"Huaxia Wine News" reporter Xu Feiyuan
The latest ProWein Business Report notes that the wine industry is on the precipice as wine consumption continues to decline and the global wine surplus continues to intensify.
The report, entitled "Ways out of the crisis", was carried out by the University of Geisenheim and surveyed more than 2,000 members of the wine industry, from producers to retailers.
Presenting the findings of the report, Professor Simone Loose, director of the Institute for Wine and Beverage Business at Geisenheim University, said that the external economic crisis was the biggest concern for industry members, and that "the challenges and risks facing the industry are mainly dominated by economic factors. ”
In the 2023 survey, 73% of respondents cited rising costs as a threat to their companies, down slightly from 85% in 2022. 59% are mainly concerned about a global recession, and 48% are concerned about a reduction in wine consumption, up sharply from 30% in 2022.
The survey also found that 45 per cent of people believe that climate change is a major threat, a slightly lower proportion than expected. According to the International Wine Organization, global wine production in 2023 will be at its lowest level in 60 years. "Climate change is in the middle of the pack because short-term economic issues are more important at the moment," Loose explained. ”
As for how businesses are responding to economic challenges, especially in terms of cost and profitability, while 64% of producers and traders said they aim to reduce costs, only 6% mentioned layoffs.
There used to seem to be a general perception that consumers are buying less, but buying better – a trend that is said to have started during the pandemic, when no one could go out, so they would spend their money on a better bottle of wine. However, the latest ProWein business report shows that the market share of premium and mid-range wines has declined. The massive/low-price segment is expected to see growth over the next two years.
Among the global regions surveyed, the largest declines in premium wine sales were North America (USA and Canada) with a decrease of -42% and Scandinavia (Finland, Denmark, Norway and Sweden) with -43%. For the mass category, the Netherlands (20%), Austria (18%) and Switzerland (15%) saw significant growth, which may come as a surprise given the very high average income.
However, the increase in wine sales does not mean that there has been a much-needed increase in global wine consumption. 76% of respondents said that a decrease in disposable income was the main reason why people were reducing alcohol consumption. In contrast, 63% attributed the decline in part to health trends. However, Loose warned: "If the economy picks up again, the downward trend in consumption will not go away." ”
Twenty-nine percent believe that a change in preference is a factor, for example, that potential wine drinkers are attracted to beer and spirits. Loose points out that the "big players" in the beer and spirits space have an advantage because they have more promotion budgets that they can use to promote their products, which most wine producers can't.
Admittedly, these numbers are not pleasant to read. However, despite the pessimism in the industry as a result of the survey, it at least demonstrates an acknowledgment of the full range of problems and offers a possible solution to the crisis.
According to Loose, the secret to securing the future of the wine industry lies in a "holistic" approach that combines economic sustainability with improved communication. "It doesn't matter where you start. She explained.
Moreover, while self-described wine connoisseurs may be delighted by the seemingly difficult knowledge of wine, one factor that keeps young drinkers away from wine may be its complexity – 62% of producers and 57% of traders believe that wine needs to be easier to understand in order to attract new consumers.
Of course, the desire to change is one thing, but how quickly producers and traders adapt to these challenges is another thing entirely.