decanter.com — Rudy Ruitenberg
The world wine industry had another tough year in 2023 as inflation pushed up prices and eroded household budgets, prompting consumers to buy fewer bottles.
Wine consumption fell 2.6% to an estimated 221 million hl last year, slipping for a second year to the lowest level since 1996, the International Organisation of Vine and Wine (OIV) said in its annual report on the state of the industry. That’s equivalent to around 800 million fewer bottles being uncorked around the world.
‘Inflation has been a key factor in the past two years, because it has significantly increased production and distribution costs, while also reducing consumers’ purchasing power,’ OIV Director General John Barker said in an online press conference.
Wine drinking fell in the five biggest markets, led by the US and France, though Barker raised a note of caution about interpreting the preliminary data. The OIV is seeing reports that distributors in key markets have been importing less, instead selling down stocks to cope with inflationary pressure, which may affect calculations of apparent consumption, the director general said.
Global consumption has also been affected by a steep decline in China’s wine drinking in recent years, with volumes in 2023 less than half of what they were just four years earlier, according to the OIV. Additionally, demographics and lifestyle changes are driving an underlying trend of falling wine consumption.
‘Given the very complicated influences on global demand at the moment, it’s difficult to know the precise extent to which the recent decline in consumption is a short-term or a long-term feature of the market,’ Barker said.
Global wine production fell 9.6% to 237.3 million hl in 2023, below the OIV’s November estimate after Italy and Spain significantly reduced final output figures. The vintage is the smallest since 1961 after ‘extreme’ weather slashed grape harvests around the planet.
The difficult harvest will at least prevent a significant discrepancy between global supply and demand, according to Barker. It’s probably ‘a little bit too soon’ to say what will happen to wine prices and consumption in 2024, though inflationary pressure is waning, he said.
‘The biggest driver of the price increase appears to have been inflation in 2023, and that seems to be easing off this year,’ the director general said. ‘Whether or not the smaller 2023 vintage will affect supply and demand balance and prices in this respect probably depends a little bit on the extent of stock holdings globally.’
The value of global wine exports fell 4.7% to €36bn, still the second-highest on record as higher prices partly made up for lower shipments. The OIV said the average wine-export price rose 2% to €3.62 per litre, the highest ever, with inflationary pressures again the likely explanation.
‘The small 2023 harvest in the Northern Hemisphere has for the most part not yet reached the market,’ Barker said. ‘Given the current destocking, and the average to smaller size of recent global vintages, it will be interesting to observe what impact a small harvest will have on global trade in terms of both volume and pricing.’
Sparkling wines such as Champagne and Prosecco showed the most resilient export performance, with the value of shipments rising 1%, even as volumes fell 4%.
The entire category of sparkling wines has seen ‘incredible growth’, with production and consumption tripling since 2002 said Giorgio Delgrosso, the OIV’s head of statistics, While Italy’s Prosecco has led the surge, Champagne, Cava and Germany’s Sekt are all doing extremely well, he said.
‘All the data highlights that sparkling wine is by far the category that is most successful in the market,’ Delgrosso said. ‘It’s certainly a category that is performing extremely well, and it is something that can help the industry navigate these turbulent times.’
In addition to sparkling wines, some premium, high-priced products continue to do well, particularly high-end reds, Barker said.
France remains the leading wine exporter by value, boosted by its shipments of Champagne, even as Italy and Spain exported more by volume. All of the world’s biggest wine suppliers reported lower export volumes last year.
The OIV also reported its first estimates for Southern Hemisphere wine production, which may rise around 5% in 2024, based on early data. Australia may lift volumes 21% on favourable growing conditions, while initial estimates for Argentina are for a 27% bigger vintage, according to Barker, who said the figures are subject to revision in the coming weeks or months.