In a recent report, the IWSR outlined seven key trends affecting the global wine industry, identifying structural volume declines, changes in market demographics, and areas for growth.

The seven trends are:

1. Structural declines

While there are opportunities in growing markets, especially in the Asia Pacific region, it has not offset the long-term structural decline of wine. Major wine markets such as France and Italy have been experiencing this decline for decades. The US, the most valuable wine market in the world, also appears to be in an extended downcycle. Emerging wine markets are not shielded from this trend either, with Brazilian consumers switching wine for beer following an initial surge in wine consumption during the pandemic.

However, sparkling wine seems to be bucking this trend, with the ‘other sparkling’ segment increasing volumes in 14 out of the top 20 markets between 2019 and 2023. While still wine volumes fell by four per cent in the 20 key markets in the first half of 2023, sparkling volumes rose by one per cent. Sparkling wine is expected to deliver a further volume CAGR of one per cent from 2022 to 2027, compared to a one per cent CAGR decline for still wine.

However, China and emerging Asian markets have benefited from expanding consumption and premium-and-above sales, especially following the on-premise reopening in China in 2023.

Some common factors influencing this widespread decline are a decrease in alcohol consumption, reducing participation in wine from younger legal drinking age (LDA) consumers, and increased competition from other beverage alcohol categories, particularly RTDs, at social and non-food occasions.

2. Recruitment challenges

The wine category is increasingly reliant on older drinkers, due to ageing populations in Europe and North Asia and a difficulty recruiting younger LDA consumers in some markets.

There are many differences between today’s younger LDA consumers and those of 10 to 15 years ago. Generally, LDA Gen Z consumers are lighter alcohol users compared to preceding generations at the same age, and increasingly gravitate towards non-traditional segments such as RTDs, cocktails, and craft beer.

Millennials are being recruited in some markets, such as the US, but continue to be lighter drinkers and tend to be discovery-oriented, chasing short run trends rather than maintaining loyalty to brands or regions. However, millennial consumers are more willing to trade up through price tiers if they are offered clear laddering options and premium cues.

3. Category engagement

Promisingly, younger LDA wine drinkers are more confident about and engaged with wine than previous generations, as well as being more adventurous in terms of category exploration. While the IWSR has noted this trend for a long time, it is now more relevant to wine consumption, as younger LDA consumers are more confident about wine than the same age groups in 2010.

In Australia, the proportion of consumers aged 18 to 24 expressing confidence in their wine knowledge increased from 19 per cent in 2010 to 50 per cent in 2023. This is also true in Germany and the UK, but the change is less evident in the US, where confidence was already relatively high. Promisingly, Australian confidence is higher than all of the aforementioned markets.

This seems to be affecting engagement and involvement levels, with 60 per cent of 18 to 24 year olds expressing a strong interest in wine, up from 31 per cent in 2010. In addition, consumers aged between LDA and 42 are also engaging with an expanded typical beverage repertoire, increasing the categories that wine has to compete against.

Despite this professed increase in knowledge, objective knowledge has fallen, especially in the US, Australia and China. This disconnect may be due to smartphones reducing the need to remember a lot of detailed information, or that country and region of origin are less important to newer wine drinkers. Consumers are also relying more heavily on retailers and on-premise operators to choose products for them.

4. Less but better

Premiumisation still continues in wine, driven by LDA drinkers. However, this trend is slowing, with Champagne, premium-plus sparkling, and still wine in volume decline in the first half of 2023. Wine in lower price brackets are declining faster, allowing premium-and-above to gain share.

The softening of this trend is caused by ageing populations reducing the proportion of younger drinkers, a key population for premiumisation, younger LDA consumers reducing spending as a result of the cost-of-living crisis, and the fact that younger LDA drinkers are less frequent wine consumers.

5. NOLO growth

Wine is a big player in the low alcohol space, growing by eight per cent in 2023 across 10 key markets, primarily driven by the US. Innovation in this space focuses on better-for-you attributes of low calories, reduced carbs, lower alcohol content, and little to no residual sugar.

No-alcohol wine consumption is also growing by volume, up seven per cent in 2023 across T10 markets. Despite this boost, the segment is much smaller, and struggles with negative perceptions of quality and taste, as well as less availability in some markets. These factors are causing consumers to look into other no- and low-alcohol categories, such as beer and RTDs.

6. E-commerce growth

E-commerce continues to be a promising area for wine, but it is growing at a slower pace as less mature spirts, beer and RTD categories are increasing their channel share. Though growth of wine in e-commerce was accelerated during the pandemic, this is now ebbing, with still wine suffering the largest value drop. Wine accounted for 38 per cent of total beverage alcohol (TBA) ecommerce by value in 2020, but this fell to 33 per cent in 2022. It is expected to decline further by 2027 to 28 per cent.

IWSR growth expectations reflect wine’s relative maturity in e-commerce, with a positive value CAGR forecast of one per cent, compared to eight per cent for beer and five per cent for spirits.

Even so, there are still opportunities in wine e-commerce, and off-premise operators should continue to invest in this technology to engage with digitally-oriented consumers.

7. Climate concerns

Climate change continues to impact wine production, with more frequent extreme weather events such as frost, hail and forest fires affecting grape yield and quality, and general temperature increases affecting harvest time. This is making it particularly difficult for winemakers to respond to a growing consumer preference for lighter styles.

As a result, sustainable viticulture and production techniques are becoming more common, with many vineyards adopting organics, biodynamics, and regenerative viticulture. Some wineries are experimenting with alternative grape varieties that are better suited to changed environmental conditions, as well as exploring new planting locations.

Packaging is another avenue for sustainable innovation, with premium brands exploring alternative packaging such as Tetra Pak, bag-in-a-box, and PET wine bottles.

Sustainability is a concern for consumers, as well, with two thirds of regular wine drinkers in major markets describing it as important to them. This is even higher in some markets, with 70 per cent of US wine drinkers and 94 per cent of Chinese wine drinkers citing sustainability as a key concern.

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