A few weeks ago, I suggested that wine businesses should put more focus on using SWOT (Strengths, Weaknesses, Opportunities, and Threats) and PESTLE (Politics, Economic, Social, Technological, Legal and Environmental) analysis to benchmark their financial health and competitiveness. For this year’s Meininger’s Wine Conference, I decided to go one stage further by trying to produce a SWOT for the wine industry as a whole.
People defensively discussing the state of the industry are very ready to discuss what they see as strengths whilst others offer their lists of weaknesses and threats, but these are rarely set out together, along with possible opportunities. So, here goes:
Strengths
History
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What other beverage can claim evidence of having been produced 8,000 years ago? And of having been such a part of the history of western Europe and its colonies?
Landscape
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Vineyards are part of some of the most beautiful countryside in the world.
Sophisticated
- The culture of wine is all about the appreciation of one of the finest pleasures.
Convivial
- But it is also about sharing bottles and great moments of companionship.
Interesting/Fascinating
- Which other beverage has inspired so many words?
Huge variation
- Red, white, pink, sparkling, dry, sweet, fortified… There’s something for everybody.
Accompanies food
- No other drink has the quality of being the perfect partner to such a wide range of dishes.
Expresses terroir
- Wine is unique in conveying the character of its soil, aspect, altitude and microclimate.
Appellations
- Some officially recognised regions - Napa, Rioja, Chablis - have global reputations
Part of local culture
- To drink a wine is to have a link to everything about the region where it was produced.
Tourism
- A growing number of people love to visit the source of the wine in their glass.
Investment
- People have made money out of investing in fine wine. And, occasionally, wine estaes.
Weaknesses
Regulation
- National and local regulations restrict promotion and innovation.
Over-production
- There is - and has long been - too much wine
Lack of consistency
- Most consumers like predictable products; wine, especially with climate change is variable in volume, quality and style.
Old fashioned
- For many people, a bottle of wine is ‘yesterday’s’ beverage - associated with previous generations..
Snobby
- The complexity of labels and appellations, range of prices and the attitude of some ‘experts’ has led to a resentment of ‘wine snobbery’.
Too broad a choice
- Having to choose between large numbers of often quite similar labels is daunting, confusing and - for many - boring.
Packaging
- Most wine comes in a 75cl glass bottle, which is heavy, breakable and too big for a man and woman to enjoy in the ‘moderation’ to which most wine professionals pay lip service.
Labour
- Hiring vineyard workers is getting harder and sons and daughters are unwilling to take over family estates.
Water
- It takes up to 600 litres of water to produce a bottle of wine. Water is a declining resource.
Distribution
- Too much wine is sold through supermarkets with no interest in wine or building/supporting brands. Discounting and private labels are common.
Appellations
- Reliance on appellations leads to commoditisation. Retailers and monopolies look for the cheapest example from a region. It also leads to laziness: producers rely on the regional body rather than build their own brands. Most appellations have little/no resonance for consumers.
Low margins
- These factors lead to poor profitability.
Weak marketing
- Which leaves producers with insufficient money to build and sustain their brands.
Peasants and hobbyists
- Too much of the industry is in the hands of peasant-farmers who simply follow their fathers’/grandfathers’ footsteps, and hobbyists who throw spare money at a wine estate. In both cases, there is too little demand for a return on investment and sustainable profits.
Lack of imagination
- Too many producers have tunnel vision regarding innovation, such as alternative packaging and new styles. If it isn’t already being done or officially allowed, it is not on their radar.
Opportunities
Climate change
- Bad news for some, warmer temperatures are creating new wine regions.
Better marketing
- Even with their limited resources and restrictive legislation wineries could promote their wines far more effectively. By using social media better, working with products in other sectors, paying more attention to their brands.
New packaging
- Apart form better, more memorable labeling, producers could explore other options beyond the 75cl bottle - including PET, cand, Bag-in-Box, smaller glass bottles and returnable ones. They could also look at selling on draft.
New Styles
- Wine producers are making money from wine-based, fruit-flavoured RTDs, zero alcohokl and mid-strength wines, wines aged in bourbon barrels and unfamiliar styles such as pink Prosecco. There will be more of these.
New Distribution
- Europeans have been slow to adopt the Direct-To-Consumer subscription models of the New World. There are also apportunities of working with other brands (see Yellow Tail plus Domino’s).
New and untapped markets
- Africa and India may prove to be fertile soil for wine sales. China may bounce back. And some of the two thirds of Americans who don’t drink wine may be persuaded to do so.
Tourism /Events
- Better wine tourism and use of events will not only help to build sales, but also brand awareness and desire.
Sampling
- Perfume companies and spirits brands understand the value of sampling. Wine businesses could do a lot more of this.
Threats
Climate Change
- Apart from steadily warming temperatures and water shortages, vintage variation is a growing problem.
Anti-Alcohol
- There genuinely are people who’d like alcohol to be outlawed.
Health
- Most doctors do not want this, but they are aware of the damage alcohol - including wine - can do. So they and their official bodies can be expoited by the real temperance campaigners.
Wellbeing
- Separate to fears of cancer, thanks to fitness bands and smartwatches, there is a growing awareness of the negative effect of alcohol on sleep patterns. This leads to greater total abstinence and the giving-up of drinking during the week. Alcohol is also associated with mental health issues.
Legislation
- Governments love passing laws that restrict alcohol.
Taxes/Tariffs
- And they love taxing it.
Other beverages
- The range of alternative adult drinks, ranging from proxies to kombucha and sparkling tea grows every day. Cocktails are increasingly appeling as are craft beers. Wine is no longer a default choice to accompany a meal.
These are far from exhaustive. Readers will have their own thoughts on what to put into a wine industry SWOT; I encourage them to spend a little while playing with my suggestions and coming up with a few more of their own.
