Author: Caroline Thompson-Hill, General Manager Europe, Accolade Wines

August 18, 2022

Wine is a great product and a great business to work in. A drink people around the world love, built on generations of expertise that plays a vital role in stewarding the environment and sustaining communities. But it is also a company that faces challenges; whether it’s increased regulatory complexity, the cost of living crisis, climate change or the speed of innovation.

To grow the category, winemakers and distributors must challenge industry norms – and to do so, they must work with customers to meet ever-changing consumer tastes and lifestyles. It means taking risks and being willing to go against convention.

The wine industry has been slow to innovate. Take zero and little alcohol. This is a category that neither beer nor wine took seriously until recently, and wine offerings in the past haven’t really done the category a favor. Today, it represents 0.6% of total wine sales. But that is changing. Non-alcoholic wine is growing in value by 28.2% year-on-year and is now worth over £39m in the UK. Non-alcoholic sparkling wine leads the way, having driven the growth of the category, and represents 38% of the total value of non-alcoholic wine.

Taste is everything
There is a huge opportunity for no- and low-alcohol wines as consumer preferences change. But to deliver that in a market where taste matters, you need an exceptional product to help convince customers.

This is where technology can step in and provide the solution. Access to world-leading dealcoholization technology gives market leaders their edge. These processes operate at a lower temperature compared to traditional methods, resulting in a smoother removal of alcohol, retaining more of the wine’s aroma, body and flavor. The result is a superior alcohol-free product that doesn’t require the extra sugar to compensate, which traditional dealcoholization techniques use.

Additionally, it introduces the ability to offer lower sugar options and achieve better taste. For example, lines like Hardy’s Zero that use this method have reset expectations of what this category can achieve. The rapid improvement in alcohol-free and low-alcohol products in the wine industry is particularly welcome given the government’s somewhat erratic approach to regulation and trade. Take, for example, the UK tariff reforms in relation to Free Trade Agreements (FTAs) between the British, Australian and New Zealand governments.

The wine industry in the UK and Australia was delighted last year when the International Trade Secretary made it clear to UK consumers that Australian wine would be cheaper thanks to FTAs. This was good news for Australian wine lovers. Unfortunately, the excise duty reforms proposed by the UK government will eliminate these benefits, reduce choice, hit the pockets of UK consumers and damage Britain’s reputation for inward investment.

Export data from Wine Australia suggests the current proposal would add £81million in tariffs a year to Australian wine sold in the UK (the burden falls on wines which are generally stronger due to growing conditions ). This contradicts the government’s commitment that the new rules should not have a material impact on the amount of duties collected.

Without adjustments, the wine industry is rightly concerned about the uncertainty the duty review introduces and the potential to damage both the business-friendly environment and consumer choice in Britain.

Fairness and simplification
With consumers already facing rising inflation, we hope that a sensible solution can be found. The industry recognizes the need for reformulation of the current system and the goal of promoting fairness and simplification. Industry players want to work with the government to establish a formula that allows people to enjoy a glass of their favorite wine in moderation, but does not unduly punish the consumer or hinder investment.

Consumers and customers expect wine industry leaders to pioneer change and take action. They expect all winemakers and merchants to take responsibility for providing quality and affordable beverages. They also expect them to act on the climate, whether at the level of the vineyards, the manufacture, the distribution – or the way in which the wine is packaged or bottled.

Some winemakers are rewriting the rules regarding traditional wine packaging. For example, Banrock Station’s Wise Wolf range uses 94.8% recycled content in hopes of inspiring others in the industry to join the journey towards a more circular future.

Each material used must be carefully considered, along with the environmental impact of transportation methods, routes, bottle shape and size. The most responsible brands operating today are taking these steps. Disruptive collaborations across fashion, tech, sports and music are a mainstay. They fuel interest and loyalty, especially among young adults. Although not so much in the wine industry. We as an industry intend to change that too. The global wine merchants operating today have been doing so for centuries, but tradition cannot be a reason to prevent progress. The wine industry has enormous potential, but we also face challenges. To move forward, we need a different mindset, closer to a start-up, to fully realize it.