Lower alcohol wines: What are the opportunities - and the challenges?
Wine Intelligence says lower alcohol wines still face the challenge of becoming a regular choice for drinkers, and such products must ensure they meet all aspects of consumers’ expectations and demands.
But as a trend for moderation gathers pace, lower alcohol wines do have the potential to grow in multiple markets, it says.
Wine for enjoyment
There are three main issues that prompt consumers to choose wine with a lower ABV: health, a rejection of a binge drinking culture, and taste.
“Consumers believe lower alcohol wines contain less calories, fit into diets better, and are generally healthier than other wines,” Wine Intelligence told BeverageDaily.
“They are also motivated to purchase lower alcohol wines for lifestyle and cultural reasons. In a culture where alcohol is seen first and foremost as an ‘intoxicant’, consumers are increasingly motivated by products which allow them to enjoy wine whilst minimising the negative effects associated with binge drinking and alcoholism.
“As drinking in moderation continues to become a cultural norm, encouraged by governments, lower alcohol wines are increasingly allowing drinkers to fit in with this idea.
“And some consumers simply enjoy the taste of lower alcohol wines, and enjoy drinking these products with meals.
"This is especially apparent in the German market, where many of the traditional wine styles are lower in alcohol.”
But do these factors actually translate into tangible sales? Wine Intelligence says that there is definitely interest in these products, but growth so far has been inconsistent.
“This could be because existing products do not meet consumers’ expectations, for example regarding taste or price, and as such are not becoming part of drinkers’ regular beverage portfolios,” it says.
“Therefore, while the interest is there and is growing, it hasn’t necessarily translated into growth of sales yet, as what is available may not satisfy consumers’ needs.”
Market by market
Germany has the highest proportion of wine drinkers who have bought lower alcohol wine (47%), out of the eight markets surveyed by Wine Intelligence.
Canada and the US were the biggest growth markets: 7m Canadians bought lower alcohol wine in 2015, compared to 5.1m in 2014. This could be because these markets are ‘typically less conservative’ than some European countries.
But in France, the sector faces the cultural perception that lower alcohol products ‘are not really wine’ (a view shared by 26% of wine drinkers). In 2015, only 21% of drinkers said they would consider buying lower alcohol wines again (compared to 33% in 2013).
Source: Wine Intelligence’s ‘Lower Alcohol Wines: A Multi-Market Perspective’ report for 2016.
A key challenge for the industry, therefore, is to produce lower alcohol wines that meet expectations.
What is a 'low alcohol' wine?
A definition depends on the regulations in each market. In the UK, for example, alcoholic products with an ABV of less than 5.5% start to invite lower rates of duty per bottle, but 5.5%-15% ABV products are all treated the same. Other countries have different tax brackets, while some do not discriminate between ABV levels for duty at all.
For Wine Intelligence, a ‘lower alcohol’ wine can come from ABV categories of 1-5.5%, 6-8.5% or 9-10.5%.
“While consumers may not perceive lower alcohol wines as inferior to other wines per se, what has been offered on the market has not always fit in with consumer needs (the taste might not be right, or the pricing wrong) and as such, in the long term, buyers have not been convinced that what is currently available is a viable alternative to other wines.”
For brands that do believe they can hit the spot with consumers, there is another hurdle to overcome in getting products listed.
“Many retailers are reluctant to stock lower alcohol wines because they are seen as being harder to sell and a more niche product, which has meant that retailers have had little commercial incentive for them to stock these products."
“But as lower alcohol wines become more mainstream and more suppliers get on board with the lower alcohol movement, we expect that the products will gain more exposure.”