Traditionally, the wine industry has been closely aligned with specific cultures. For example, many cultures and countries in Asia and parts of sub-Saharan Africa (aside from South Africa, which is a prolific wine-making region), don’t have a history of high levels of wine consumption.
This makes certain markets difficult to penetrate for the wine industry. However, there are signs that the Asia Pacific market is changing, with increasing sales this year set to continue into 2020.
Wine industry 2020 – what to expect
Established wine markets still lie in European countries. France, Italy and Portugal consume the most, with 35 litres per person every year. Australia comes in at 23.9%, the US at 9.9% and China at 3.5%. The biggest aggregate wine markets are in France, China and the US because they have the bigger populations.
In terms of importing wine, the most important countries are Germany, the US and the UK, because consumption far outweighs home production. Wine industry growth trends show that on a macro level consumption has somewhat plateaued during 2019. However, it’s expected that growth will pick up from 2020. By 2022, the volume of wine sold globally is expected to increase to 2.7 billion cases. According to the latest Vinexpo/IWSR wine and spirits report, the market will be worth around $207 billion by 2020 with a compound annual growth rate (CAGR) of around 3%.
In 2019, the major trend driving the wine industry is that people want to “drink less but better”. This is why value is outstripping the amount sold across every region in the world. This is particularly the case in Asia-Pacific and the Americas. In Europe, increases in value and volume are more level, but the region still dominates worldwide wine consumption.
Impact of global economic trends
Wider economic trends including increased population growth and disposable income in regions like Asia are changing the dynamics of the global industry. While cultures may take time to change, they do change eventually. And some sub-categories of the wider industry are growing faster than others. For example, rose and organic wines are showing significant increases.
And while China’s economy is showing signs of a slow-down, that hasn’t stopped the country increasing its wine consumption throughout 2019. Imports to China were up 8% this year, and this trend is predicted to continue. The report predicts that China will outstrip France by 2020 and become the second most important and valuable wine market globally. By 2022, its value is forecast to reach more than $19.5 billion.
China is also increasing the amount of wine it makes domestically. Its vineyard area has doubled in the ten years up to 2016, and it’s now the second biggest in the world after Spain. China’s land under vine is bigger than that of Italy and France.
Due to the massive potential market in China, producers from around the world must tweak their style to meet the tastes of Chinese consumers. By adjusting everything from packaging and branding to the level of sweetness and drinkability, wine producers will continue to court the Chinese wine market. Big brand names are popular in China, something that matches consumers’ propensity for luxury brands in other areas. But it’s also likely to be because of the relative newness of wine with consumers turning to recognisable and trusted brands.
Other trends in the wine industry that are becoming increasingly competitive include:
1. Sparkling wine increases global sales
Around 10% of the world’s wine produced every year is sparkling. And Europe produces around 80% of this. The most important import markets are the US and UK, as the biggest consumers of sparkling wine drink what’s produced in their own country.
In 2019, Prosecco sales have increased in the US by more than 20%. The UK is still the biggest market in the world for Italian sparkling wine, but sales are finally slowing. This year saw a decline in UK sales for the first time in a number of years, suggesting that the UK may have reached ‘peak Prosecco’. Other sparkling wines such as crémant have increased rapidly in 2018 and 2019.
2. Rose is a major growth category
Rose is continuing to go from strength to strength, thanks in part to the celebrity endorsements on social media. Celebrities like Drew Barrymore and Brad Pitt own their very own rose wineries, pushing the popularity of this wine. It’s a similar sized market to sparkling wine at about 10%.
3. Emerging markets for natural, biodynamic and organic wines
While there is much media coverage of this relatively subcategory within the wine industry, it’s still a small percentage of the global market. In 2017, less than 5% of the vineyards around the world were certified organic, and they have lower yields than traditional vineyards.
Wine actually made from organic grapes stands at around 3% of the global industry yield, with most vineyards in Europe. Around 90% of the organic vineyards in Europe are found in Italy, France and Spain. But this is a growing sector, with French organic wines compounding at more than 20% since 2013, and Italy’s market growing at more than 15%.
These categories reflect the ever-changing nature of the global wine industry as we head into 2020. Climate change, changing consumer demands and increased awareness of environmentally sound winemaking converge to change the face of the traditional global wine industry.
Other trends to watch out for include the growth in consumer interest for luxury brands with solid provenance. This is growing in tandem with an increased taste for other luxury categories and will continue to take off in 2020.