Volume of wine produced globally in 2017 lowest in 60 years

Volume of wine produced globally in 2017 lowest in 60 years – Nicholas Corfe at Go Brazil Wines discusses the impact (or lack of);

News from the OIV ( International Organisation of Vine & Wine ) that the volume of wine produced globally in 2017 was the lowest in 60 years has not come as a surprise. Indeed, the likely impact of both severe frosts and drought on vineyards in Europe’s key producing countries – France, Spain and Italy – had been widely forecast.

While some of the shortfall will be made up from stock or from new sources of supply, price increases from the affected areas look inevitable. But, perhaps perversely, this might have a negligible difference on UK wine consumption. Why? Because consumers have become used to a steady upward trajectory in prices for many years, with increases in excise duty a key reason. Secondly, and more importantly, consumers are increasingly seeking to trade up and are prepared to pay for a more ‘premium’ product: although UK per capita consumption of wine has been broadly static in the last ten years ( at around 21 ltrs p.a. ), in value terms it has been growing, driven in particular by the popularity of sparkling wines. We are seeing a similar trend in the beer market, with brewery giant Carlsberg only last week reporting reduced market share in the UK ‘due to premiumisation’ – effectively, consumers deserting mainstream brands and turning to craft beers.

Despite the fact that not all consumers are in a position to trade up, the ongoing trend for premiumisation in the drink ( and food ) sector represents a significant opportunity and one that producers ignore at their peril. At its most basic, it affords companies an opportunity to build margin – something that seems to have been forgotten by the recently collapsed Conviviality group – while also encouraging innovation and creativity.

Meanwhile the new Minimum Unit Pricing ( MUP ) law in Scotland, although introduced for health reasons, seems to reinforce the message that the era of truly cheap booze may finally be over.