Posted: Aug 07, 2019
A few years ago, while living in the U.S., I was introduced to rose wine in a can at a summer picnic. Being British, I set aside my preconceived notions, politely accepted the drink and sipped away.
I had always believed that a great wine could only ever come in a bottle, but I was pleasantly surprised by the canned offering. It offered a great taste that kept the wine cooler for longer, particularly on a hot summer day. Fast forward a few years, and we’re starting to see greater format evolution within the wine market.
In the off-premise trade, the wine category is the largest contributor to alcohol sales in the U.K., accounting for over a third of the category’s value; however, over the past three years, wine has lost share to other, faster-growing categories. Over the past two years, wine has, to a certain extent, been overshadowed by excitement in neighboring categories: the resurgence of gin, the boom within craft beer and the summer successes of ready-to-drink pre-mixed cans.
Nowadays, however, wine is starting to gain traction in the off trade is in two specific formats, which are driving excitement and helping to expand usage occasions: bag in a box and cans.
Bag in a box is not new to the off trade wine market: it’s currently worth £264 million and holds 5% share of off trade wine. Though this format has been stable over the last few years, it’s beginning to shake off some of the negative quality perceptions that may have previously been held against it. In the process, it’s evolving into an offering that caters to well-known and loved brands, comes in a bigger format and stays fresher for longer than your average bottle. The average price of a bag in a box in the off trade market is around 25% cheaper than your average 75cl bottle, which is another great selling point to attract wine buyers, all while catering for the growing sharing occasions, whether at home or outdoors.
Shoppers are now purchasing the bag in a box format more often than ever, and when they buy, they’re trading up to more premium offerings now available. Though shoppers only tend to put one bag in a box in their basket, we know they’re enjoying it as the number of shoppers who go back to buy it again is also on the rise. And while you might think the bag in a box caters primarily to larger households, it’s actually the smaller households that are purchasing this format the most often, with 78% of spend coming from households with two or fewer members. Thanks to the increased distribution of bag in a box products and a steady stream of new brand offerings, this format is seeing a resurgence, particularly among the critical 45year+ shopper group, which holds the majority of the FMCG spending power.
Canned wine has also gained traction over the last year. Although this format has been around for a few years, sales accelerated last summer and during the Christmas period, up 155% (+£1.5m) last year and now total £2.4m. Retailers are responding by increasing the in-store visibility and profile of these products, especially the more impulse-driven retailers, where this format fits the on-the-go, convenient missions of shoppers.
While you might think the canned wine format is primarily targeted to a new type of wine shopper, we see that canned wine shoppers are very aligned with the average wine shopper: They tend to come from affluent, mature, two-person households. They’re not Millenials, contrary to what some might expect. With this insight, we can really begin to see how format expansion can encourage new usage occasions that break away from the norm while still appealing to core wine shopper.
Though the can format has yet to reach 1% share of the U.K. off trade wine market, it has notable growth potential. In the U.S., the canned wine market has been around since early 2014 and is now worth $70 million. Last year alone, canned wine sales were up 70%. Many of the U.K.’s current alcohol trends are those that have evolved or picked up after being tested in the U.S. With the average price per litre in a can being higher than an average 75cl bottle, this format is one to ensure you have available on shelf, to help drive value back into the wine category and to ensure it can maintain its No. 1 foothold in the off trade.
The bag in box and can formats are both key to re-engaging with existing wine shoppers. They can also bring excitement back to the category and attract new shoppers. They also do a great job of satisfying outdoor, on-the-go occasions, especially in the hotter months where shoppers look for chilled, convenient formats. With another scorcher of a summer forecast, brands and retailers should be thinking about how they can tap into this trend and provide alternate wine formats to off trade alcohol shoppers and engage them to continue to buy these even through the cooler months.
By Gemma Cooper
July 25, 2019
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