Although the growth is not enough to cover the considerable economic losses after the closure of the hospitality sector, Spanish online retailers report a considerable surge in wine sales since the lockdown was declared. Tougher restrictions come into effect today but they will not affect their business.
With 85% of total sales in Spain, Bodeboca reported an 85% growth in the week after the state of alarm was declared in Spain compared with the same period last year. “This week [23-29] we are over 100%. Sales are booming,” says Nathanaël Berbessou, who confirms that activity is set to continue today in their warehouses. Uvinum, a market place comprising over 200 retailers across Europe and around 60% of sales abroad, saw sales increasing over 100% in comparison with the previous month, according to co-founder Nico Bour. Both Bodeboca and Uvinum are owned by Pernod Ricard.
With 60% to 65% of orders sent outside Spain, Decántalo doesn’t provide figures but says that they are selling as much as during the Christmas period. Vinoselección, Spain’s largest wine club with 160,000 active members (15,000 of which are based abroad), has seen a rise in demand for wines ranging from €7.5 to €12 similar to the Christmas period. Meanwhile at Lavinia, sales have almost doubled compared to the previous month despite being a multichannel trader with online accounting for barely 25% of their total output.
A pioneer online retailer in Spain since 2005 and with over 50% of sales abroad, Vinissimus also reports a dramatic surge in sales, but does not reveal how much of them can be attributed to the lockdown given that they held an anniversary sale in March and launched a promotion with high discounts between 23rd and 25th of March. They will operate normally this week.
The situation is very similar across Europe. In the UK, Majestic’s website crashed temporarily due to the unprecedented demand, according to Drinks Business. Felicity Carter reported in Meininger a surge of wine buying in countries under lockdown. It seems obvious that some consumers have been stockpiling wine supplies.
A small business like Vinícola de Información in Vigo, a wine store specializing in wines from Galicia and Bierzo with 80% of sales to clients based across Spain, has closed the shop temporarily but has been able to get some income with direct and online sales.
Online players whose business comes mostly from distribution are also experiencing a significant increase in demand. This is the case of Coalla Gourmet, a merchant with several food and wine stores in Asturias, northern Spain. Online sales barely represent 3% of its turnover, but the company has registered a 160% increase over recent days. “Growth is huge and it is likely to continue; we are finding that the online is worth looking into. However, the sales in our physical stores and online do not make up for the losses in distribution,” says Ramon Coalla. Regarding the ban on all non-essential work imposed by the Spanish government, he understands that wine is food and expects to continue delivering wine orders.
Wine is Social, which started out online to later make the jump into distribution, has returned to concentrating on Internet sales. "We’ve expanded our discovery pack offer. We believe that in this situation, selections that include some form of training and discovery can offer our customers greater added value," states CEO Manel Sarasa.
Spanish producers with online stores also reported a significant growth, although as Ricardo Arambarri, CEO of Vintae, points out this channel accounts for a tiny part of total sales. Online sales at Ramón Bilbao represent 0.50% of its total but they grew 100% in March. To make logistics easier they have limited their portfolio to eight items. Carmen Bielsa, retail director at Zamora Comany, owner of Ramón Bilbao, thinks that this crisis “may help to finally undestand that online shopping is just another channel that is particularly focused on convenience; this means reaching people’s homes with ease, but also to serve those who because of their circumstances, are unable to leave their homes -it is precisely in this regard where we are witnessing a rapid growth,” she says.
Other strategies to weather the crisis feature wine packs that can be later enjoyed on virtual tastings. Importers and distributors doing this include Alma Vinos Únicos, La Tintorería or FAP Grand Cru, which is donating part of the profits to charity. The likes of Ramón Bilbao, Grupo Bodegas Palacio, Raventós i Blanc or Artadi have undertaken similar initiatives or are just selling packs of wines online.
Most of the online retailers we contacted agree that the average price per bottle has dropped. “Perhaps, orders were more focused before and now people are looking for more popular, widely available wines,” says Héctor Pla from Decántalo who also thinks that “uncertainty is behind some of the shopping sprees of recent days.” They have also registered a decline on the number of bottles per order: “It has fallen from an average of 11 to 8.” Uvinum’s Bour points out that despite the fact that the average purchase hasn’t change, the average price per bottle has dropped below €10.
While Vinissimus estimates average losses of €1 per purchase, Berbessou reports a drop from €15 to €13.5 per bottle in Bodeboca. “Demand grows for everyday wines like Protos, Ramón Bilbao or Cvne Crianza, which are widely available at supermarkets, but are now being purchased online,” he adds.
According to Manuel Hevia, general manager at Vinoselección, the lockdown has brought new clients, often as a result of recommendations from existing ones, and most interestingly, “the return of people who hadn’t bought from us for over two years”. He also notes that “campaigns to attract new customers are working very well these days”.
In contrast, Vinícola de Información has not experienced any variations in terms of average price or style, thanks to its loyal customer base which demands the type of wines the store specializes in. The novelty for them is the arrival of new clients as a result of direct recommendations from the existing ones.
Ramón Coalla, for his part, compares online customers to those buying in his physical food and wine stores which remain open: “While online purchases are driven by connoisseurs, consumers are returning to classic regions, mainly Rioja and Ribera del Duero. It also happened in 2008, when a great deal of the efforts to promote emerging regions of the time such as Priorat and Jumilla were lost”.
Except for confined towns like Igualada in Catalonia and some areas of Italy, or freight companies limiting their activity as is the case with DHL in France, according to Nico Bour, the online retailers contacted by SWL confirm that logistics are working fairly reasonably, at least until the ban of non-essential activity. There have been occasional contretemps such as “orders stopped on the border with Portugal as they were not considered essential” in the case of Bodeboca, or changes in international shipments at Vinissimus in order to provide a better service to its customers.
In general, delivery times have been delayed due to courier overwork and the introduction of safety measures, including the limitation of one operator per van. Delivery employees are avoiding direct contact with customers and many companies that used to request signatures from recipients are no longer asking for them.
However, in Vigo, Tensi López say that although couriers cannot guarantee deliveries, their performance is better than ever: “There is very little traffic and customers are at home, so there are far less problems”.
Security measures also affect online operators' warehouses, whether owned or outsourced. They work with less staff to maintain safety distances and often in shifts as is the case of Vinissimus and Decántalo. The latter has established two groups that work on alternative days in order to avoid infections. As a result, there are less workers to handle a larger number of orders.
As well as taking similar measures in its warehouse, the 60 workers at Vinoselección's contact centre (they represent over 50% of the workforce and their department generates 35% of the sales) are now working from their homes.
Wineries have been supplying wine normally ("except for those that have closed or are in confined areas", points out Berbessou) as opposed to distributors ("many have taken forced vacation; some have reduced the frequency of delivery and others have increased it", says Vicens).
Everyone agrees that the current situation has raised a great deal of uncertainty. The prospect of the government imposing a ban on logistics operations remains on the horizon. “What I've learned from this crisis is that you can't make any kind of prediction,” says Hector Pla.
The crisis has changed the way wineries see online retailers. “Since the traditional distribution channels are not working, we are the new El Dorado,” notes Nathanaël Berbessou from Bodeboca.
Manel Sarasa from Wine is Social confirms, "We are being contacted by many wineries that want to participate in the club and/or get listings in our store."
“The crisis is having a great impact on producers and many are suggesting promotions and discounts,” acknowledges Héctor Pla, yet he thinks that “brand positioning at this moment is a sensitive issue.”
While Uvinum offers free shipping for purchases exceeding a certain value, Vinissimus met the demands of the wine industry with a special sale of 1,500 wines with 20% discount between 23rd and 25th March -something unthinkable just a few weeks ago. 180 producers joined the initiative. “We were seen as a necessary evil until now, but online sales will emerge stronger for maitaining wine consumption as opposed to other channels which have collapsed,” says Toni Vicens.
In Spain, e-commerce is less developed than in other European countries. There are no reliable studies measuring its share of wine sales. Some interviewees estimate that it ranges between 2.5% and 3%, a very low rate compared to more mature European markets like Germany and France, that are closer to 10%, or the United Kingdom, which has surpassed this threshold.
Manel Sarasa of Wine is Social, believes that "this crisis will speed up the process of digitalisation in the market."
According to Nico Bour, “whether we like it or not, the crisis has created a new consumer who must stay at home, doesn’t want to do without certain pleasures and is ordering online for the first time. Providing that the experience is positive, part of their purchases will shift to this channel.”
By March 27th, Vinissimus had registered a 10% increase in new customers over the same month last year. For Nathanaël Berbessou, this benefits online sales on the short term because “the biggest challenge for any online retailer is to secure the first purchase,” yet he believes that there will be a boomerang effect. “When people are able to finally go out, they will yearn to buy things outside from the home.”
Lavinia’s Juan Manuel Bellver agrees: “Some people will discover the convenience of buying online but I think consumers will generally return to their former habits. I find prescription and face-to-face purchases more enjoyable. People will continue to appreciate chatting with a sommelier. It makes sense that online sites gain market share -this is the future- particularly in the case of deliberate purchases.”
Ramón Coalla is very optimistic and thinks that "online sales will grow in the future". He also believes that the hospitality industry will lose ground in favour of traditional retail stores. “In Mediterranean countries like Spain and Italy hanging out is part of the culture, but this is going to be reined in,” he says. “My wine bars usually get crammed during the weekend, but I cannot imagine now a guy making his way to the counter among the crowd.” Fear derived from the pandemic leads Bellver to question "the future of tasting show rooms with the likes of 300 people spitting in a limited space.”
For Berbessou, the greatest achievement maybe that “although wine is not a staple produce, it has remained strong and has proved to be a necessary pleasure in difficult times. Opening a €8 or €9 bottle is an affordable pleasure.”
Looking at a somewhat distant future, Nico Bour points out that “in Spain, young people who are already shopping online have yet to gain their independence and purchase products for their homes. It is a generational issue which is about to happen.”
For Berbessou, "it is fascinating to see how, in just 10-15 years, the online channel has become an important part of our lives and how it works as a social link. This is the big difference between this crisis and the previous ones,” he points out.