The global wine industry faces another tough year in 2023, with inflation driving up prices and eroding household budgets, prompting consumers to buy fewer bottles.
The International Organization of Vine and Wine (OIV) said in its annual State of the Industry report that wine consumption fell by 2.6% to an estimated 221 million hectares last year, falling for a second year to the lowest level since 1996. This equates to about 800 million fewer bottles being sold. Open around the world.
“Inflation has been a major factor in the last two years, because it has led to a significant increase in production and distribution costs, while also reducing the purchasing power of consumers,” John Parker, director general of the OIV, said in an online press conference.
Wine consumption fell in the five largest markets, led by the United States and France, although Parker cautioned against interpreting the preliminary data. The Director-General of the Office said that the Office sees reports that distributors in major markets are importing smaller quantities, and instead selling their stocks to deal with inflationary pressures, which may affect apparent consumption accounts.
Global consumption has also been affected by a sharp decline in wine drinking in China in recent years, with volumes in 2023 being less than half of what they were just four years ago, according to the OIV. In addition, demographic and lifestyle changes are driving the underlying trend of declining wine consumption.
“Given the very complex impacts on global demand at the moment, it is difficult to know the precise extent to which the recent decline in consumption is a short-term or long-term feature of the market,” Parker said.
Global wine production fell 9.6% to 237.3 million hectares in 2023, below OIV's November estimate after Italy and Spain significantly lowered final production figures. The grapes are the smallest since 1961 after “extreme” weather reduced grape yields across the planet.
According to Parker, a difficult harvest will at least prevent a major discrepancy between global supply and demand. He said it may be too early to say what will happen to wine prices and consumption in 2024, despite inflationary pressures easing.
“The biggest driver of price increases in 2023 seems to be inflation, and it seems to be easing this year,” the general manager said. “Whether or not the smaller 2023 model will impact the supply-demand balance and prices in that regard probably depends a bit on the extent of stock holdings globally.”
The value of global wine exports fell by 4.7% to €36 billion, the second highest value ever recorded, as higher prices partly offset lower shipments. The average export price of wine rose 2% to €3.62 per litre, an all-time high, with inflationary pressures again a likely explanation, the OIV said.
“The small 2023 crop in the Northern Hemisphere has not yet reached the market,” Parker said. “Given the current stock liquidation, and the medium to smaller size of recent global varieties, it will be interesting to observe what impact the small crop will have on global trade in terms of volume and price.”
Sparkling wines such as Champagne and Prosecco showed the most resilient export performance, with the value of shipments rising by 1%, even as volumes fell by 4%.
The entire sparkling wine category has seen “amazing growth,” with production and consumption tripling since 2002, said Giorgio Delgrosso, head of statistics at OIV. While Italy's Prosecco led the increase, Germany's Champagne, Cava and Sect performed very well. He said.
“All the data shows that sparkling wine is the most successful category in the market,” DelGrosso said. “It is definitely a category that is performing very well, which can help the industry get through these turbulent times.”
In addition to sparkling wines, some premium and expensive products continue to perform well, especially fine red wines, Parker said.
France remains the leading wine exporter by value, supported by its shipments of Champagne, even as Italy and Spain's exports increase in volume. All of the world's major wine suppliers reported lower export volumes last year.
The OIV also announced its first estimates for Southern Hemisphere wine production, which could rise by about 5% in 2024, based on early data. Australia could lift volumes by 21% under favorable growth conditions, while initial estimates for Argentina suggest a 27% increase, according to Parker, who said the numbers were subject to revision in the coming weeks or months.
