Economic Woes Batter Global Wine Market

The global wine trade is facing a tough year. According to customs data analyzed by the based OEMV, wine exports worldwide dropped by 5.4% in volume and 6.4% in value in the twelve months leading up to March 2024. That means 567 million fewer liters of wine were traded, and the total value fell by €2.43 billion, leaving the industry with just under 10 billion liters sold and a global trade value of €35.59 billion. Average prices fell slightly, too, reaching €3.60 per liter.

This decline is part of a broader slowdown tied to the global economic climate. Rising inflation, political tensions, and ongoing conflicts have made international trade more erratic, pushing the wine industry into a period of uncertainty. While the inflationary pressure has eased somewhat, it's brought down prices, which hasn't helped overall revenue. In short, the global wine market is struggling to regain its footing.

One key development has been the shift in pricing. After nearly three years of steady price increases, the global average price per liter began to fall in late 2023. Over the past year, prices dropped in six of the last seven months. The drop in prices may reflect a cooling off from the inflation spikes of previous years, but it's also eating into the value of the market.

While price decreases hurt revenue, the volume of wine traded has fluctuated unpredictably. After several months of growth in late 2023 and early 2024, trade volume began to shrink again. This volatility in both price and volume has left producers and exporters unsure of what's coming next.

Bottled wine, which traditionally dominates global wine exports, took the hardest hit. Volume dropped by 8.3%, and the total value of bottled wine exports fell by 7.2%. This translates to 458 million fewer liters sold, with revenue down by €1.84 billion. Despite this, the average price of bottled wine edged up by 1.2%, reaching €4.69 per liter. Still, bottled wine accounts for over half of all wine exported and nearly two-thirds of the total value, making these losses particularly concerning for the industry.

Sparkling wine fared somewhat better, although it still saw a decline. Volume dropped by 4.8%, with the value down by 4.2%. Sparkling wine remains the second-most valuable export category, generating €8.67 billion over the past year. The average price for sparkling wines rose slightly to €8.07 per liter.

Bulk wine, typically the lower-priced segment, saw the smallest decline in volume at 2.2%, but it suffered the steepest drop in value. The total value of bulk wine sales fell by 9.2%, driven by a 7.1% decrease in average price per liter. Bulk wine now represents a third of all wine exported but brings in just 6.7% of the total revenue.

Bag-in-Box wines (BiB) showed some resilience, with a smaller decline in value at 1.8%. However, volume still dropped by 6.3%. BiB wines were also the only category to see a notable price increase, up 4.7% to €1.92 per liter. This format now makes up 3.7% of the global wine volume but remains a niche product in terms of value.

One bright spot in the otherwise grim outlook was the surge in grape must exports, driven largely by strong demand in Italy. Grape must volumes shot up by 82.7%, while value increased by 38.2%. Despite this boom, prices for grape must fell by 24.3%, suggesting that increased volume was the key driver of growth in this category.

The world's top wine exporters—Italy, Spain, and France—continue to dominate the global market, though they haven't escaped the downturn. Italy remains the largest exporter by volume, with just a slight drop of 0.7%. In total, Italy shipped 2.15 billion liters of wine over the last year, generating €7.84 billion in revenue. Spain followed closely behind with 2.13 billion liters, though it saw a larger drop in value, down 4.3% to €2.99 billion.

France, known for its premium wines, leads in value but saw a significant drop in volume and revenue. France exported 1.28 billion liters, down 6.8%, with revenue dropping by €655 million to €11.75 billion. Despite the dip, French wines continue to command the highest prices, with an average of €9.16 per liter.

While European producers are holding their ground, New World wine exporters are struggling. Chile, Australia, New Zealand, and the United States all experienced double-digit declines in value. Chile remains the fourth-largest exporter by volume, but it recorded the steepest drop, losing 99 million liters and €341 million in value. Australia, although slightly ahead of New Zealand in terms of value, also took a hit, with revenue down 10.5%.

The United States and Argentina had particularly tough years, with both countries seeing volume declines of over 20%. These losses are creating a stark contrast between the performance of Old World and New World wine producers.

As 2024 unfolds, the global wine trade finds itself in a precarious position. While inflation has eased and prices have moderated, the overall value of the market continues to shrink. European wine exporters, particularly Italy and France, seem better equipped to weather the storm, but the New World is facing more serious challenges. With geopolitical tensions and economic uncertainty continuing to loom large, the global wine industry will need to adapt quickly to navigate these shifting dynamics.

The coming months will be critical for producers and exporters looking to stabilize their operations and find new opportunities in a rapidly changing market. Whether this year marks the beginning of a long-term downturn or just a temporary dip remains to be seen. Either way, wine producers and traders worldwide are bracing for more uncertainty ahead.