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Global Wine Industry Faces Challenges Amidst Poor 2023 Harvest

The global wine industry encountered significant challenges in 2023, marked by the poorest harvest since 1961.

According to the "2023 World Vitivinicultural Economy" report by the International Organization of Vine and Wine (OIV), led by Luigi Moio and disseminated by Giorgio Del Grosso, the production of wine plummeted to 237 million hectoliters, reflecting a 10% decrease from 2022.

This decline was mirrored across major wine-producing countries, leading to a surplus of over 16 million hectoliters compared to global demand, which stagnated at 221 million hectoliters, down by -2.6% and declining for the third consecutive year.

The challenges extended to international trade as well, with overall exports experiencing a -6% drop in volume, reaching 99 million hectoliters, the lowest figure since 2010. However, the value of exports hit a record high of 36 billion euros, primarily due to an unprecedented average price per liter of wine, standing at 3.62 euros. This increase, up by +2% from 2022 and 29% from 2020, was largely attributed to inflation and higher costs along the supply chain, which were partly passed on to the market.

Despite these difficulties, the wine market remains inherently global, with 45% of global wine consumption occurring outside the country of origin. This highlights the interconnectedness of the industry and underscores the importance of international trade in sustaining it.

A detailed analysis reveals a slight reduction in the global vineyard, totaling 7.2 million hectares, including both wine and table grapes, representing a -0.5% decrease from 2022. This decline stems from a stabilization of the Chinese vineyard, which had seen significant growth from 2010 to 2020, coupled with a general downward trend observed in most regions.

Spain retains its position as the leading producer with 945,000 hectares of vineyard, followed by France with 792,000 hectares, China with 796,000 hectares (predominantly table grapes), and Italy with 720,000 hectares, of which over 660,000 hectares are dedicated to wine grapes.

At the production level, the top three countries—France, Italy, and Spain—account for 48% of global production, with the European Union alone contributing 62% to the total output. Despite the concentration in production, consumption is also highly concentrated, with five markets—USA, France, Italy, Germany, and the UK—comprising 51% of total consumption.

However, these key markets witnessed a decline in consumption, ranging between -2% and -3% in 2023 compared to 2022. This downward trend is reflected in the broader scope, with the top ten consuming countries experiencing a generalized decrease in consumption.

Examining wine types, still bottled wines continue to dominate both in volume (52%) and value (67%), despite experiencing a -9% decrease in volume and -6% in value. Sparkling wines, accounting for 11% of volume and 24% of value, fared relatively better, with a -4% decline in volume and +1% increase in value.

The bulk market, constituting 33% of volume but experiencing a -4% decrease in 2023, and bag-in-box wines, representing 4% of quantity, maintained a stable position.

In terms of exports, Italy leads in volume with 21.4 million hectoliters, followed by Spain with 20.8 million hectoliters and France with 12.7 million hectoliters. However, French wines dominate in terms of value, with 11.9 billion euros, followed by Italian and Spanish wines.

Import-wise, Germany leads in volume, followed by the UK and the USA. However, the USA tops in terms of import value, followed by the UK and Germany.

Overall, the global wine industry faces a complex landscape characterized by changes in consumption patterns, climate variability, inflation, decreased purchasing power, and geopolitical conflicts. Navigating these challenges requires strategic planning and adaptation across the entire supply chain to ensure the sustainability of the industry.

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