The staff at Areni Global got together to discuss the year ahead, and talk about what’s happening right now, and what they hope will happen.
The discussion included Pauline Vicard, CEO, Felicity Carter, Editorial Director, Sarah Phillips, Head of Membership, and Polly Hammond, founder and CEO of 5forests, the brains behind Areni’s design, website and digital strategy.
We are going to talk about the overall trends that we see happening for fine wine this year. But before we do that, I just wanted to ask you about your general feelings for this next 12 months. Felicity, do you want to get us started?
This is one of these strange years where I hesitate to make any predictions. I would’ve said that we were going to go into a recession in 2024 and yet Christmas retail spending was extremely strong in the United States, which is the key driver of the world economy.
This is one of these strange years where I hesitate to make any predictions. I would’ve said that we were going to go into a recession in 2024 and yet Christmas retail spending was extremely strong in the United States, which is the key driver of the world economy.Felicity Carter
But at the same time we have this wretched situation in the Middle East, which might be contained or it might spread, and the impact that that is having on a whole range of things, including particularly logistics and shipping could be devastating or it might be solved fairly soon. So I don’t know how I’m feeling. What about you?
It’s that kind of tipping year where everything can happen. One of the things that I discussed quite a lot in November and December is the end of the rebels, and all those rebellious movements that wanted to create something new in wine.
They ended up a lot like fine wine in some ways. They ended up being very expensive. They ended up being collectible. They ended up in the secondary market. They started as an inclusive movement, but they ended up being quite exclusive in many ways. So it’s like the end of that cycle. And I’m really wondering what’s next for fine wine? You need those rebellious movements. I wonder what’s coming next to disturb or to challenge fine wine in a good way.
Polly, what about you?
I feel very positive going into 2024. I think that we’ve had a lot of uncertainty and I’m not saying that that uncertainty doesn’t still exist. But what I notice with my fine wine clients is there is less of a reactionary or reactive response and much more of a sense of confidence in the direction that their brands and their segment of the industry are going. One of the things that makes me optimistic, is we are simply at a point in dealing with our segments and with our audiences where we’re knowing them better.
What I notice with my fine wine clients is that there is less of a reactive response and much more of a sense of confidence in the direction that their brands and their segment of the industry are going.Polly Hammond
I think one of the things that we’re going to continue to see in 2024 is the expansion of fine wine and more and more wines that are calling themselves fine on the market and they will have an audience for them.
And the real thing is that it’s also going to be a diversity of brands. I think that for a long time when we talked about ‘fine wine’ or we talked about luxury wine, it was very much dominated by a kind of traditional brand experience. And what we’ve seen is our luxury brands are less afraid of breaking the mould.
Sarah, what about you?
I would extend on a number of things that you guys have said. I mean, on one hand, I think taking a non-wine specific look at the world, it’s hard not to be concerned. What’s happening in the Middle East is obviously deeply distressing, as well as Ukraine. But if you narrow the question to what’s happening in the fine wine world, I think I would share Polly’s optimism. There are a lot of concerning headlines about wine, but if you look at where the wine market is performing well, it’s at the top end.
We’re noticing a huge polarization in the wine markets. Anyone who sits in that really cheap and cheerful category is going great guns; anyone who sits in an established and a true fine or luxury space is going to be completely fine. And then separate from fine wine, what we end up with is this middle band and those are the ones that I have the most concern about because, for various reasons, it’s inappropriate for them to move either up or down our market ladder. And so those are the ones that I think are going to be hit hardest by whatever will befall us in 2024. I’ve seen a lot of brands actively working over the past two years to achieve a luxury or fine as an expensive wine status.
Anyone who sits in that really cheap and cheerful category is going great guns; anyone who sits in an established and a true fine or luxury space is going to be completely fine.Polly Hammond
You mentioned that the wine segment is more and more polarized and it’s not surprising because wine follows society and as society gets more polarized, the wine segment gets more polarized in a way.
Felicity, any other global trends?
Many. A feature of uncertain times is that you see a flight to safety and so things which have a track record will always be okay. I also think there’s been a lot of silliness in the market over the last few years. Burgundy would be a good example, where we’ve seen some not very good villages where the prices have just become stratospheric and completely out of whack with the quality of the wine. Maybe some of that going back to better pricing. I think we’ll also see luxury become more discreet. That is a typical reaction to uncertain times.
A feature of uncertain times is that you see a flight to safety and so things which have a track record will always be okay. We’ll also see luxury become more discreet.Felicity Carter
I think we’re going to see a lot of consolidation, not just because of economic indicators, but also because of the fact that so many people in wine are aging out and they need to move on. So I think we’re going to see a lot of sales and a lot of opportunities for people who’ve got money.
Climate change is absolutely making a difference now. It’s making a difference to what people can produce, to how much they can produce. And it’s also having a dire impact on the insurance market. There are people, especially in places like California that may not be able to produce wine any longer because they can’t get the insurance that they need.
In some ways I see that as a positive thing — not for people who are affected by it — but I think if anything is going to make people wake up to climate change, it’s going to be the actuaries inside the insurance companies who work out what the real risk is.
I think we’ll see more white wine move into the investment grade market. Logistics I think is really troubling.
The other thing which is a bright spot, which we’ve talked about a lot at Areni, is we’re seeing young people enter the fine wine market. And what is driving that seems to be technology, that there’s a gamification of fine wine and people have a lot more transparency around the fine wine market because the apps are allowing it and that transparency is leading to a much wider adoption of wine by a much younger group of people. So that’s really the right spot.
What do you think AI is going to change for us this year?
Not much. When people hear ‘AI’, what does everybody think of? We think of ChatGPT, right? We think of a second brain that’s doing the work and I don’t think that we’re at a point where this year we’re going to see it. I think that we can start to look at more AI on the production side, but I’m not sitting here pinning my hopes and dreams for my clients on AI. I think that there are other things that are going to have a much greater impact.
I think we cannot overlook the knock-on effects of the Silicon Valley Bank collapse.
In case some of our listeners might now know what’s happening in the US, can you recap what happened with the SVB bank?
Basically the Silicon Valley Bank had a run which led to the collapse of the bank. But the critical thing about the Silicon Valley bank was it had a division that was specifically centered on wine; most banks don’t understand the wine industry.
Do the banks who took on those loans want to remain in the alcohol industry? Do they want to continue supporting loans to wine businesses? And I think that that is one of those things that we’re going to continue to see the financial impact of and not in a way that is overt.
The other thing I want to touch upon is distribution. So we can talk about logistics, we can talk about the producers, but what we’re seeing is the number of distributors who reduced their lines. It will be much harder to get distribution. And I don’t really know that that’s a great thing for our industry.
What we’re seeing is the number of distributors who reduced their lines. It will be much harder to get distribution.Polly Hammond
Sarah, what do you think the main issues are going to be or the main opportunities are going to be for our industry this year?
I think the Champagne story, particularly in the collector world, will continue to be quite interesting. We’re going to think about Champagne as wine more. And I think this is part of what you’re saying, Pauline, about this kind of growing broadening of the fine wine world. I think Champagne’s an important part of that.
[There are] reports of collectors slowing down their drinking and liquidating cellars. So I think we’ll probably see an injection of a lot of older vintages into the market. Liquidity is always good for markets and that’s got the potential to drive a lot of interest in a lot of classic fine wine regions, as younger drinkers will get greater opportunities to taste these wines with some age.
We’ll probably see an injection of a lot of older vintages into the market. Liquidity is always good for markets and that’s got the potential to drive a lot of interest in a lot of classic fine wine regions, as younger drinkers will get greater opportunities to taste these wines with some age.Sarah Phillips
We’ll see some people, particularly in the younger drinking segment, who have traditionally been natural wine drinkers; I think there’s potential for them to migrate into fine wine, particularly with producers who share the values of the natural wine producers that they’ve been drinking. There’s a lot of fine wine producers who are making wine sustainably.
And then, I think we’re going to talk more about Argentina this year. They’ve just elected a controversial president who’s promising to make some pretty significant economic changes. Any big changes in Argentina are likely to have some impact on the broader market.
Before we continue to trends, I just wanted to step back a bit. We’ve talked a lot about wine and health. I can see two sides in the wine industry: the ones that are, yes we need to be responsible. We need to do whatever we can to promote moderation. The others in some way can’t understand why they need to act because they are still, ‘I don’t understand the conversation about wine and health. Wine has always been part of the diet and it’s always been known that wine is good in moderation’. I’m not sure we’re aligned and that worries me.
I completely agree with you. I think there is some mobilisation around this now but, like you said, it really bothers me that some members of the wine trade cannot understand the fact that there is an issue with alcohol and wine in some segments is not as benign as we would like to believe.
I’ve seen some shocking marketing of wine take place over the last 10 years or so, and I really notice that come Dry January, how hostile [many in] the wine trade is to people who are moderating their intake. Now I’ve done Dry January. Most of the great spiritual traditions have a period of fasting and it’s part of reflecting on consumption and I don’t see that as a bad thing.
The more I hear the wine trade get hostile to something that does let people reset their relationship with alcohol, the more I worry that they haven’t understood what we’re really facing here.
The more I hear the wine trade get hostile to something that does let people reset their relationship with alcohol, the more I worry that they haven’t understood what we’re really facing here.Felicity Carter
From a business and marketing standpoint, I think we are going about getting brands to understand the impact incorrectly, which is we need to be paying attention to the economic impact of ignoring it. And some of that will come from banks who don’t want to lend, and governments who don’t want to give money grants.
There are actually three ways that this can go: you can emphatically care about it; you can emphatically fight against it or, guess what, you can just do nothing. And we have a lot of brands that are just not doing anything. There’s no reason for them to be a part of that conversation because they’re not interested in it and their audience isn’t interested in it. If we want to make a trend happen, we need to communicate about the financial impact of doing or not doing something.
I was thinking about this when the BECA [Beating Cancer Plan] report was discussed at the European Commission. That’s the report that says that alcohol is dangerous from the first single drop and therefore it’s a risk product. And my first reaction was like, ‘Wow, if that’s now the status quo at the European parliament, how will they be able to fund viticulture anymore?’ Because if the European Union decides that it’s risky from the start, how can they spend millions of euros in the production of it?
What would you like to see happening in the next 12 months?
I would like to see more professionalisation. This is something that we talk a lot about at Areni behind the scenes and we have a Rethinking Education white paper coming out on this topic, but I would like to see less emphasis on how wine tastes and more emphasis on professionalization and upskilling of people in the industry,
I’m super excited by some things that I’ve been seeing on social media, which is transparency around money and production. I’ve come across a fabulous Australian winemaker who is on TikTok and Instagram talking about all of the financial as well as production issues around starting his own winery.
It’s a very opaque industry and people still live in this romanticised world of what it must be like. But if we are taking a generation who’s so accustomed to reality TV and they’ve grown up in a world where people are redoing châteaux and building tiny homes, I want to see them get their hands on wine and actually take something that is so secret and hidden and blow it open. What does it take to produce a fine wine? That’s my wish list and I’m seeing little inklings.
I’d like to see more wine tourism. I think if you look at all of the opportunities and challenges that are facing the fine wine world, we know that people are looking for great experiences, authenticity, connections and beautiful places and things where you can take a lovely picture and put it on Instagram. And I think wine tourism can deliver all of those things. We were talking about the alcohol issue, and I think wine tourism and connecting people to the place shows that wine is a cultural, agricultural product, not just some booze that you pick off the shelf.
Additional Trends by Markets:
- Understanding the Fine Wine Consumer: Market Insight-France
- Understanding the Fine Wine Consumer – Country Profile: Japan
- Analysis – How Fine Dining is Changing and What it Means for Fine Wine
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