SYMPOSIUM “ACT FOR CHANGE”
PANEL DISCUSSION: “E-COMMERCE OR ULTRA-LOCAL: 
WHICH FACTORS WILL INFLUENCE THE WINE & SPIRITS BUSINESS IN 2030?”



 

INTRODUCTION

On 20 and 21 June 2022, international professionals and experts gathered at the Cité du Vin in Bordeaux for the second edition of the Symposium “Act for Change”. These two days of talks were organised to shed light on the major changes and impacts on the production and distribution of wines and spirits by 2030. It was an opportunity to get together and discuss, exchange ideas, and work together to better prepare ourselves for the challenges that await the wine world in the coming years.

During this panel discussion, the speakers discussed the impact of various market developments on the production and sale of wine. The development of digital technology and the search for increasingly local consumption are turning the sector upside-down. How has the e-commerce boom changed the world of wine? What avenues should be pursued to enable technology to meet consumer needs?

SPEAKERS

Patrick Schmitt MW, Editor-In-Chief of The Drinks Business, moderated the debate with five speakers: Pam Dillon, Co-Founder and CEO of Preferabli, Felicity Carter, Editor-in-Chief of Pix, Fabrice Bernard, President of Millesima, Anthony Maxwell, Sales Manager at Liv-Ex, and Roland Peens, Fine wine specialist at Strauss & Co Fine Wine.


THEME: E-COMMERCE OR HYPER-LOCAL: WHAT FACTORS WILL INFLUENCE WINE IN 2030?

DEVELOPMENT OF E-COMMERCE: WHAT IMPACTS WILL IT HAVE ON THE WINE & SPIRITS SECTOR?

COVID and the digitalisation it has brought have turned the market upside down. In 2020, the average price of a bottle was 44 euros. Today it is about 54 euros. At Millesima, for example, there has been an increase in the sale of wines from Provence: before the health crisis, they represented 1% of our turnover; in September 2020, they represented 6%. In the space of two years, we have doubled our turnover. What was also noticeable during this period was to see that customers tested many more products than in normal times: the lockdown made it possible to develop consumer curiosity about wines they don’t usually taste. 

(Fabrice Bernard, President of Millesima)

The problem that arose with the health crisis was the paradox of choice. There are millions of listings for wines, beers and spirits. This means huge amounts of data to process digitally. Humans cannot process all this information, sales history, inventories and user scores. With our platform, we aggregate this information and use it to identify customer preferences. The main challenge for the development of e-commerce is to digitalise the wine sector and create a suitable platform. Three-quarters of wines and spirits are still sold in physical locations and these locations will not disappear overnight. The COVID crisis has accelerated a process that was already underway. We now need to go further and bring together various technologies and artificial intelligence and succeed in creating digital experiences. These tools also allow small producers to reach out to customers who are not right next door, even consumers on the other side of the world.

(Pam Dillon, Co-founder and CEO of Preferabli) 
 
There is very little e-commerce in South Africa. During the first few weeks of the lockdown, our sales increased six- or seven-fold. As the lockdown continued, we saw new players entering the market. We started online auctions in 2020 and, to our surprise, bottles sold for 3 to 4 times more than what we expected. The number of competitors in the market has increased considerably in recent years.

(Roland Peens, Fine wine specialist at Strauss & Co Fine Wine)

Before the pandemic, the idea of adopting measures that supported transparency in sales was a challenge for the sector. Through transparency on Liv-Ex, the global wine trade marketplace, we have tried to help businesses grow. People were looking for new ideas to interact with, which led to the wide acceptance of our services by our members.

(Anthony Maxwell, Sales Manager at Liv-Ex)

As the borders started to close, people stored wine and didn’t know how to sell it. Those who were already present on the online market sold many bottles. They discovered that they had to pay attention to their local market and they realised that they had neglected customers nearby. Transactions can be done quickly online, but the more industry players there are, the harder it is to get noticed. The big issue for wine producers who sell online is how people can find their website on the internet. It’s complicated getting recognised and properly referenced by Google. If you are a small industry player, how do you get noticed in the ocean of e-commerce? There is a range of skills that need to be acquired before you can start.

(Felicity Carter, Editor-in-Chief of Pix)
 
E-COMMERCE HAS COMPLETELY CHANGED RELATIONS WITH CONSUMERS

When you buy wine, you do so to find out its story. E-commerce must be able to tell stories about wine. Customer habits have changed a little with the health crisis, but not as much as you might think. Before COVID, 85% of our new customers bought wines from a single region. Now it’s less than 60%. For Millesima, this is a good thing: it is better for us when customers buy wines from different regions. During COVID, people wanted to taste wines from all countries. In particular, we sold more magnums and large bottles.

(Fabrice Bernard, President of Millesima)

Our approach is to look at what a human expert would do and use digital tools to help consumers choose. Let’s take the example of a sommelier: if we tell them the type of wine we are looking for, they can suggest three or four similar wines. On our platform, we will make calculations of similar products. We take into account different factors to guide consumers in their choices. We also use tools such as emails and newsletters that are no longer targeted as they used to be, but rather quite general. Today, thanks to our platform, we can see what kind of content consumers are looking for. Thanks to technology, we need to enhance this content and the stories around wine. As for younger consumers, they no longer want to talk to wine experts because they feel they are being looked down upon. Digital tools can also allow us to get closer to this young audience.

(Pam Dillon, Co-founder and CEO of Preferabli) 
 
In the South African market, we have two main ways of attracting consumers’ attention: good ratings from critics and proximity to producers or winegrowers. This means that experts’ ratings are still important today. For example, a wine that recently scored 100 points in a critic’s rating will increase its price fourfold. As for winegrowers, they build a digital relationship with customers and this is very important in our market. For younger consumers, influencers are key to developing the market.

(Roland Peens, Fine wine specialist at Strauss & Co Fine Wine)

Consumers have the power of choice thanks to e-commerce; they can choose whatever wine they are going to drink on a Saturday night at home, and they are spoilt for choice. Over the last 20 years, the internet has helped us move towards a more transparent, less opaque market in the wine world. If we provide transparency around price and quality data, we can turn this somewhat niche market into a much larger one.

(Anthony Maxwell, Sales Manager at Liv-Ex)

WHAT CHALLENGES DOES THE FUTURE HOLD FOR E-COMMERCE IN THE WORLD OF WINES & SPIRITS?

NFTs and blockchain may be interesting solutions for the future. It is also necessary to be able to develop a large database shared by all key players (retailers, producers, traders) in the wine sector.

(Fabrice Bernard, President of Millesima)

We are going to see a consolidation of the market, but the biggest change over the next 10 years will be the increasing number of players focusing on customers rather than simply the product. This vision should be reversed today. What also counts is human interaction, or just simply humans. Through social networks, we can also introduce interaction; the shop is not the only tool to offer customers concrete interactions. Digital technology will accelerate the magic around the wine’s story, and technology can help tell these stories.

(Pam Dillon, Co-founder and CEO of Preferabli) 
 
I believe the future lies in decentralised finance. Even if the phenomenon is still very much in its infancy, fine wines will be on blockchain in the coming years. For intermediaries, this will be more difficult, as direct access to sales platforms will be easier for producers. At the moment we are still in the early stages of adopting this technology, and people still need to know there is someone behind the transaction. Some wine enthusiasts love to write about their wine collection and soon it will be possible to showcase their collection on a platform in the form of an NFT. You can sit in your living room and see a collector’s wine collection in an alternative way.

(Roland Peens, Fine wine specialist at Strauss & Co Fine Wine)

In my opinion, the main issue for fine wines in the next few years is to find ways to keep cases in the same place. A bottle of wine can change countries ten times in its lifetime and this is environmental nonsense. With Liv-Ex, we store bottles of wine for our customers. In the future, I believe we need to create a network of warehouses, with good monitoring, and potentially anonymisation. Another challenge is that everyone in the supply chain has a database. Nevertheless, digital tools can reduce barriers at all levels and give the power of decision-making and choice to the consumer.

(Anthony Maxwell, Sales Manager at Liv-Ex)
 
I do not believe that the e-commerce business can be threatened by small players entering the digital market. It takes time, expertise and employees to have a good sales platform. Small companies cannot do this. It would be catastrophic to move towards more concentration in the wine sector. I don’t think concentration is a good thing. But as far as the future of e-commerce is concerned, I remain optimistic, especially with regards to transparency, which is key to development and brings a lot to the market.

(Felicity Carter, Editor-in-Chief of Pix)
 

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