Global wine consumption has fallen to its lowest level in 27 years, reaching 221 million hectoliters in 2023, a 2.6% decrease from the previous year. This significant decline is largely attributed to persistent inflationary pressures that have driven up prices and reduced consumer purchasing power worldwide. The International Organisation of Vine and Wine (OIV) reported that the average wine export price rose to a record €3.62 per liter, reflecting increased production and distribution costs.
The observation that "Apparenlty wine has experience inflation like THC and everything else," as noted by Stewart Alsop, host of Crazy Wisdom Radio Show, mirrors broader economic trends. Inflation has impacted various sectors, and the wine industry is no exception, facing higher expenses for inputs like glass bottles, labor, and energy. These rising costs are subsequently passed on to consumers, dampening demand.
Major wine markets, including the United States and France, have seen notable drops in consumption, with the U.S. experiencing a 5.8% fall and France a 3.6% decrease in 2024. China's wine consumption has also plummeted by over 60% in the past five years, impacted by COVID-19 restrictions and price sensitivities in its younger market. While consumption volumes are down, a trend towards premiumization is evident, with consumers occasionally opting for higher-quality, albeit fewer, bottles.
Industry experts, including OIV Director General John Barker, highlight that inflation has been a key factor over the past two years, significantly increasing operational costs for producers and distributors. This environment has led to destocking by distributors in key markets, as they sell existing inventories rather than importing more. The small 2023 harvest in the Northern Hemisphere is expected to further influence future pricing and trade volumes.
Looking ahead, the wine market faces continued challenges from shifting consumption patterns, including a growing preference for moderate drinking and the rise of no/low-alcohol alternatives. Despite these headwinds, the market remains in balance due to concurrent declines in both production and consumption. The industry continues to adapt to these economic shifts, with some regions and premium segments showing resilience amidst the broader downturn.