The Future Of The Global Wine Industry: Boxes, Bulk And Blends

Introduction

Good data are available on what is happening in the wine industry. Nielsen surveys US off-premise (non-restaurant) wine sales and Wine by the Numbers has just issued a report on global wine trading that includes and informative piece by Mike Veseth. In what follows, I summarize key features from each and offer a few thoughts on where they suggest the industry is going. Tables 1 and 2 provide data from the Nielsen surveys. Off-Premise sales exclude restaurants. It is perhaps the best indication of what customers want when given all options.

Several points in Table 1 are worth noting. Red wines outsell whites and they are growing more rapidly. Italian wines outsell other countries by a large margin. In sales to the West, Australia has yet to recover from the boom and bust resulting from declining interest in Shirazes and its overproduction. However, the country is benefiting from the rapidly growing Chinese demand. In 2008, Argentine wines sold $420 million in the US. It has yet back to that number, in part because of heavy taxes levied during the Kirchner regime.

France continues to sell well in the US. France is getting a real boost from the popularity of its Bordeaux in China. There was a time when Chile was a leading supplier of well-known branded wines to the US. Times have changed. Spain has worked hard to under-price almost all competitors. The demand for German wines in the US is flagging. At least for now, Portuguese wines are increasingly popular in the US. South Africa has shown no interest in launching a serious effort to sell its wines in the US.

Overall, varietal sales are growing more slowly than the total wine sales.  Antonio Rallo, the president of Unione Italiana Vini, explains this as follows: “It should be noted that this has less and less the character of a specific varietal and increasingly often a more or less convinced embrace of a philosophy: the eco-friendly, the sustainable, the generational or lifestyle wines, expressly because it is clear that a varietal can no longer be used as a valid mantra for all time periods and generations.”

He has lost me. I wonder what he really means.

Changes in the sales of individual varietals reflect changing “fashions” among US consumers. “Light wines” including Pinot Grigios, Sauvignon Blancs and Pinot Noirs are in. At the same time, a couple of “Heavy Reds” – Merlots and Shirazes – have lost favor.