What is the strategic role of New Zealand wine in your business?
It is unique to other wine categories in that it is white dominant (95% share) and almost singularly focused on one varietal, Sauvignon Blanc. Customers love New Zealand’s signature style of Sauvignon Blanc. With the growing trend towards refreshing white wines, New Zealand is well-poised to continue to meet customer needs. New Zealand commands strong brand loyalty among customers in our market. In terms of sales, it holds three of the top 10 import SKUs – Kim Crawford, Oyster Bay, Stoneleigh – which are strategically important to the growth of the category and the wine portfolio overall. New Zealand is also a premium wines category at the Ontario Liquor Control Board (LCBO), with one of the highest net dollar sales per litre. As such, this category is important as we look to continue to fuel growth of premium-priced wines.
How does New Zealand wine currently perform in your business?
New Zealand ranks 6th in terms of total wine sales and is outpacing other key producing regions such as the United States, Italy, France and Australia. New Zealand is also the only top ten wine region that is showing positive growth while other regions are in decline.
How significant is the no and low alcohol wine trend in the Canadian and LCBO market?
Lighter options continue to be the popular choice among wine customers as more Ontarians are looking to moderate their alcohol consumption. Total no/low alcohol wines represent 5.8% share of total wine sales at $111 million, growing 0.2%. We have recently expanded our range of de-alcoholised wine, including still red, white and sparkling, and are seeing a great customer response. While on a very small base of sales, de-alcoholised wines are growing 100%, with total sales of $1.725m. Low alcohol wines, between 1% and 9% ABV, are also gaining in popularity, with total sales of $106m, up 0.3%, outpacing wines above 9% ABV. Within this assortment, New Zealand has a dominant share at 26% with only four SKUs. New Zealand’s low alcohol sales are $26m and outpacing other low alcohol wines.
How important are sustainability and organic certifications?
LCBO Spirit of Sustainability is our social impact platform. Within this framework, we are working to improve our process to identify sustainable products, and also to amplify the work of our sustainable partners through instore and online promotions, via integrated marketing campaigns. Our research indicates that customers, particularly Gen-Z and Millennials, do prefer brands that align to their social values, including organic and sustainable. However, customers are not necessarily willing to pay a premium for these values, so product offerings need to be priced competitively. Given there is a global standard certification for organic wines, we are able to identify and promote these products for customers. However, sustainability does not have a global definition, and we do not identify products within our system as such. For customers to understand and identify sustainably certified products, New Zealand suppliers should ensure products carry a trust mark and make it easy for customers to access their country’s sustainability protocol to validate the claim. New Zealand Winegrowers and LCBO collaborate on initiatives to drive awareness by promoting the sustainability message for New Zealand.
