2021 key figures:
- Slight decline in production (-1% to 260 mhl)
- Slow recovery of consumption (+1% to 236 mhl)
- Boom in global exports (+4% in volume and +15,5% by value)
- Market internationalisation index 47%
The Balance Between Production…
After peaking in 2018, world wine production now appears to be quite stable overall. It is estimated at 260 mhl - slightly below its ten-year average. However, this figure hides significant regional variations. Largest producing country was Italy, with an increase of 2% and a 19% share of world wine production. Frost and bad weather conditions caused a substantial fall in major wine producing countries (-19% in France, -14% in Spain) while Australia and Chile in the southern hemisphere both saw growth of 30%, while Argentina made 16% more wine than in 2020. Most dramatically, Brazil, the third largest producer in South America recorded volume growth of 60%). New Zealand was the one country beneath the equator to buck the trend – with a decreases in production of 19%.
All of these southern hemisphere figures need, however, to be seen in the context of a return to more average harvest yields in 2022.
...and Consumption
Global consumption also recovered somewhat in 2021 to 236 mhl, although it is still far away from its 2017 peak and, given the peculiarities of life in a pandemic and the uncertain state of the global economy, it is too early to say that the downward trend has been reversed.
China’s fall in consumption of 15%, and Argentina’s 11% fall, also need to be taken into account.
Overall, global production still exceeds demand by 10%, and this will not be helpful to an industry that needs to raise prices to cover increased costs.
International Wine Trade
Export figures are also surprising. With an increase of 4% in volume (116.6 mhl) and 16% in value (€34,3bn) these have doubled over the course of 21 years. As the OIV Director General Pau Roca stated, “We are recording the highest figures ever in history”.
This is reflected in the ‘wine market internationalisation index’, which describes the ratio between the volumes of world wine exports and world wine consumption. In 2021, it is at 47%, showing that nearly half of the wine consumed in the world is imported.
At a time when transport costs are rising, and environmentalists are concerned about ‘food miles’, this level of global trade raises its own questions. On the other hand, the shift to bulk shipments, lighter glass and alternative packaging is helping to reduce the industry’s CO2 footprint.
Russian War
Finally, it is impossible to look at the industry without considering Russia, the 10th largest wine importer by volume in 2021 (3.7 mhl, +6%) and number eight in consumption (10.5 mhl, +2%).
Imports were mainly bought from Italy (33%), France (19%), Spain (12%) and Georgia (10%), with bottled wine being the largest category in both volume and value (+9% and +8% respectively). Until the invasion of Ukraine, for many distributors, this fourth consecutive year of growth appeared to offer interesting prospects for the future. These now need to be reconsidered. Further information about the Russian market see here and here.
The war has led to new supply-chain bottlenecks and even worse, hitherto unresolved pressure on the global energy market. Sanctions will put further pressure on the market. Roca warns, “This conflict has a large impact on global economy.” He sees potential reduction in demands, increasing costs and inflation. “Margins are going to be reduced. The conflict is going to affect global trade for a while.” And he has a recommendation: “Governments have to be very careful not to increase taxes and not to add more wood to the fire.”
STATE OF THE WORLD VINE AND WINE SECTOR 2021 (April 2022): presentation and report
