The Future of Wine
The Future of Wine - what can we expect? A summary of some key take-aways from several industry reports on the biggest wine trends for this year (IWSR and OIV).
Unsurprisingly, most markets report a continuing decline in wine volumes, particularly in the traditional wine drinking markets of Europe and the US. Competition from other alcohol categories and a growing interest in health, fitness and well-being have played a role in this decline, however wine producers are also up against the simplistic, but wide-reaching narrative from 'prohibitionist' groups. (Felicity Carter recently wrote an important piece on the impact of this movement on the wine sector).
On the upside, the reports show that the average spend on a bottle of wine has remained stable (although it is under threat as younger consumers (most consumers?!) feel the pinch of inflation). Overall however, these reports find some evidence that premium wine is suffering less than value wine, so the "less but better" philosophy may have gained some traction, although any real growth appears to be coming from newer markets outside of Europe and the US, including Asia and South America. Views are mixed on whether wine is seeing an increase in average spend - a recent article in the Wine Economist reports that the decline in wine likely owes less to demographic factors and more to economic pressures - so taking a global view may skew the reality in the traditional wine markets.
The impact of climate change continues to be a worry for the industry, as weather patterns change and become less predictable. In late April a hard frost struck northern Europe, (including vineyard regions in northern France, Austria and Germany and as far south as Spain), similar to that of 2021, as well as devastating localised hail events. These weather events are particularly damaging for vineyards in late Spring when the delicate vine buds are vulnerable to severe damage and, in some cases, the entire crop has been lost.
An increasing awareness among consumers of the importance of sustainable viticulture and wine production is evident. The report states that "overall, sustainability is an increasingly high priority for consumers, with two-thirds of regular wine drinkers in the biggest markets describing it as important to them – and as high as 70% of regular wine drinkers in the US, and 94% in China". There’s no doubt that consumers are increasingly looking for reassurance of environmental credentials and the onus will be on producers in this regard.
The industry regularly discusses the challenge of recruiting new and younger drinkers to the wine category. It seems obvious that we need to embrace the cultural views of young people and bring food and wine culture and tradition to them, rather than expect them to come to wine by themselves. One positive view from these reports is that the younger consumers who are recruited into wine, are increasingly adventurous, confident and engaged, making them more likely to be curious about exploring wine.
The NOLO sector is gaining traction as non-alcoholic wine becomes part of the mainstream conversation. Its share continues to grow, albeit from a low base, with more interesting products being produced from regions all around the world, especially the US, with sparkling wine proving particularly interesting. Premiumisation (especially on packaging but also on "clean" or "low sugar" options) has been strong in this category, as consumers seek a real wine experience from their non-alcoholic choice.
The evolution in drinking preferences in terms of wine style makes for interesting reading. Rosé wine has grown significantly in the twenty years between 2001 and 2021 and now represents 8% of total market share. White wine plantings have significantly increased over the same period and white wine (including sparkling which has seen a boom) totals 49% share. Red wine is in decline and the market share has reduced from 48% to 43%.
The biggest take-away is that the wine industry cannot afford to stand still. Innovation remains key to success and a willingness to adapt to emerging trends is critical. This latter could pose a challenge for producers in traditional wine regions, where regulations are strict and, in many cases, were created many decades ago, arguably for a wine drinking population that is dying out.
It’s safe to say, there are interesting times ahead.