Wine

Global wine trade expands in 2019 but prospects dim for 2020

The global wine trade expanded in 2019 according to the International Organisation of Vine and Wine (OIV), both in volume and value, but its growth streak could be clipped by Covid-19 pandemic and a projected production decrease in southern hemisphere.

In 2019 the world wine export market has expanded with respect to 2018 both in volume, estimated at 105.8 mhl (+1.7%), and in value, with €31.8 billion (+0.9%), according to OIV.

wine production

In 2019 the global value of wine exports is on the sustained growth path started in 2010 reaching a new record high.

France was still the most important world exporter in terms of value, with €9.8 bn exported in 2019. There were rises in the value of exports in many large exporting countries like France (+ €425 m), Italy (+€211 m), and New Zealand (+€84 m). The largest declines concerned Spain (-€234 m) and South Africa (-€73 m).

The top importers of wine are Germany, the UK and the US in terms of volume.

China, however, for the second consecutive year saw a significant decline in its imported volumes (-11% / 2018), reaching 6.1 mhl in 2019. In terms of value, the trend is similar, with an overall downfall of -9.7% compared to 2018, reaching €2.1 bn. The only category that increased both its volume (+8%) and its value (+8%) is sparkling wine, although it represents only 2% of the total imported volume.

Production in Southern Hemisphere projects to drop

southern hemisphere

Production of wines in Southern Hemisphere including key producers such as Argentina, Chile, Australia and New Zealand are expected to drop, with the exception of South Africa and Uruguay.

In 2020 a decline in production volumes in all South American countries, with exception of Uruguay, are expected. In Argentina estimated production is 11.6 mhl (-11%), in Chile 10.5 mhl (-12%) and in Brazil 2.0 mhl (-1%), while in Uruguay 0.65 mhl (+11%).

South Africa seems to continue its recovery path from the drought and expects +5% with respect to last year, reaching 10.2 mhl.

In Oceania, Australia expects a lower production level in 2020 estimated at 11.5 mhl (-4%) due to drought and bushfires while in New Zealand (2.9 mhl, -2%) expectations on wine production are by and large in line with 2019, or just below.

Covid-19 impacts

coronavirus image 1440x560cropped
Digital image of coronavirus by Centers for Disease Control and Prevention

Though data are insufficient at this stage to gauge the global impacts of Covid-19 on wine consumption, but early feedback from OIV’s 47 member states reflect “a radical change” or transfer between distribution channels, says the intergovernmental body.

The expected overall balance is a decrease in consumption, a reduction in average prices, and therefore an overall decrease in total sales value, turnover, margins and finally profits of the wineries.

As far as exports are concerned, economies in recession are not a promising market to develop, and during this pandemic, the largest consuming countries such as USA, Europe and China have been the most affected. Trade flows may recover along with the economy, but some permanent changes could occur.

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