New spaces in the wine market: more bubbles, less pesticides and more domestic wines

The wine market looked very different until recently: the Chilean giants were dominating, omnipresent with their cute cartoon-style animal labels; Alpaca (VSPT) was reaching new heights; Pudu (a small deer from Concha Y Toro) was competing against Puda (another small deer sold by Aeon); and Casillero del Diablo was establishing a distinct market space and recording robust growth. But the tax-free Japan-EU free-trade agreement implanted in February 2019 changed the game. Chili lost 10% of the market in 2019 while EU wines gained 8%, a growth they have not experienced for decades. In just a few weeks, the new flood of low-price Spanish, French, Italian and German bottles replaced Chilean wines on the shelves.

But is this good news for the category?

Unfortunately, this game-changer just reshuffled the deck without contributing to overall market growth. Also, most of these new European bottles are interchangeable, sold without brand-building and proper investments to capture new consumers.

What does this mean?

Meanwhile, four market spaces have witnessed an impressive growth. First, the bubbles space; sparkling wine reached a new peak over the last year, with the Spanish cava as a big winner. Second, the long awaited organic wine segment leveraged robust consumer traction to become one of the top categories in recent years. Third, Japanese wine is now trendy…in Japan! This space is recording fast growth in 2019 and 2020 with numerous new productions coming from Hokkaido, generating a whole new excitement about the future of the Japanese wine industry. And last but not least, the non-alcoholic wine, which is clearly the segment to watch in 2020 and 2021.

The good news to top this all off is that, unlike European wine, these four spaces have strong potential to attract new consumer segments and create value for the entire category.