UK wine e-commerce: what’s the case for future growth?
Among the notable trends affecting the industry, the specialist highlighted premiumisation, with many customers looking for quality over quantity – although, in general, “the market remains a pretty low-value market”. “The second trend that I think has been interesting is a movement towards subscription businesses that seek to educate the customer, so it’s the plethora of new players that are focused on how to break down barriers to wine.”
Although COVID-19 has been “catastrophic” for the wine industry as a whole, as restaurants and bars have remained closed, the pandemic has worked in e-commerce wine’s favour by accelerating uptake. “The big question, of course, is what proportion of customers will stay purchasing online following the end of lockdown restrictions.”
The former director covered the industry’s main four players, including their competitive strengths and target audiences. They also explored Virgin’s approach: “I would say that Virgin almost tries to be everything to all people, have [a] product that suits everyone presented in a way that offends nobody.” Virgin’s portfolio is geared towards the “greatest hits”. “The disadvantage is that, of course, these wines are things that then customers have a direct price comparison with.”
Conversely, Naked Wines goes more down the unrecognised route, focusing on the stories of independent winemakers. While it may be more difficult to attract consumers this way, they explained, “one thing that the British wine [drinker] absolutely loves is feeling like they’re in the know or that they’re getting a bargain.”
Ending the Interview with the best and worst case scenarios for this industry over the coming years, it was noted that there are favourable conditions for continued growth. One “trend or indicator that growth can continue is the movement towards working from home. One of the biggest barriers, prior to the pandemic, for the wine industry online was the friction around delivery.” In their opinion, there could be a double-digit CAGR for the next few years.
To access all the human insights from Third Bridge Forum’s Virgin Wine’s Potential IPO & the UK Wine E-commerce Industry Interview, click here to view the full transcript.
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