Between climate change and the COVID-19 pandemic, the wine, beer, and spirits industries face a range of changes. Trends that emerged recently are expected to last beyond 2022, bringing both challenges and opportunities.

Trends Impacting Wine, Beer, and Spirits Companies

Several shifts in the industry are likely to have a lasting effect well into the next few years, including:

• Concerns about weather. Companies in wine-growing regions are exploring nontraditional growing areas due to environmental conditions and insurance costs.   
• COVID-19 adaptations. The pandemic changed consumer habits and led to a disruption in supply chain distribution. Business owners are asking themselves how tasting rooms will operate as restrictions ease and people eat and drink out again.
• Low- or no-alcohol by volume (ABV) beverages. These products were established in the beer sector and are taking shape in the spirits and wine sectors. Hard seltzers recently benefited from this trend as well.
• Cannabidiol (CBD). As low- or no-ABV beverages gain popularity, consumers are growing more interested in CBD infusions.
• Spirits. There’s more demand for spirits such as whiskey and bourbon.
• E-commerce. Customers have adjusted to shopping online and will likely continue.
• Sustainability. Environmental initiatives are a greater focus for consumers and companies. Consumers want companies to disclose how they make products and their environmental impact.

Future Opportunities and Challenges

All these trends foster business-related opportunities and challenges that companies will likely face.

Challenges

Insurance

Insurance costs significantly increased due to wildfires.

Distribution

Getting products to market shelves may be difficult due to disruptions in the distribution chain, including a decrease in truck drivers.

Craft beer businesses in particular may struggle to expand out of their local regions and gain shelf space as bigger companies acquire independent distributors.

E-commerce

Distribution challenges could push businesses to consider investing in e-commerce.

Companies that sell online must navigate several factors such as tax nexus, the complexities of Amazon, cybersecurity implications, and additional challenges.

Labor

Labor shortages are affecting many industries.

Wineries specifically are struggling to find laborers to work in the vineyards. Both wineries and breweries face staffing challenges for tap rooms as well as finance and accounting.

To add to the challenge, wages are increasing across the board.

Opportunities

Transactions

With an increase in companies going public through an initial public offering (IPO) or special purpose acquisition company (SPAC), businesses should assess their current position and structure.

Business should also prepare for changes, whether a spin-off, merger, acquisition, or restructuring event.

Growth in New Locations

There’s potential for wine companies to expand in nontraditional locations such as New York, Michigan, Texas, and Virginia.

Whiskey and bourbon products also face that same possibility for growth and expansion into new areas such as Texas.

We’re Here to Help

For insight and guidance into navigating industry trends, challenges, and opportunities, contact your Moss Adams professional.

You can also learn more about our Wine, Beer & Spirits Practice and find information on related topics.