Recent figures in the annual report of the International Organisation of Wine and Vine (OIV) confirm that the world wine industry is undergoing considerable change. In particular, long-dominant European nations are finding their positions strategies challenged by the emergence of countries such as China, both as producers and consumers.
Globally, demand has risen slightly, to 242 million hectolitres (mhl), down from its peak of 250mhl in 2008 but up from the low of 240mhl in 2014, and there are signs of long-term growth. Yet per-capita consumption is stable or slightly falling among the French, Spanish and Portuguese – once upon a time daily wine-drinkers. What has more than filled up the gap is the global market, with occasional consumers around the world drinking wine one to three times per week.
Another encouraging sign for the industry: Wine is finding new customers in countries with large populations. In the early 1990s the US market was ranked sixth in the world, but by 2016 it had climbed to the number-one spot, at 31.8mhl, followed by France (27mhl), Italy (22.5mhl) and Germany (20.2mhl). A substantial market has already been established in Brazil, in spite of the negative economic trends in 2017, and there are great expectations in India, still to be confirmed…
With these new markets, often being driven by emerging local production, the number of wine-producing countries is also increasing. The example of Australia is most familiar, but fewer with the experience of countries such as Canada. In fact, consumption in Canada has been rising steadily for some years. The government is making efforts to stimulate national production and hopes to be able to export Canadian wine. Local production is even emerging in Ethiopia, where the highlands are well-suited to grape cultivation and there is a substantial non-Muslim population (approximately 66% out of a total of 100 million).
China on the rise
China is leading the industry shake-up, by virtue both of its size and determination. Wine enjoys great symbolic value there, linked to the fact it’s a product of the land and has strong historical ties, yet it also functions as a “high class” social marker. Either way, China is now the sixth leading consumer of wine in the world, 17.3mhl, just behind Germany, and with a 2017 population of 1.4 billion, the potential is considerable.
With a new market and a government working to build the foundations for a national wine industry, China has now the second largest area under cultivation in the world, 847kha (thousands of hectares), up 17% over 2015. In 2015 the country overtook France (now with 785kha) and now second only to Spain (975kha). China is expected to overtake Spain in the next five years. Vines are grown in dozens of provinces, including Shandong, Hebei, and Tianjin, as well as the autonomous regions of Xinjiang, Ningxia and Inner Mongolia.
Whatever the country, where there is local production consumers tend to favour it. As they become more familiar with wine, they begin to try those from other countries, and this represents an important growth lever for international trade. That’s why 40% of the wines produced globally are currently exported, compared to just 20% in the early 1990s.
Although how we consume wine is shaped to a large extent by cultural context, knowledge of the world of wine, the techniques for analysing its sensory qualities, and trends set by certain internationally known experts also play a part. Countries with newer wine industries must therefore introduce their wines to other countries while steadily building recognition and a kind of wine-making pedigree. This too has the effect of stimulating international trade.
France continues to lead by value
For the French wine industry, while the landscape has shifted the foundations remain solid. France continues to challenge Spain and Italy for the title of the world’s number-one producer by volume, and it continues to lead the world in terms of value, as it long has. France produced 43.5mhl of wine in 2016 compared to 50.9mhl for Italy (15% less) yet the value of France’s exports was 8.2 billion euros compared to 2.6 billion for Italy – over three times more, and 28.5% of the total value of the global wine market.
The figures confirm that French wines are perceived and purchased as high added-value products, and France continues to excel at capitalizing on the quality of its wines. While Spain is the leading exporter by volume, the price of Spanish per unit remain low on the international markets, with a total value of just 2.6 billion euros.
One immediately thinks of Champagnes, revered and undisputed as the sparkling-wine par excellence, as well as the great Bordeaux and Burgundies, and more recently, the Provence rosés. French wines are also exported to more countries than wines of any other nationality and generally speaking, any new importer starts by “listing” French wines before looking at any other foreign producers. This is a reflection of what the French industry has been able to convey to wine lovers the world over in terms of image, quality and diversity.
In the coming years, as wine-producing countries continue to seek to maintain and expand their domestic and international market shares, they’ll also need to adapt to ongoing climate change. For example, Brazilian production dropped 55% between 2015 and 2016 because of a strong El Niño, while production fell in drought-stricken South Africa. An increasingly strategic approach is being developed, including specialized research schools. At all levels around the world, stakeholders are engaging with governments and decision-makers to increase the industry’s competitiveness and better tackle these new international challenges.