Intel and Insights: Opportunities and challenges in Canada
With a population of 40 million and growing, Canada remains one of the largest wine-consuming nations globally, presenting opportunities and challenges for New Zealand wine producers.
However, the issue lies in the frequency of wine consumption among these drinkers. Many are drinking less or diversifying their alcoholic beverage choices, with options now including hard seltzers, RTDs, fruit blends, low alcohol, alcohol-free beverages, and THC infusions.
The competition for ‘share of throat’ has intensified, and the consumer demographic is also shifting. 10,000 Americans turn 21 every day in the US and most of the population growth is led by Hispanics of various origins. Wine is much less developed than beer and spirits among these growing segments. Baby Boomers, a key wine-drinking demographic, are ageing, while Generation Z approaches alcoholic beverages with more caution and different values.
Nonetheless, there are still category winners, including New Zealand wine, Danny said in a recent webinar with New Zealand Winegrowers members. Of the 100 wine brands that added the most dollar growth year on year, nine were from New Zealand. This is significant given New Zealand’s 3.6% value share of the US off-premise wine market.
New Zealand wine, particularly Sauvignon Blanc, performs exceptionally well in the US. It holds a 47% share in the Sauvignon Blanc category, surpassing US domestic Sauvignon Blanc by seven percentage points. In the top two Sauvignon Blanc price tiers ($11.00 to $24.99), New Zealand wines dominate with a substantial market share.
In the traditionally important onpremise channel, New Zealand Sauvignon Blanc leads with a 57% share compared to 34% for US Sauvignon Blanc.
Beyond Sauvignon Blanc, New Zealand Pinot Gris is growing rapidly, now ranking as the third most popular country for Pinot Gris/Grigio in the $11 to $15 price range, following Italy and the US. New Zealand wines are also strong in the $11 to $25 price range, where table wines are performing well. The demand for lighter, fresher white wine styles is growing, with whites generally outperforming reds.
Danny identifies other growth opportunities, including alternative packaging (375ml glass, premium cans, and tetra) and the ‘better for you’ segments like organic, non-alcoholic, and lower/ lighter alcohol wines. The lighter wine segment is a significant growth area for New Zealand brands in the US, growing at over 20% and representing 14% of overall New Zealand wine brand sales.
He sees a promising future for nonalcoholic wines, noting that if that category could capture the same 1% share as beer, it would translate to an additional 4 million cases. For New Zealand, capturing just 10% of the no alcohol market would mean 400,000 cases of growth, largely incremental since 90% of non-alcoholic buyers also purchase alcoholic beverages. This segment also offers an opportunity to attract new consumers seeking sophisticated adult non-alcoholic drinks.
Despite the challenging market, Danny concludes that New Zealand’s wine performance in the US is positive. There is potential to grow the share of Sauvignon Blanc in underdeveloped states (West and Northeast), expand the Pinot Gris footprint, and build on the momentum in the “better for you” segment, bolstered by early NPD and category development through the NZ Lighter Wines initiative.
Richard Lee is Intel and Insights Specialist at New Zealand Winegrowers.
