or different strains of yeast. I think more could be done with wine in this way. There is also the language – if you look at wine bottles, they all talk in an abstract, difficult-to-understand language. Craft beers use, admittedly, more hyperbolic terms but that better describe the taste you get from the product. Packaging of course plays into that and is really important. It is often a modern spin on old traditions, like the radler style of beer that came from Germany in the 1920s where the packaging can have some really cool graphics.

 

Where would you say, worldwide, producers have most embraced the concept of craft wines?

The only evidence I’ve seen of producers embracing the concept is from New Zealand. The Allan Scott winery has been totally inspired by craft beer and has used some of the craft packaging and semantics to give wine the craft edge. Aldi have done it in the UK, but there are very few examples. You would have thought that America, the home of craft, would have been all over craft wine – they have some very entrepreneurial people in the alcohol industry. But I really haven’t seen many.

 

Where are consumers most likely to be receptive to the term?  

One of the reasons why craft developed was because the beer market had stopped growing. That isn’t the case with wine in a country such as the US. I think the UK and Scandinavia are ripe for craft. The countries that have really embraced craft beer are the US and Canada, Scandinavia and particularly Sweden and Norway, the UK and Italy. Craft is a worldwide trend - it is also growing in China and Brazil and is not something that should be restricted to specific markets.

 

What kind of demographic – consumer profile is likely to be attracted to a wine marketed as craft?

Generally speaking, craft appeals to the urban millennial, with a couple of caveats. The younger millenials, from age 18 or 21 in the US, tend to have a more conservative palate. They might dabble in craft but it tends to be more when people reach the age of 25-40 when their palates are a bit more experienced. That’s the sweet spot. Anyone above 50 tends to be much more set in their ways and sceptical about this kind of concept.

 

Are there any big cross-overs between consumers of craft beers and spirits and wines?

I think there are big cross-overs. There is a big cross-over between male drinkers who tend to be bigger craft drinkers and red wine - both are quite complex and more male-centric. We are seeing similar cross-overs between beer and coffee connoisseurs. These are the urban, early-adopters who are more likely to be young men and are geeky about this kind of trend. 

 

How much damage has the craft beer and spirit movement done to the wine market?

It is impossible to quantify but I think wine producers need to understand that it is a very competitive time right now because consumers are drinking less alcohol so wine will be losing drinkers. It might not show on the bottom line now, but it’s more about what’s going to happen over the next ten years. If you don’t get drinkers engaged in the category at this very important adoption age, as they’re coming into alcohol, you could lose them forever. So at the moment, wine may not be losing consumers to other craft drinks – although it’s probably not helping it – but it’s more about where are they going to be in five to ten years.

 

What kind of successful strategies could wine producers ‘steal’ from craft beer and spirits?

It’s all about packaging concepts and being more consumer-centric. A lot of wine is still in 75 cl bottles which I don’t think makes any sense for the modern consumer – it’s not what the consumer wants. All wine bottles look the same – we talk about the wall of wine – and that’s not helpful for consumers. Wine needs more packaging differentiation in terms of product description. Craft beers, for instance, also tend to use social media very well. Craft beer is very inclusive so the idea of brew pubs has really grown, where you go along to where beer is actually being brewed. I think wine could tap into that a lot more, through urban wineries which are really cool places to try all sorts of different wines. It just makes wine more approachable.

 

Can the success of craft beers and spirits be duplicated in the wine world?

I think craft wine will always be more marginal because of the nature of the wine industry. It’s more conservative and a lot of people enter the industry because they want to make great wines that are less consumer-centric than the other industries. But I think it will adapt because it will go where the money is and that’s where the money is at the moment. Whether it adapts radically enough, we’ll have to wait and see.

 

Aldi recently launched a range of ‘craft’ wines in 50cl brown glass beer bottles. Can we expect to see other retailers following suit?

I think we can. I wouldn’t be surprised to see a retailer like Marks & Spencer doing something like this. I have a feeling that for Aldi it didn’t really kick off. Maybe they weren’t the right retailer to do it. It’s definitely an opportunity for private label. Private label does very well for wine because of the tyranny of choice – consumers are looking for a bit of curation and who better to do that than private label.

 

How do you see the future for craft wines?

It’s getting late in the day. When a trend comes along, you really have to tap into it, otherwise you miss out. How long will craft last? It may go on for another ten or twenty years or we may see a bit of a backlash – which we’re starting to see already – because people are claiming to be craft when actually they’re not. So there is the danger that wine gets into craft when craft has peaked.

 

 

 

 

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