The “consumption” section of the Organization of Vine & Wine’s recently published ‘State of the World Vine & Wine Sector 2023’ made for sober reading. Consumption in 2023 was estimated at 221 million hectolitres, down 2.6% versus 2022 and the lowest level since 1996. The growth gains made between that year and the consumption peak in 2007 have since completely unwound – despite the global population having risen by 1.5 billion in the meantime.
The OIV listed potential reasons for the contraction: a not inconsiderable drop in Chinese consumption of 2.0 million hectolitres per annum since 2018, pandemic lockdowns in 2020 (although this was offset by a rebound in 2021), and – since 2022 – energy crises and global inflationary pressures that have “exerted considerable pressure on consumer purchasing power”.
This assessment may betray some recency bias, as the decline in global consumption was already being discussed in the years before the pandemic. If the rise in Chinese demand through the late 2000s/early 2010s was to be removed from the equation, the global consumption decline since 2007 would have been even more precipitous. The underlying causes run deeper: the generally reduced level of discretionary spending power – ever since the 2007-08 global financial crisis – among the more affluent demographics that dominate wine consumption; the often higher cost of wine per serving versus rival beverages; increasingly strident health messaging; and lower interest in drinking alcohol among the Generation Z (born after 1996) and Millennial (1980) generations compared to their predecessors.
The OIV’s graph of the world’s vineyard surface area was not dissimilar to that of wine consumption: area peaked in the early 2000s at over 7.8 million hectares, before gradually falling over the past 20 years to reach 7.2 million hectares in 2023; again, the decline would have been more marked if not for expansion in China. However, the decline was within a narrow band, and the statistics include table-grape area, so it is harder to draw direct wine-related conclusions. Vine removals are certainly on the wine industry’s agenda now. Removals are happening for a range of reasons – for example, long-term drought conditions in northern Chile have meant some vineyards there have been abandoned, while the weak Rand and long-term cost pressures in South Africa have led to older vineyards going unreplaced. However, removals in Chile, California and France, at least, have also been occurring as a consequence of the global wine industry’s structural oversupply, a lack of need for certain wine grapes and/or the inability to sell them at a margin that makes farming viable. As such a supply “correction” is probably a necessity – just look again at that OIV consumption graph – it can be easy for some commentators to forget that such a correction impacts real people, their businesses and livelihoods.
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