Today's post is by John Sears. One of the first Sommeliers to be certified in Saint Louis by the early 1990s, John is one of the oldest, most experienced, and internationally peer-recognised Sommeliers in the world with a very diversified background in the field of food & beverage. On the west coast, he worked closely with a number of fine wine establishments including the now-defunct Atwater’s in Portland, Oregon, a Wine Spectator Grand Award-winning restaurant.
Wine is an art and winemakers are artists but, similar to all other romantic artistic genres which generate desirable and valuable luxury market artistic pieces, it is a huge global business that retains its own place in the international economy overview affecting all who appreciate its art form from casual consumers to cultured collectors.
“Come gather 'round people wherever you roam And admit that the waters around you have grown And accept it that soon you'll be drenched to the bone If your time to you is worth savin' Then you better start swimmin' or you'll sink like a stone For the times, they are a-changin'…."
The world is in the midst of a volatile storm in a vast sea filled with a diverse number of industrial entities involving several factors including climate change, natural disasters, a post-Covid environment, inflation, labor force issues, supply chain concerns, military conflicts and even banking collapses creating a very unstable global economy which is affecting all of these business venues. Specifically applicable to the wine market are also current glass shortages and generational consumer drinking preferences across the categorial board of wine, beer and spirits.
It's a brave new world in the changed post Covid-19 business environment.
The global market for wine estimated to be around U.S. $383 billion in 2023, is projected to reach around $528 billion by 2030. The United States market alone is estimated at $103 billion. Obviously, the most established wine markets are located in Europe. Portugal, Italy and France retain the highest per capita consumption at over 35 litres per person per year. This is in contrast to 23.9 for Australia, 9.9 for the United States and just 3.5 for China. Of course, Europe remains the world’s largest consumer center with 58% of the volume and 50% of the total value. The largest combined markets are the United States, China and France because of their larger populations while the biggest importers of wine are Germany, the United States and the United Kingdom with production being much lower than consumption.
Sparkling wine accounts for about 10% of the total amount of wine produced a year globally with Europe producing 80% of this. The largest consumers of Sparkling wine produce the majority of it domestically leaving the United States and the United Kingdom as the most significant import markets. Prosecco is leading the league in the Sparkling wine game in the United States with sales of over 20%. Since the United States imports more Italian wine than from any other country and Prosecco has a much more approachable price point, it is an obvious choice for most casual consumers. The United Kingdom has been established as the world’s largest market for Prosecco actually consuming a third of the total amount produced each year.
Somewhere in the middle of red and white we have Rose as another major growth category.
Exports from Provence are rising to over 30% while the United States domestic Rose consumption has increased 100%. There is also an extreme amount of press in the wine world currently regarding a fairly controversial segment of natural, organic and biodynamic wines. In 2018, around 5% of the world’s wine grape vineyards were certified organic or biodynamic a total of around 780,520 acres of vines. These vineyards produce a significantly lower yield on average relative to conventionally managed vineyards so wine produced from organic grapes is only about 3% of the total and still many organic grapes are treated with chemicals in the winery and they cannot be considered natural or organic. Most organic vineyards are in Europe with approximately 80% of the global total basically within only three countries: Spain, France and Italy, not surprisingly.
Other significant areas to consider is the luxury brand wine category which continues to grow at a steady rate.
While quality and the true value of wine is subjective, a few definite market drivers can be isolated. Scarcity is an obvious one also relating to supply and demand along with history of which many producers are able to document many generations of winemaking in their families. Another consideration that should not be underestimated is the influence of wine critics.
“The Government’s view of the economy can be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it and if it stops moving…subsidise it!"
As a closing observation, there is a world class historic network of merchants and collectors in Bordeaux called “La Place de Bordeaux” which has been in operation for more than 800 years. Originally intended to sell only the wines from Bordeaux, since 1998, the marketplace has evolved to include some of the most prestigious wines from around the globe. This complex distribution system is made up of over 300 negociants who sell the wines to the consumers. As each year passes, more and more non-Bordeaux wines are being traded on La Place de Bordeaux. There are now more than 100 wines from eleven nations providing this unique connectivity network.
A report by Liv-Ex (The London International Vintners Exchange which is the global marketplace for the wine trade) warns that the continued enlargement of an increasingly crowded La Place may make it more difficult for newer arrivals to find an audience in the future despite the system’s undoubted benefits.