In the November issue of National Liquor News, Andrew Gerrard, Senior Consultant at IRI, writes about the potential of wine in a can and how it can drive category growth with occasion based consumption.
Dionysus, the God of the grape harvest and winemaking, was associated with the idea that being under the influence of the sweet nectar of wine (depending on your preference) could make one feel possessed by a larger energy. I’m sure many of us could attest to that, although I find there is an inverse relationship between the quantity consumed and the power felt.
The wine category in Australia is big business, with off-premise sales of $4.9B (MAT to 6th Sept 2020). Sales growth has been positive also with dollar sales increasing by 8.4 per cent (or put another way, actual growth of $382M has been recorded). That translates into approximately 22 bottles of wine purchased per annum by every adult shopper in the market.
The off-premise channel has also seen an upsurge in sales growth in the last six months as the impacts of COVID-19 have been felt. Shoppers have been forced to stay at home during the lockdown periods, but this has translated into growth of 14.2 per cent (almost double the MAT rate).
To give even more context, when we look at the growth rate from last year the wine category only grew a very modest 0.4 per cent, so there has been a pronounced resurgence in growth in the latest year.
One might expect that with these uncertain times that shoppers would be more cautious with their discretionary spend, but when it comes to wine at least, it seems that there is strong evidence that consumers are treating themselves at home. Sales in the Champagne category have popped up by 28.1 per cent (which is three times the rate of total wine growth) and given the average price differential is five times that of wine, one can surmise that price is not a factor insomuch as the occasion is driving demand.
Canned wine performance
So let’s look at the subject at hand now and investigate the performance of canned wine. Overall sales of canned wine represent just 0.2 per cent share of total wine, although the growth rate, as one would expect, is high as the format is still in its introductory phase (dollar sales have grown 140 per cent in the last six months).
Shoppers are currently looking more towards sparkling canned wine as this format represents 75 per cent of all sales in total canned wines. However, expect this number to change more towards still canned wine as the recent growth rate for still is 12 times more than that of sparkling (which has been the result of increased distribution).
One of the biggest challenges so far for canned wine is on-shelf or in-store presence. At the moment canned wine accounts for just 0.7 per cent of all items available in the market and a recent visit to a major liquor retailer revealed just four facings in the chiller versus over 250 for bottled wine. This in itself will make expanding the category difficult, but if we look at other liquor formats in cans (e.g. RTDs and Seltzers) then we can expect momentum to come once brands invest in more new product developments to tap into this nascent space.
The future of canned wine
Canned wine has the potential to attract new shoppers who are not used to wine or are trying wine for the first time and as the price point is generally lower on average than a 750ml, this then offers a low risk purchase alternative (especially relevant for Millennials and Gen Z). On the flip side there is the opportunity to bring in existing shoppers more often, for occasions that wouldn’t warrant a whole bottle (such as festivals and picnics). It also offers an alternative for those who want to enjoy wine with a meal but not consume as much alcohol, keeping with recent trends around wellness and moderation (aka mindful consumption).
The other advantage in growing the canned wine segment is that it will enter the consideration set of shoppers who are looking for the canned format when purchasing alcohol for convenience sake, or to be able to better manage consumption by with smaller pack sizes that cans make available.
The future bodes well for this segment, especially when we see that household penetration for canned wine (i.e. the number of households that have purchased) has increased by 40 per cent over the last year to 1 per cent (admittedly of a small base) and that the interval between purchase has dropped from every nine weeks to every seven weeks on average.