Flavour of the month
Supply challenges, premium offerings, and a new-found enthusiasm for bag-in-box expressions has seen the bulk wine trade come of age, Arabella Mileham discovers
IT’S TURNING out to be a good year for bulk wines. The sector has found itself in a relatively sweet spot while the world continues to recover from the Covid-19 pandemic. The long-awaited World Bulk Wine Exhibition (WBWE) is set to return to Amsterdam this month after a year ’s hiatus, giving bulk wine suppliers and producers the golden opportunity to once again do business face to face, following months of Zoom meetings.
Last year was largely defined by a hearty e-commerce push, retail private label exclusives and alternative formats rising to prominence. Currently there is a greater call for wines in the catering sector, as well as lower harvests globally, and widespread rumours of shortages.
The result is that 2021 has become a year for seeking out fine wines tailored to each market, according to Otilia Romero de Condés, chief executive of the WBWE show – and there are many opportunities to be seized in turbulent times.
“Consumers have got used to placing their orders online, and now they enjoy discovering new wine references that catch their attention due to packaging, labelling and price,” she says. “The ball is very much in the court of the wineries and purchasers; the market is changing course and opening up new paths.”
Paul Braydon, buying controller at UK bottler and supplier Kingsland Drinks, agrees that the bulk sector will continue to go through major developments in the next few years.
“For a long time, ‘bulk’ was a synonym for entry-level, cost-sensitive wines, which have to land on shelves at the lowest possible price,” he says. “But we are already witnessing how wine bottled in market is no longer that – it is becoming more premium every year and we expect this trend to continue,” he says.
“Bulk wine no longer means low price – it means a lower carbon footprint, more efficient transportation methods, and quantifiable environmental benefits, as well great tasting, good quality wines.”
While perennial favourites such as New Zealand’s Sauvignon Blanc, Argentinian Malbec and Chilean Sauvignon already widely shipped in bulk to be bottled or packed in other markets, Braydon notes that there are increasingly more interesting wines from diverse regions being bottled at Kingsland’s site at Irlam, in Greater Manchester, each year. Recent additions include Washington State in the US and Elqui Valley in Chile, he points out. As a result, he remains optimistic about the future of premiumisation in wines bottled in market.
Key wine consumers – those defined by trend analysts Wine Intelligence as being premium wine-drinkers or PADs (premium, adventurous or discerning), who tend to spend more per bottle – are also becoming increasingly aware of climate issues.
“They want to know the traceability of a wine and to be able to seek out sustainable and environmentally friendly products,” Romero de Condés says. “These wine drinkers not only want organic wines, but they also worry about the environmental impact that wineproduction processes might entail; and that’s why the bulk wine market is so important right now.”
As a result, Braydon feels there needs to be more positive messaging around bulk wine, to capitalise on this. “If consumers can be given all the positive messages around bulk shipping and the environmental, cost and quality benefits, then the UK consumer will demand that more wines be bottled in their home markets,” he argues.
CLEAR WINNERS
During the pandemic there were several clear winners – private- and own-label wines, which account for around 40% of the UK wine-retail market, with the premium own-label sector rising the fastest during 2020, Kantar ’s head of retail Frazer McKevitt told the drinks business. “It may only be 2% of sales, but it is growing quickly,” he explains. “I think that is a retailer-led trend to get their highest priced own-label bottles on shelf and visible, and provide a viable alternative to brands at the often cheaper price, though not always.”
As Romero de Condés points out, the introduction of more organic and vegan-certified wines in private-label lines has helped to raise their profile.
“They are not linked to cheap wine but, on the contrary, enjoy a positive quality image,” she says.
As the Co-op’s category buying manger for wine, Ben Turner, points out, it has been a focal point for the convenience retailer to buy direct and pack in the UK where possible. “Easily over half our business is bulk,” he said. “There’s no reason why we’d change that. When we look at our sustainability plan, the recommendation is that this approach is better. It has a big future.”
Mark Jarman, head of wine operations at Morrisons, agrees. “The quality of bulk wine is very good, the quality of the process for bringing it over to the UK is also very good. It’s a very reliable source of wine, and that’s been the case over the past 12 months.”
Braydon notes that there has been particularly strong demand for bulk wines from Australia and South Africa, particularly for varietal wines. The value of bulk wine exports to the UK rose by 32% in the last year, to A$304.9m (£166m) worth of wine, reversing a recent trend.
According to recent reports, the dramatic shift in supply and demand caused by China’s tariffs on Australian wine has seen many producers move away from bottled exports towards bulk, which has surged in recent months and put “significant downward pressure” on prices.
Meanwhile, South Africa has started to recover from last year ’s ‘annus horribilis’. “South Africa’s wine industry has struggled immensely due to lockdowns and Covid restrictions, and as we emerge back into normality, the UK has really thrown its arms around the country and is keen to support South African winemakers, producers, exporters and distributors to get the wine market back on its feet,” Braydon notes.
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The country has also become a good source of Sauvignon Blanc, plugging the gap left by the shortage of Sauvignon Blanc from New Zealand.
“Countries such as South Africa, Australia and Chile are ready and available, offering good-quality, affordable, recognisable wines, ready to be bottled here in the UK,” he points out. Eastern European wines have also become more popular, notably ones from Bulgaria. The country is going through a regeneration of wine making, with a new generation of producers making great strides in bringing back traditional processes, resurrecting old vines and making wineries more sustainable.
Meanwhile Spain, a stalwart of the bulk market, has seen huge demand in the past year following smaller yields in Europe. This demand has depleted the carried-over inventory of last year ’s crop, pushing up the price and making the availability of international varieties a bit tighter.
BOXING CLEVER
Boxed wines, which lend themselves to being filled in overseas markets, have also come into their own during the pandemic. The UK became one of the fastest growing markets for bag-in-box wines, with value sales up by 25%, on volumes up by 21% since the start of the pandemic, according to IRI.
“We’re selling a lot of bag-in-box, which for a 300ft convenience store is a real win for us,” the Co-op’s Turner points out.
“People trust bag-in-box now, in the same way as they do in the Nordics.”
UK consumers seem to have discovered a more cost-effective and convenient quality option, and it looks like the shift is here to stay. Bottling suppliers such as Kingsland certainly think so.
This year it invested heavily in order to double its bag-in-box capabilities, enabling it to fill 1.5l, 2.25l and 3l formats using ethylene-vinyl alcohol copolymer bags, which it says are easier to recycle, and use a shorter wine tap, meaning less plastic per bag.
“We are focusing on ensuring our bag-in-box formats are as sustainable as possible as well as aligned with consumer needs,” Braydon explains. “Getting the format and price right, along with best practice sustainability, could see a continued growth in the category, providing it is communicated well.”
Although bag-in-box growth has slowed a little since the height of lockdown, Braydon is confident it will still level out at a higher point than the pre-pandemic market, now that new consumers have entered the category and discovered the many advantages of boxed wine.
“They last for weeks once opened, are lighter and more recyclable than ever, plus the quality of wine available in this format is now excellent,” Braydon says.
Romero de Condés argues: “From an environmentally friendly point of view, there are only positives when it comes to implementing sustainable packaging methods; less waste, fewer costs and great quality: a trio that is increasingly taken into consideration.
“Design, intelligent labels, alternative packages and bulk wine all go hand in hand, providing brands with infinite creative possibilities.”
Romero de Condés also points to the proliferation of high-end wine boutiques starting to offer wine on tap.
Bulk wine, she points out, gives retailers and producers “ever more sustainaable and imaginative options for their end consumer”.
And with COP26 due to take place in Glasgow later this month, laser-focusing minds on the environmentand its needs, this savvy trend is only likely to accelerate in pace.
Feature findings
• 2020 was a pivotal year for wine sales, that, while challenging, opened a host of opportunities for the bulk wine category.
• During the pandemic, customers increasingly turned to retailers’ own-label and exclusive wines, while larger formats and boxed wines grew exponentially.
• There is a continued push towards premiumisation in the bulk wine market, and interesting new regions and varieties are increasingly embracing bottling in market.
• More engaged consumers are not only increasingly recognising the rising quality of bulk wines, but also their environmental credentials – a key message that suppliers say needs to be amplified.
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