In the wine trade there are two main distribution channels: the on-trade and the off-trade channel. The on-trade channel (whose strategy is to distribute the product through channels linked to direct consumption: bars, restaurants, nightclubs, hotels, among others). Most of the time this on-trade channel was more cost-effective but this crisis has changed that and currently we see an advantage for the off-trade channel in which wine is sold in large volumes such as bulk wines. In the off-trade channel the focus lies more on supermarkets and not so much on catering destinations.

The bulk wine industry sells a commodity product in large volumes and that means large players. The markets of bulk industry are seeing a lower negative impact compared to the rest of the industry.

 One well-known brand grows only 5% of the grapes that goes into their wines. In one year, they bought grapes from 650 different sources. Instead of employing farmers, they have a number of staffers that do nothing but buy grape juice. Another example of what is happening: a top 25 largest wine seller in the US, owns no vineyards at all.

 

So, what does this tell us? Next to the traditional winemakers there is a big market for bulk wines that works very differently. Wine can also be made by “urban vintners” who know how to find and buy the right grape juice. And this trend suggests a growing trade in grape juices (bulk wine) rather than bottled wine. Experts estimated a couple of years ago that 42% of global trade measured by wine exports is bulk shipments, but this percentage will surely rise this year due to the COVID crisis. South Africa leads all countries in the portion it exports in bulk followed by Spain and Australia. France exports very little bulk, as do Germany and Portugal.

 

Next November one of the most decisive forums for the bulk wine industry: the WBWE takes place in Amsterdam. On this event, during only two days, 75% of the bulk wine supply that is exported worldwide is being gathered. Experts from across the world will also participate in this area for debate and reflection with the aim to shed light on the commercial trade alternatives within our new global context. Some of the crucial topics that should be dealt with are the following: the future of wine fairs; the importance of maintaining the environmental issues in the spotlight; the web analytics boom; digitalization and the possibilities provided by E-commerce platforms; the relevance of design for successful proposals of private labels; or the immediate actions carried out by the industry.

 

Undoubtedly, the wine trade is facing more challenges than ever, taking into account the current situation in the markets and the pressing need to reactivate trade.

Opportunities for the off-trade channel
Opportunities for the off-trade channel

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