useful_context_stats_20240514175033 Flashcards
China Outlook
China is the fifth largest producer and consumer-2022.
Imports = 60%.
Production was noted at 11 million cases by major companies like Changyu Pioneer Wine Company and GreatWall Wine.
2020 The wine consumption dropped by 17.4% for COVID.
2022 showing a reduction in imported wine volume by 21.1%, attributed to the pandemic, economic slowdown, US trade war, and Australian tariffs.
Jim Boyce - publisher of Grape Wall of China China is consuming around a third in volume and value vs 2018
China Packaging
Premium and exclusive packaging styles are preferred, with a focus on heavy bottles and unique labels. Clear and easily pronounced labels, such as Penfolds’ bin numbers, are successful, while vibrant colors and unconventional designs are less attractive. China’s Grace Vineyard, Judy Cha- Laura Odoriz.
China People
There is an increasing level of awareness and education about wine, particularly among Gen Z and millennials.
Fongyee Walker MW from Dragon Phoenix Wine Consulting in Beijing are crucial for market engagement.
China Place
Online sales represent 30% of the wine market in China, popular among tech-savvy millennials through platforms like Tmall, JD.com, Pinduoduo, and Taobao.
Supermarkets and hypermarkets play a crucial role, with major players like Yonghui Superstores and Walmart.
Retail wine shops are transforming into experience centers or wine bars, with live-streaming sales growing in popularity. Wine tourism, like at Pernod Ricard’s Helan Mountain Winery in Ningxia, is gaining traction.
Hong Kong: Mature wine market with no wine taxes.The fine wine 60% of global wine and spirits sold at auctions through Sotheby’s, a larger share than London and New York. Consume x 9 china
Macau: Portuguese wines are popular.
Taiwan: French wines lead, followed by US and Chilean wines.
One-third of China’s wine consumers live in Guangdong (Drinkers aged between 20 and 34 are the main drivers for drinks consumption, high income)
China Price
The Chinese market is sensitive to pricing, with wines priced between RMB 100 to 500 ($15 to $75) being most popular among the middle class.
Tariffs vary, with Australia facing a significant 218% inc.. - lift
Cristián López from Concha y Toro aims to make it the largest brand and importer in China.
European wines face high import tariffs promoting heavy investments from companies like LVHM and Domaines Barons Rothschild Lafite.
China Product Champagne
Demand Increase: Champagne shipments to Hong Kong rose by almost 8% in 2023, reaching over 2 M bottles. Simpson notes a positive market rebound, indicating growth potential due to regulatory changes and inc.d demand.
China Product China Product
There is a strong gifting culture with premium imported wines serving as prestigious gifts. Red wine is the most popular, followed by sparkling wines. The market for rosé and white wines is smaller but expected to grow. Imported wines are mainly from France, Chile, Spain, Italy, and South Africa. Counterfeit products are a concern, leading to trust issues and avoidance of local liquor shops.
China Product Hong Kong Champagne Market
Demand for Champagne in Hong Kong is on the rise, with Pol Roger Portfolio MD James Simpson MW noting that the city is “back up and running.” Champagne shipments to Hong Kong inc.d by almost 8% in 2023, totaling a little more than 2 M bottles.
Global Trends Sustainable
Natural, organic and sustainable produced wines lead the opportunity index.
China offers the most opportunities across the sola, followed by Sweeden andGE (organic)
Brazil and Singapore in Natural and sustainable wines. WI2023 SOLA report
UK Outlook
While still wine volumes have consistently fallen over the past five years, the regular wine drinker population has increased from 25.7 million in 2019 to 28.5 million in 2022.
Sparkling wine is the only category showing volume growth from 2016 to 2021 (2,4%).
Rose wine also continues to grow, with a strong performance in the on-trade market.
UK Packaging Can
Barry Dick- waitrose - Shift to cans aimed to halve carbon footprint per drink, with canned wine sales increasing x4 in 2020.
UK Packaging BIB
Premium bag-in-box packaging is creating a niche, though it struggles to grow beyond 5-10% of volume. Bottling in the UK has grown, with bulk imports increasing from 340 million litres in 2010 to 516 million litres in 2019. UK bottling plants like The Park and Greencroft offer the advantage of carbon neutrality.
While the UK is losing its share as a target market, Germany consolidates its position as the largest importer by volume. 2023 This data is sourced from a bulletin by the World Bulk Wine Exhibitio the UK (–7.3%)
UK Packaging Alternative
In the UK, the discount retailer Aldi is now filling own-brand wines in “Paperbottles” and flat PET bottles.The flat PET bottles from Packamama
UK Packagking Bottle weight
The Wine Society: Testing recycled plastic bottles to decrease carbon footprint with bottles that can be recycled at home.An empty rPET bottle weighs 63gr vs 460g avg glass bottle. Glass bottles are 31% of WS emissions
UK Packagking Capsules
Waitrose: Dispensing with plastic and metal foil capsules, shift towards cans to halve carbon footprint per drink.
UK People
Consumers show less concern about the origin of wine, with major brands like Yellow Tail, Casillero, and Jacobs Creek having significant brand power. There is a declining knowledge among consumers, especially Generation Treaters, who show less interest in mainstream brands.
UK Place Off trade outlook
80% of wine sales occur off-trade through major retailers like Tesco, Sainsbury, Morrisons, Waitrose, Asda, M&S, the Co-op, Aldi, and Lidl.
Online sales have increased post-pandemic, with Aldi and Lidl gaining influence through their EDLP model, but consumers are used to saving 25% or more in supermarkets during cyclical promotional periods- Martin 80% tesco on promotion.
Over 1000 independent wine shops are present, run by 777 businesses, showing over 50% increase in ten years
UK Place Ontrade- Bibendum report
2023
Grower champagne now appears in at least 50% of tracked restaurants.
75% of red wine drinkers are interested in drinking English still wine.
Wine MODE 2022 saw a range of indigenous grape varieties listing increase Greece – Xinomavro (+70%) Assyritko (+45%)
UK 2024
Portuguese wines are still niche, accounting for 0.3% of MAT still wine volumes, but there are already signs of growth (+7.8% vs. last year).
Known for its youthful qualities and vibrant acidity, Vinho Verde is also seeing a growth in popularity. Vinho Verde bottle listings appear in at least one out of two MODE restaurant listings.
UK Place Off trade trends- coop
We are outperforming the market with our sales but at market level
Red wine is in the most decline (value sales of red -9.4%, white -5%, Rose -3.7% - Neilsen 52 week data)
People trading up in classic areas (eg I sell quite a lot of £22 Finca Notables Malbec and £20 Cune Imperial Reserva)
exploring more unusual grapes (Mencia, Mazuelo, Portuguese white field blends, Greco, we have a new Swiss Gamaray in own label, new Pais from Chile etc)
Portugal is seeing significant growth, driven both by the success of the brand Porta Seis and by Portugal being the number one holiday destination for UK tourists.
Sarah Benson coop
UK Price
The UK market is highly price-sensitive, with excise duty at £2.23 per bottle and a VAT of 20%.
Wine prices are rising, with the average on-trade price now £44, reflecting a 9% increase in line with inflation.
The average selling price in the total market is £6.52, driven mostly by increased costs.
Consumers are drinking less but better, with faster growth at price points above £9 and £10.- Sarah
with Aldi and Lidl gaining influence through their EDLP model, but consumers are used to saving 25% or more in supermarkets during cyclical promotional periods- Martin 80% tesco on promotion.
People trading up in classic areas (eg I sell quite a lot of £22 Finca Notables Malbec and £20 Cune Imperial Reserva) Sarah Benson
UK Product Champagne
Market Normalization Post-Covid.
Shipments dropped by 8-9% in 2023.
James Simpson MW expects stabilization at 25-27 million bottles annually.
Return to Traditional Trading: Post-Christmas discounting on Champagne becoming common again in the UK, despite a decrease in high-end sales offset by demand from London’s West End.
Simpson highlights the need for stable pricing.
Brand Resilience and Quality: Despite market fluctuations, strong brand quality contributes to resilience in the industry. Simpson emphasizes the importance of competitive pricing to promote sales.
UK Product Sparkling
Sparkling wine is the only wine type to record volume growth from 2016 to 2021 (2,4%)., driven by Prosecco accounting for 70% of volume.
Prosecco DOC Consorzio, December 2023 Campaign: Spent over £250,000 on UK campaign to distinguish Prosecco from common effervescent wines.
Champagne volume has fallen significantly in sub-£30 price bands.
Alexandra Mawson, Champagne and Sparkling Wine Buyer, Waitrose: Sales of crémant have overtaken Cava, with a 51% increase over the past three months compared to last year.
UK Product Trends
62% of beverages volume is beer vs 19% wine.
“Premium rosé remains a very strong part of the market; it’s very interesting. It feels like it is behaving more like the Champagne category.” Matt Wilkin MS-
Sarah Benson: We are seeing switching into Rose from white and sparkling.
Malbec, Carmenere, and Moscato are trending in red and white categories. The market is also exploring unusual grapes like Mencia and Mazuelo.
“I can see a big opportunity for South African Sauvignon Blanc now that New Zealand’s prices are largely £10-plus in the off-trade.”
UK Product Private labels
Sarah It can’t be hard to compete with big brands with big marketing budgets but for me I’ve found that using Premium own label has been a way to grow Chile beyond the market leader Concha Y Toro.
Our Casablanca Pinot Noir outsold their Cono Sur brand so I took the brand out. Own label is strong for us because Coop members get £0.02 back in every £1 they spend on own label but also we give £0.02 back for every pound they spend to Community causes (that is causes nominated by local communities such as sports groups, art classes, funding park renovations etc) we’ve given £117 million to community causes since 2016.
Members are also keen to be involved and feed back – I had 115,000 members involved with designing the label for my new Pais wine but also 7000 members feedback on my fortified wine range and told me they wanted a white Port – so I brought one in.
UK Trend Regenerative Viticulture and Sustainability
The Wine Society has initiated a climate and nature program to promote regenerative farming practices among its suppliers and producer partners, offering grants for individual projects aimed at enhancing sustainability. The program emphasizes soil’s potential to sequester over 30% of the world’s carbon emissions, positioning this approach as a strategic response to climate change in the wine industry.
UK Trends NOLO
Portman Group found that 24% of British drinkers are keen to cut back on booze
IWSR +17% 2021 estimates will increase by 1/3 by 2026. (global)
UK Trends UK Vegan
Marks & Spencer = 70% of their range,
UK Trends flavours UK
WI
Easy to drink, fresh and crisp are the top attributes for white wine;
full-bodied, smooth and rich are the main preferences in red.
People buy more led by description in the label. - Carmenere-Malbec UK-Sarah
Duties
excise duty rates will be frozen - at least until August 2024 UK
In an online post, Steve Finlan, CEO of the Wine Society, one of the UK’s leading wine specialists, said “After the biggest rise in [excise] duty in 50 years, implemented in August, the Government is now proposing a further rise this month of up to 8.8%. This would mean a 30% hike in wine duty since 31st July 2023. This represents an assault on wine consumers, wine retailers, and wine producers and threatens the survival of many businesses at a time when consumer confidence is slowly returning”
US Outlook
Wine sales by volume in the US have dropped by around 3%, while turnover has remained flat. Predictions suggest a continued contraction in wine sales into early 2024.
According to Shanken, 2023 will mark the third year
of negative volume growth for the wine category and the first time in 45 years that the spirits market will surpass the wine market in total volume sales.
The annual Silicon Valley Bank wine industry report highlights near 0% value growth and anticipates an increase in flash sales and discounts in the US.
US People US People
Resons to drink less:
41.7% beverage preference.
26.5% health
23.0% budget.
The decline in consumption in the wine category can’t be put neatly into one variable
Appealing affordable alternatives such as RTDs, spirits, cannabis or have been abstaining all together.
National Institute of Health reported that between 2012 and 2022, for those aged 19 – 30, monthly cannabis use increased from 16.6% to 28.8% of the cohort, while alcohol use declined from 68.4% to 67.5%.
US People Consumer Behavior Adjustments
US drinkers are still consuming wine but are increasingly relying on their existing supplies. The behavior is partly attributed to reducing the stockpiles amassed during Covid, with “noise in the channel from Covid” affecting current sales trends.
US Place DTC
Direct-to-consumer volume and value sales were lower in 2023 and tasting room visitation dropped for the second straight year.
Still, small wineries continue to increase their direct sales, which now average almost 70% of total sales. That is a twenty basis point growth from past years.
US Price
Overproduction+ covid = inventory excess
Increases discounting and price reductions.
High-production wineries will find price increases more difficult. (lower vintages in the past 4 years)
Pressure starting from the grower will create inventory bulges and drive higher-than-needed inventory turns in 2024.
Wine demand under $12 is dicreasing turned negative, pulling the entire category down.
Wine volume sales above $12 have remained positive.
Premium wineries will end 2023 with slightly negative volume sales. Value sales growth between 1% to 4%
US Price Napa Market Dynamics
A survey by SVB highlighted that Napa prices have risen to an average of US$108 per bottle.
US wineries have become over-dependent on tasting rooms, prompting a recommendation to open a second tasting room in a satellite area to boost sales.
US Product Champagne
Nathalie Doucet notes that 2024 might see an improvement as the US market is currently out of stock.
Price Increases: Concerns over the price of Champagne, which rose by 10-12% in 2023, are part of the reason for the current sales slowdown and are expected to increase again.
Tariff Threats and Market Stock: Potential tariffs of 10-50% by former President Trump could adversely affect the market.
US Product Overstock
Continued over-production noted in California and Washington, with sales declining for three years. The planted acreage in CA and WA is exceeding current demand.
Total wine consumption is decreasing by volume.
Retail inventories are backing up into wholesale.
Wholesale inventories are bulging, and wineries are being more cautious about carrying inventory in a reduced-demand environment.
Without improving demand, retailers can only rebalance inventories by buying less from wholesale while selling through their existing inventory.
The report suggests a likely market correction for grapes and bulk wine in 2024, especially affecting larger, high-volume producers.
inventories at 1.61 times sales The report notes that the ideal inventory-to-sales ratio in a flat volume growth scenario should be 1.0x but may be lower in the current negative growth environment.
US Product Yields
California fourth consecutive year of below average yields. Avg 3,5 mm gallons vs +4 in 2018
US Product Rose
Rosé has benefited from its positioning as a gender-neutral beverage
US Packaging BIB- Cans
2020(The Nielsen Report)
BIB +31.5%
cans + 69.2%
US Packagking Bottle weight
- Ron Rubin Winery: Uses plastic bottles 85% lighter than traditional glass, enhancing transport efficiency.
US Packagking Sustainable
- Revino: Refillable glass bottle system aims to reduce carbon footprint by up to 85%, refillable up to 50 times.
US Trends NOLO
USA grew by +31% 2021- 52% of adults who drink alcohol in the us are either trying now or have tried before to reduce their alcohol intake.
Nielsen found that 78% percent of non-alcoholic drinks buyers in the U.S. are also purchasing alcoholic beer, wine, or spirits, an indication that many customers are paying closer attention to how much they are drinking and managing it more mindfully.
Great price range Fre- Ariel- (8$) Pierre Chauvin (FR) from 6$ to 25$. Trinchero Family Estates- Luminara premium range (20£ DTC)
US Trends Regenerative Viticulture and Sustainability
Regenerative viticulture is gaining traction as the new global standard for sustainable wine production.
Example: Stephen Cronk of Maison Mirabeau, along with Mimi Casteel of Oregon’s Hope Well Wine, co-founded the Regenerative Viticulture Foundation (RVF). This initiative is supported by major industry players like Jackson Family Wines and Möet Hennessy, emphasizing a holistic approach to viticulture that enhances biodiversity and soil health.
US Trends Consolidation
The wine industry is experiencing significant consolidation.
Example: Duckhorn and Treasury Wine Estates acquire mid-sized wineries to reduce costs and expand market reach. This consolidation is reshaping the industry landscape, particularly in the context of rising production costs and competitive market conditions.
US Innovation Technological Innovation
69% uses AI for manual data entry and 50% for automated winery softare. Marketing data processing <35%. DTC sales 62% uses active data management. Out of the whoele survey only 30% uses itSVB report 24
US Challenges Labour
The wine industry is increasingly focusing on fair labor practices.
Example: Joseph Brinkley, the director of regenerative agriculture at ROC-certified Bonterra, highlights the implementation of a living wage and regular feedback sessions with farmworkers, which have led to operational efficiencies and reduced equipment damage. This focus on labor has become crucial in maintaining a sustainable and ethical operation.
US Trends Diversity and Inclusion
The wine industry’s efforts toward diversity and inclusion are increasingly community-driven. Example: Jahdé Marley, founder of [ABV] Ferments, is actively working in Vermont to create cooperative facilities that focus on underserved populations. This grassroots approach is enhancing the diversity of both wine professionals and wine consumers by making the industry more accessible and representative of broader societal demographics.
US Trends US Climate Challenges
Climate change continues to challenge traditional viticultural practices, prompting innovations in grape growing and wine production.
Example: Lois and Dave Cho of CHO Wines in Oregon have responded to climate-related challenges by integrating diverse crops like apples and pears with traditional vine planting, aiming for sustainable and resilient agricultural practices that adapt to changing environmental conditions.
US Trends flavours
Nick Jackson MW Sapidity: Even if acidity is not as high as desired, there are other sources of freshness. Phenolic content Saltiness/salinity Minerality Winemaking techniques such as reduction or lees contact
US Trends Innovation
Co-fermentation is becoming a popular technique among innovative winemakers.
Example: In Vermont, Deirdre Heekin of La Garagista has inspired a new generation of winemakers with her experimental approach to co-fermentation, blending local ingredients like apples, honey, and native grapes to create unique wine profiles that reflect regional characteristics.
South Africa Outlook Exports
2023
- 17% volume
+ 0.9%value
Similarrly to Austria, it also dropped the Bulk export volume.
Emerging markets
Belgium notable increase of 32% , and Zambia, experiencing a substantial 105% most major target markets encountered declines in wine volume.
UK remained the largest export market, 2/3 are bulk.
Africa Outlook Africa Outlook
The African wine market revenue was $8.29 billion in 2022, expected to grow at a CAGR of 14.26% by 2025.
Out-of-home wine consumption is also expected to increase.
UAE Outlook Dubai Alcohol Market
In Dubai, only two companies, Maritime and Mercantile International (MMI) and African & Eastern (A&E), are permitted to import and distribute alcohol.
Following the decriminalization of alcohol in 2020, Dubai scrapped a 30% alcohol tax last year and eliminated the license fee required to buy alcohol in January.
This relaxation in regulations supports a vibrant commercial and tourism sector.
Market Growth: UAE’s Champagne market shows potential with sales nearing 2.9 million bottles annually, valued at approximately €80 million. Ranked top 10 globally by value.
India Outlook
+ 14% over the past five years, valued at $238 million in 2022.
In India, wine is increasingly featured at luxury weddings, a part of the US$75 billion wedding industry in 2023-24.
Despite high import taxes historically set at 150%, recent economic agreements have reduced these duties to 75% with future reductions planned, improving market access for foreign producers.
Italy Outlook
2022
The Italian wine market is expected to grow at a CAGR of 4.3%, due to the easy availability of grapes for wine production. Italy saw a 10.1% increase, reaching €7.8bn. 2022
2023
Italy’s Wine Exports Fell 7.3% in 2023 Lamberto Frescobaldi, president of UIV, commented on the situation: “It’s undeniable that 2023 was affected by cyclical factors, especially the reduction of stockpiles in North America. But it’s equally true that our country urgently needs to expand its customer base: These main five countries account for nearly 60% of the value of Italian exports, compared to 50% for France and 40% for Spain.”
Global Outlook
Attractiveness of Wine Markets: The US remains the most attractive market for wine.
Japan and China are now in the top 10 due to their potential for future growth.
Southern European markets are benefiting from normalizing social activities and tourism.
However, Eastern European markets are declining due to economic pressures like high energy prices.
Australia Place Exports -
Declined by 1% in value and 2% in volume in 2023
Exports to Northeast Asia increased by 29% in value.
Despite declines to North America and Southeast Asia, Australian wine exports remain relatively stable due to growth in Europe and Hong Kong.
Strong growth in Northeast Asia, particularly Hong Kong which saw a 60% increase in exports
Exports to Hong Kong mainly consisted of red wine above AU$10 per liter FOB, reflecting Hong Kong’s role as a major trading hub, with some wines on-shipped to other Asian markets.
Exports to Japan grew by 4% and to Mainland China by 21%, despite recent tariffs affecting historical data.
Asia was the largest region by value for Australian wine exports, with a 36% value share.
Thailand is lifting a tarif.
Declines were noted in Southeast Asia, with exports dropping in Singapore, Indonesia, and Malaysia
Austria Place exports
value rose by 2.7% while volumes fell due to a drop in bulk wine exports.
Netherlands s
Netherlands reported a consumption level 9% below its last five-year average.
an increase in excise taxes by 8.4% on still and sparkling wines from 2024, for products with an alcohol content of more than 8.5% abv,WHO advocates for it
Thailand Price Taxes
The recently-elected Thai government on January 2, to cut excise duty on wine from 10% to 5%. Swingeing import duties will also be removed for the next 12 months.
Australia, with 33% of the market, leads the field, followed closely by France, with 32%
France Product Champagne
Challenges in French Market: Domestic consumption has declined, now only 42.5% of total production, with significant drops in the past two years.
Lower yields Europe- Frost 24
France
Jura 40%.
90% in Cahors (Vitisphere)
Bordeaux =minimal impact (CIVB)
Hail Chablis
Sébastien Dauvissat vineyards were directly hit by the storm winds and hail. In these cases, he estimates the crop loss at 70% or more. Additionally, due to the high rainfall in the following days, bodies of water overflowed their banks, resulting in some wineries being flooded.
Rioja indicate 6.6%
Austria
damage in the wine and fruit growing sectors at a total of €56m. Styria
Germany
Moselle, particularly in the Saar and Ruwer side valleys, losses of 80-100% have been reported.
taxes
Increasing
Neatherlands an increase in excise taxes by 8.4% on still and sparkling wines from 2024, for products with an alcohol content of more than 8.5% abv,WHO advocates for it
lifting
Thailand
The recently-elected Thai government on January 2, to cut excise duty on wine from 10% to 5%. Swingeing import duties will also be removed for the next 12 months.
Australia, with 33% of the market, leads the field, followed closely by France, with 32%
China- march 2023- will need 2 years to use the overstock
Trade by Product Type:
Bottled Wine: Represents 53% of trade volumes globally in 2023 and 67% of the world total wine export value. Sparkling wine witnessed an unexpected decrease of 4% in terms of trade volume.
Sparkling Wine: Represents 11% of total exported volume and 25% of export value. Bag-in-Box® (BiB) wine represents 4% in volume and 2% in value of the total world exports.
Bulk Wine: Represents 33% of total world wine volume exports but only 7% of the total value of wine exports in 2023. The category recorded an average export price of 0.7 EUR/l.
Sweeden
Easy to buy organic drinks
Target level 2023: 15%
Outcome in 2023: 14.1%
Comment on the results for 2023 : We see that customers continue to choose organic and demand more organic options when they shop with us, which is also reflected in our sales figures with an increased proportion of organic.
Price components (average product)
Alcohol tax: 29 %
Supplier: 41 %
VAT: 20 %
Systembolaget: 10 %
Global Opportunities Product NOLO
Wine leads the low-alcohol sector, showing an 8% volume growth in 2023 across 10 key markets, mainly driven by the US.
US innovation in low-alcohol wines emphasizes health-oriented features like fewer calories, reduced carbs, and often zero residual sugar.
No-alcohol wine also rose by 7% in volume in 2023 in these markets, yet struggles with quality and taste perceptions and limited availability, leading some consumers to switch to other no/low options like beer and RTDs.” (IWSR)
Global Opportunities Place - Online Channel
Wine’s growth in ecommerce is slowing, with market share being eroded by beer and spirits.
Across key markets, wine accounted for 38% of total beverage alcohol (TBA) ecommerce by value in 2020, but that figure fell to 33% in 2022, and is expected to decline further to 28% by 2027. IWSR
Online sales represent 30% of the wine market in China, popular among tech-savvy millennials through platforms like Tmall, JD.com, Pinduoduo, and Taobao
Global Challenges Market Dynamics
Tourism and Trade: Tourism is recovering but hasn’t reached pre-pandemic levels, partly due to restricted Chinese international travel. Intercontinental wine trade dynamics are shifting, with Australia finding new major partners in the UK and India, and New Zealand signing with the EU. The UAE is seeing notable growth, moving up 12 places in market attractiveness.
