Finding new pathways to US consumers for Australian wine

COVID-19 restrictions have shattered the on-premise market for wine sales in the United States – Australia’s second largest export market by volume – resulting in lower total wine sales and significant revenue losses for some US wineries, according to the latest Rabobank Wine Quarterly report.

Over March and April 2020 combined, there was an estimated USD47 billion, year-on-year reduction in total sales in US foodservice and drinking establishment channels as restrictions set in.

And with sales in full-service restaurants and bars not likely to return to 2019 levels until after 2021, the Q2 report, titled ‘COVID -19 and the US premium wine market Part 1’, highlights that wine producers selling into the US market would need to find new ways of engaging consumers in the future.

Rabobank senior wine analyst, Hayden Higgins, said total sales for US food service and drinking establishments for the first four months of 2020 were down an estimated USD68 billion, or 22 per cent.

“For wine sales, the percentage drop in the on-premise channel will be even higher, given these are more heavily reliant on full-service bars and restaurants, which performed even more poorly than limited-service restaurants,” he said.

Higgins said the US on-premise wine sales channel was comparatively small in volume terms, but important for access and margins.

“The on-premise channel typically accounts for less than 20 per cent of annual wine sales in the United States, but it’s extremely important, particularly for small, premium wine brands which sell a greater proportion of their product into restaurants and bars,” he said.

Australian wine export figures reflected the premiumisation trend for wine in the US, and Australia’s efforts to capture more of this market.

While exports of Australian wine to the US for the year ended March 2020 were down 11 per cent by volume, they were only two per cent lower by FOB value in AUD terms – suggesting product was directed at the premium market.

And despite the drop in total Australian wine export volumes to the US, Higgins said Wine Australia reported that the average price per litre rose to the highest levels since August 2009.

The report said, barring a vaccine, the on-premise US wine sale channel would likely take years to recover.

“Between government enforcement of social distancing measures, consumer reluctance to return on premise due to fears of contagion, and reduced business and tourism travel, many bars and restaurants may be forced to permanently shut their doors unless a vaccine is made available sooner than most experts expect,” Higgins said.

“Given these, and other, challenges, it’s anticipated the US foodservice industry will likely not return to 2019 levels until after 2021, and that the recovery would be led by limited-service restaurants and take-out/delivery, where there is less consumption of premium wines.”

He said larger wholesalers who had a greater proportion of sales in the off-premise, as well as more financial muscle, should be better placed to withstand these challenges.

Higgins said the US alcoholic beverage market’s three-tier system was particularly challenging for smaller wine brands.

“The US alcoholic beverage market operates under a three-tier system made up of manufacturers in the first tier, a second tier comprised of importers, distributors or wholesalers who purchase the product from the manufacturer, and a third tier of retailers,” he said.

“Under this system, producers are unable to sell directly to US consumers. It’s therefore essential brands work closely with their US distributors – who are in regular dialogue with retailers – so they can better understand changes in the way US consumers are purchasing wine.”

Implications for Australian winemakers
With the on-premise channel in the US struggling, Higgins said Australian wine brands would need to consider how their distributors were currently working with retailers, and also planning for future channel changes in the way consumers purchase wines.

For Australian producers vying for share in the US market, he said, digital strategies will become increasingly critical for sales success.

“While the on-premise sales are currently facing monumental challenges, the growth in e-commerce has been well-documented, and will provide an important opportunity for wineries seeking alternative growth strategies – both in the US, Australia and other markets,” Higgins said.

“We’re already seeing this process well underway in Australia, as wineries try to offset the decline in tasting room sales with e-commerce.

“Beverage companies are finding new, innovative ways to connect with consumers wherever they are, in a digital environment and to help drive sales across channels.”

For Australian wine exporters, Mr Higgins said, considering how e-commerce at the retail level and connecting to the US consumer would evolve – and how distribution partners were preparing for this – should be a core component of discussions, and were relevant conversations for other markets beyond the US.

“These questions include how they think about e-commerce within the organisation, whether they should buy or build an e-commerce team and where it should sit within the organisation.”

Higgins said Tsingtao, the Chinese beer company, provided one recent example of a beverages company that has used e-commerce to increase sales.

“Tsingtao used lockdown measures in China as an opportunity to further create a network of ‘community distributors’ – essentially social media influencers working on commission – that has been extremely successful by a number of measures,” he said.

Insignia discusses challenges impacting the beverage industry

Few environments present challenges to coding and traceability like the beverage canning sector. Insignia discusses current impacts on the beverage industry.

With high production speeds, uneven surfaces to code and a hot, wet environment to contend with, achieving a reliable high-quality code is an ever-present challenge.

Every industry presents its own set of obstacles when it comes to coding and marking, and beverage canning is no different.

When investing into a coding solution for challenging canning environments, there are certain requirements that must be considered to ensure your technology can provide optimal uptime and reliability.

Production speeds

To satisfy consumer demand, companies have high production output deliverables, which means that speeds on canning lines are high and can be prone to changes (high output during summer months, lower productivity off season). Continuous advances in technology means production line speeds are rapidly increasing, resulting in a higher number of cans being processed. For example, a typical soft drink canning line can run up to 6,000 cans per minute, all of which require date and batch codes. The coding system must be able to keep pace with these high production rates without compromising on code quality.

Harsh Production Environments

The production environment of a canning facility can be wet and sugar-laden, with temperatures reaching 45⁰C on the production line, and washdown a regular part of the process. What this means for manufacturers is that they need to be investing in robust technology that’s IP rated to withstand washdown processes, and operational in higher temperature and humidity ranges.

Coding Surface

The majority of codes are printed on the bottom of cans, where the surface is concave and therefore uneven. This challenge is aggravated by the speed of the production line. A code that appears stretched or smudged is often linked to the speed of the production line however, it can also be the result of the coding system’s unsuitability to the surface or substrate being coded.

Smooth Integration

For a coding system to be effective, it needs to easily integrate with the canning line. This requires optimal print head design and a small machine footprint enabling installation in a location that will not cause bottlenecks or downtime along the production line.

Environmental Awareness

A growing number of companies are committed to their social responsibility and prefer to invest in technologies that advance their environmental credentials. Coding and marking technologies can be energy-intensive, as well as consuming volatile organic chemicals. A coding system that minimises energy consumption and waste will therefore be the preferred choice.

Late Stage Customisation

Developments in the supply and distribution of beverage cans are stimulating a growing need to quickly modify codes on the production line. Late stage customisation enhances marketing capabilities and also allows manufacturers to be more flexible with decision-making on site. With this in mind, manufacturers could potentially change the ‘best before’ dates and production data or add in promotional codes that encourage interaction with your brand.

A suitable coding technology for this harsh beverage environment must be robust and capable of marking high quality codes at high speeds.

It should also be capable of meeting both current and future requirements for high-legibility coding applications.

The F720i is Domino’s latest addition to its range of high performance, high speed fibre lasers.

Designed to deliver clear, durable codes onto aluminium cans, the new F720i fibre laser is suited to withstand the harsh production environment and high-speed coding demands of the beverage canning sector.

Independent breweries are growing the beverage industry across Australia

Independent breweries are growing the beverage industry across Australia with new facilities and partnerships.

Australian independent brewery, Tribe Breweries, has taken on Mornington Peninsula Brewery through a partnership structure.

Matt Bebe, co-founder and CEO at Mornington, will become a shareholder in Tribe as a result of the partnership and will remain at the helm to lead the Mornington team.

All employees of Mornington will continue in their current roles as the brewery looks to grow its reach both domestically and internationally.

READ: Aussie blockchain startup BlockGrain to pilot barley-to-beer tracking

The partnership will increase Mornington’s brewing capacity and allow the launching of new brews more rapidly.

Bebe said Mornington reached a point where it had to make some strategic decisions about its future.

“Joining Tribe is a great decision for Mornington as we can have our cake and eat it too; continue to be both local and independent while also part of a larger collective group that can provide benefits across the board,” said Bebe.

Anton Szpitalak, co-founder and CEO of Tribe Breweries said Tribe aspired to become Australia’s number one independent brewer and it was firmly committed to working with artisans to realise their dreams.

“Mornington fits perfectly into that vision and with the brewery joining the tribe we take a big step forward on our journey,” said Szpitalak.

Later this year, Tribe Breweries’ much anticipated state-of-the-art $35 million craft beverage production facility will open in Goulburn.

Meanwhile, Brick Lane Brewing Co. has launched a new brewery in Dandenong.

Brick Lane will offer other breweries an opportunity to use its state-of-the-art brewhouse to create their own beers.

Head Brewer Jon Seltin said the company wanted to give breweries the opportunity to bring their wonderful beers to a wider national and international audience.

“We are excited about working with some of the wonderful, talented and creative brewers out there to get more of their beers out there into the world,” said Seltin.

Brick Lane has incorporated several energy reduction, recovery and storage technologies into the Dandenong brewery, including a highly efficient vapour condenser which reclaims energy from steam produced during the brewing process.

Brick Lane will employ 60 workers in its brewhouse, producing 10,000 bottles and 15,000 cans per hour – a capacity of more than 100,000 pints of beer every day.

Urban Alley Brewery has started production in a new centre in Melbourne’s docklands.

It is located next to a brew-pub that is opening its doors in September 2018 and has a capacity of 700 people.

The 25-hectare-litre brewhouse is set to produce 2 million litres per year.

Urban Alley Brewery is also using biodegradable six pack rings (E6PR), which are made from spent grain.

 

 

SouthTrade International takes 666 Pure Tasmanian Vodka into its portfolio

 Continuing its vision to build a premium and strong local craft portfolio, SouthTrade International will have exclusive distribution of Australian craft spirit brand 666 Pure Tasmanian Vodka, from the 1st of October 2018.

This follows the announcement that Think Spirits will be taking over the distribution of Stolichnaya Vodka trademark in Australia.

Founder of 666 Vodka, Dean Lucas, said SouthTrade International was a business with fantastic energy and momentum as evidenced by recent brand additions.

“We are thrilled to be joining the SouthTrade family and what we consider to be the leading Australian craft portfolio. With the SouthTrade team’s knowledge, expertise and highly complementary portfolio, we plan to expand 666 Vodka with the next evolution of the brand inclusive of new packaging and product innovations,” said Lucas.

READ: American bourbon and vodka coming to Australia

“The 666 Vodka brand transitions to SouthTrade after a period of strong growth over the last 12 months,” he said.

SouthTrade International managing director Ray Noble said joining future icon brands of Mr. Black, Starward Whisky and Adelaide Hills Distillery, SouthTrade was excited to expand and strengthen its local craft spirits portfolio with 666 Pure Tasmanian Vodka.

“[It] marries with SouthTrade’s vision of driving long-term success for premium local craft brands across Australia. While this is a fantastic opportunity for both companies, we would also like to acknowledge the great work Think Spirits has undertaken on the brand to maintain a leading position within the Australian premium vodka category,” said Noble.

“Established in 2007 and committed to sustainability, we were drawn to the brand’s authenticity using local ingredients and capturing the purity of the surrounding environment of Cape Grim and North West Tasmania,” he said.

Stockists of 666 Vodka include Dan Murphy’s, First Choice and Vintage Cellars.