The global wine market is currently estimated at just over 285 billion euros and is expected to expand at an annual growth rate of 3.4 percent to over 356 billion euros by 2022. A huge market, largely dominated by the wine nations of Europe and North America. The USA, Italy, France and Spain are the largest producers and at the same time the largest consumers of wine. In international trade, the European Union has a share of over 50 percent. Worldwide, one million small and large winegrowers account for the production. The French producers hold the highest share of around 84 percent of the most famous brands. In global terms, the demand for wine is increasing worldwide, even in the less traditional markets.
MAIN WINE PRODUCING COUNTRIES | World
MAIN WINE PRODUCING COUNTRIES by COUNTRY 2014-2018
MAIN WINE PRODUCING COUNTRIES by BOTTLES 0,75l
MAIN WINE PRODUCING COUNTRIES by m² Label Material Demand
CHALLENGES IN VIEW
These are considerable volumes behind it. So far so good. However, despite a good outlook, producers find themselves in a drastically changing production and socio-economic environment. This poses challenges for the entire industry that can only be overcome by working together along the entire supply chain.
In summary, these are four key findings of the survey of 1,700 wine industry experts from 45 countries. The study was carried out on behalf of ProWein by the Department of Wine and Beverage Business at Geisenheim University headed by Prof. Dr. Simone Loose and her team.
- 73% of people polled expect concrete effects of climate change on their companies
- Wine producers focus on climate-adapted grape varieties and new oenological practices
- Consumers prefer lighter and more refreshing wines – in contrast to climate development
- Economic and ecological sustainability of outstanding importance for the future of the industry
What the biggest threats and challenges for your wine producers?
- Health policy and the global economic condition are expected to have the strongest effect on wine businesses
- 50% of players expect a strong or very strong effect of climate change on their business.
- Besides the effect strength businesses were also asked about the likelihood of occurrence (not shown here). Of all threats and challenges, climate change is the one with the highest likelihood of occurrence: 73% of wine businesses expect a very likely or likely effect of climate change on their business
In the short term the international wine industry is faced with the challenges of health policy, the global economic situation and growing obstacles to trade. In the long term climate change confronts the sector with major challenges which have already been felt by actors over the past five years.
Grape and wine producers have so far been and will also continue to be hardest hit by climate change. They often only have few alternatives since they are tied to their vineyards in most cases. Through changes in viticultural practices, in harvest management, in oenological practices as well as through the use of irrigation the effects of climate change on grapes and wine are mitigated. For the future, it is anticipated that new grape varieties more tolerant to heat and drought stress will be in great demand. Beyond these adaption measures in existing wine-growing regions wine growing will increasingly shift to cooler growing regions in higher altitudes or further away from the equator.
“All around the grape-growing world we can see the impact of a changing climate. Several wine companies have taken major commercial decisions on the basis of climate-related risks and opportunities, including divesting or acquiring vineyards based on their altitude, latitude and/or access to water resources,” emphasizes Dr. Dan Johnson, Managing Director The Australian Wine Research Institute.
The effects of climate change in wine growing affect all players across the complete wine value chain. Companies at the beginning and in the middle of the value chain have so far largely buffered most impacts. In future, however, these effects will be felt more strongly by marketers and consumers. Besides producers, the bottling wineries as buyers of grapes and bulk wine and exporters as intermediaries between international markets are affected most here by the risks associated with rising volatility of prices, quantities and wine qualities. Companies respond to these mounting risks by both closer cooperation with producers and by shifting to other producers and wine origins.
Wine industry players are seeing increased demand for improved sustainability in the sector. In addition to reduced water consumption the energy needs and therefore carbon footprint of wine production and distribution also have to be minimised. Furthermore, they are faced with the major challenge of also convincing consumers to buy sustainable wine. Uniform industry standards combined with comprehensive information and education campaigns could prove a solution here.
“It is important that Climate Change is the central focus (independent of the wine category) of this well-made ProWein Business Report 2019. We must reduce our emissions drastically and more action is needed on all levels. Every company should have a decarbonization program in place, but the key-word is ‘Taking Collective Action ‘and wineries should set an example and lead. The new initiative IWCA (International Wineries for Climate Action/www.iwcawine.org) makes the collaboration between wineries regarding climate change easier. Hopefully IWCA will be a trigger for other wineries to join, to accelerate or to start the implementation of carbon-emissions-reduction-programs”, underlines Miguel A. Torres, President and 4th generation of Familia Torres. “
The great interest in sustainability shown in the report confirms our own observations on the Nordic market. Organic certified is one example of how sustainable products are communicated to customers. However, we welcome a complement to organic, addressing a wider scope of sustainability issues through national and regional sustainability certifications that are now established in many countries,” underlines Marcus Ihre, Sustainability Manager Supply Chain at Systembolaget.
But challenges also offer exactly the right opportunities. Product differentiation is becoming even more important and diversification strategies will pay off in this traditional segment of the beverage industry. But, as we can also see here, the entire supply chain cannot avoid the issue of sustainability. At the end of the cascade it will affect everyone in the supply chain.
