The global wine market is facing a number of challenges as we enter 2024, including structural volume declines in mature markets, an over-reliance on older drinkers and difficulties related to climate change.
That said, opportunities persist in some regions, and those younger consumers who do participate in the wine category are becoming more engaged with it – continuing the trend of higher spend within a ‘less but better’ dynamic.
Growth also persists in the low-alcohol wine space – which remains a category strength – and in ecommerce, although here wine’s relative maturity is leading to some erosion of market share by beer and spirits as demand in the channel returns to pre-Covid trend rates.
1. Structural declines persist
Wine is facing a long-term structural decline, particularly in traditional markets, which is overshadowing the opportunities offered in some parts of the world, and particularly Asia Pacific.
This dynamic continued in the first half of 2023, with still wine volumes in the key 20 markets falling by -4%, and sparkling rising by +1% vs H1 2022.
Major wine markets such as France and Italy have been in structural decline for decades, while the US, the world’s most valuable market for wine, appears to be in an extended downcycle. Among emerging wine markets, consumption in Brazil surged during Covid but has since fallen away as consumers switch wine for beer in the on-premise, in line with pre-pandemic behaviours.
Nonetheless, opportunities continue for sparkling wine – expected to register a volume CAGR of +1% between 2022 and 2027 across the 20 key markets, versus a -1% CAGR decline for still wine over the same timescale – with the ‘other sparkling’ segment increasing volumes in 14 out of the top 20 markets between H1 2019 and 2023.
The reopening of the on-trade in China in 2023 benefitted premium-and-above sales there, and developing Asian economies such as Thailand, Malaysia, Vietnam, the Philippines and Indonesia are growing in appeal, thanks to expanding consumption and a strong reliance on premium imports.
While each market has its own local factors, some of the common causes behind wine’s volume erosion are becoming clear from IWSR’s consumer usage data. This indicates a perfect storm of declining alcohol consumption generally as moderation behaviours move into the mainstream, reducing overall participation rates in wine in some markets, especially among younger LDA+ consumers, and growing competition at social and non-food occasions from other beverage alcohol categories, such as RTDs.
2. Recruitment challenges
The wine category is becoming increasingly reliant on older drinkers, thanks to a number of factors, including ageing populations in regions such as Europe and North Asia, and a challenge recruiting younger LDA consumers in certain markets.
LDA Gen Z consumers are not being recruited into wine at anything like the rate that they were 10-15 years ago. Today’s LDA Gen Z consumers tend to be light users of alcohol generally – compared to preceding generations at the same age – and they are increasingly exploring other, non-traditional segments such as RTDs, cocktails and craft beer.
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