The wine and spirits sector is one of the oldest industries in the world. The first known winery was discovered in Vayatos Dzor, Armenia around 4,100 BC, with the first sign of spirits coming about at the turn of the first or second century AD. It’s safe to say that wine and spirits have evolved greatly since then, but recent digital trends are changing the sector more than ever before. Below are the top 5 digital trends currently changing the wine and spirits sector:
1. Direct-to-Consumer Sales
Most of the world’s wine and spirits industries are faced with what’s known as the “three-tier distribution system.” Under this legal structure, wine and spirits companies are required to sell their products to distributors who, in turn, sell adult beverage products to large retailers, grocery stores, as well as smaller convenience stores. However, with the rise of e-commerce, this structure is rapidly changing.
Now, more and more wine and spirits are being bought online globally. For example, as many as 21% of UK consumers now purchase adult beverages online. Other countries like the U.S. saw an 18.5% lift in online wine sales in 2016, representing $2.33 billion in revenue and 4% of the nation’s wine sales overall. Thanks to increasingly more intuitive e-commerce software and online fulfillment services like drop shipping, this direct-to-consumer sales trend will continue to grow over time.
2. Targeted Digital Marketing
Digital marketing is an online trend that’s changing sectors of all shapes and sizes. However, until recently, digital marketing has been a challenge for wine and spirits producers. This is because most countries have laws and regulations around marketing adult beverage products to minors. But now, thanks to technology-enabled targeted communication via platforms like Facebook and Instagram, digital marketing is beginning to take hold in the wine and spirits sector.
Wine and spirits companies today can use marketing digital ads to target specific consumers who are over the legal limit, rather than wasting impressions on below-age drinkers and potentially running into legal issues. Which is a good thing, considering that 25% of the EU is comprised of millennials, constituting a new market for wine and spirit producers if they can target them properly. Studies show that the most effective digital marketing tactic is using target pre-roll videos for wine and spirits consumers.
3. Omnichannel Loyalty Programs
One of the biggest challenges in the wine and spirits industry is loyalty. The majority of consumers choose a brand on a whim, often relying on price point or varietal to make a buying decision and not on the value of a specific brand. To combat this, wine and spirits companies are relying more and more on an omnichannel approach to their loyalty programs.
As of today, 76% of international wine and spirits loyalty programs rely solely on email marketing and promotions. This is compared with only 10% that use either SMS or a mobile app. However, an increasing number of loyalty programs are adopting an omnichannel approach where they rely on multiple digital channels for customer communication and sales promotion.
4. Fermentation and Distillation Control Systems
Wine and spirits production has traditionally been a hands-on type of job, as much art as it is science. This is because both wine and spirits are derived from agriculturally-based inputs like grapes, hops, grain, and more. Since nature is a major factor, the annual yield of these inputs varies widely. What’s more, once the grapes and grains are harvested, it takes a dedicated process of fermentation and distillation over a multi-month or multi-year period to create the actual wine or spirits themselves.
Luckily, wine and spirits producers are taking a data-driven approach to their fermentation and distillation processes. For example, wineries now use artificially intelligent control systems that measure the temperature of pressed wine in barrels during the fermentation process and makes up to the second temperature adjustments to control fermentation. The technology relies on a probe within the wine barrels themselves that assess the density of the liquid, which translates to the wines sugar content and therefore its level of fermentation.
5. Drone-Driven Agricultural Management
Since the wine and spirits sector relies on agricultural-based products, the industry has been long looking for ways to better its farming processes. Today, with increasingly more regularity, auto-pilot and manually-driven drones are taking over wine and spirit producers’ agricultural management.
For example, drones can now conduct soil and field analysis as well as actually plant crops, offering up to an 85% discount when compared to traditional means. Once a wine and spirit producer’s crops are planted, the same drones can spray pesticides, identify which areas need irrigation, as well as monitor other key crop indicators. The result is a more efficient production process at a fraction of the cost.
Overall, while the wine and spirits industry is one of the oldest we have in the world, it’s one that’s starting to adapt to the evolving digital trends. A sector with traditional brick-and-mortar sales, these trends are bringing wine and spirits producers online and helping them reach new audiences, both domestically as well as internationally.