Numerous challenges for the wine industry
The respondents face a multitude of challenges, with cost increases being the most prominent, mentioned by 85%. The second biggest challenge facing the wine industry is supply chain disruption, which 66% identified as one of the biggest threats to their business. This particularly affects export-strong countries. Concerns about a global economic slump (55%) landed in third place. The forecasts of international economic experts who expect the global economic situation to worsen in 2023 are also reflected in the wine industry. Producers from Spain and Portugal in particular, as well as traders from Great Britain and Poland, fear the downturn. The latter are driven by concerns about consumers' disposable income.
Climate change was ranked fourth in the survey with a rating of only 40% (previous year 45%). The economic crisis is pushing it into the background. However, the value fluctuates depending on regional concern. Unsurprisingly, the issue is taken much more seriously in Australia (60%).
Covid-19, on the other hand, was only seen as a distinct challenge by 23%. The issue is still particularly relevant for the hotel and restaurant industry.
Economic conditions and expectations
In 2022, the actual economic condition improved for Spanish producers. All other countries deteriorated slightly. However, there are clear differences in the outlook for the future: While optimism prevailed in the previous year's survey, the picture has now changed considerably. German producers are particularly pessimistic. The difference between positive and negative expectations here is -36, which is even lower than the expectations at the end of the first Covid year (-9).
In Italy, France and Spain, on the other hand, there is more positivity - also compared to the end of 2021. In Italy, the optimists’ camp is even slightly ahead (+5).
The trade sector is also more optimistic about the future.
Rising energy costs mainly affect producers
Rising energy costs are massively affecting the wine industry, with wine producers more affected than wine merchants. 62% of wine producers rated the impact as "high" or "very high".
In the trade it was only 43%. And there are also regional differences: producers from overseas rate the energy costs as less dramatic but suffer more from supply chain disruptions and exchange rate fluctuations.
How to deal with this? 68% of companies want to try to pass on at least part of the higher costs to consumers. However, this can have a negative impact on purchasing behaviour. Therefore, 59% of respondents are focusing on process optimisation and 41% on renewable energy.
Lack of glass bottles hampers the wine industry
The biggest problem in 2022 proved to be the supply of glass bottles, which caused problems for 92% of producers. Cardboard containers (59%) and aluminium closures (49%) followed at a distance. 63% responded to the supply problems by increasing stocks, but this may have increased demand and thus exacerbated the problems.
The difficult supply had a negative impact on producers: It increased the time needed for procurement (73% of wine producers) and at the same time the costs for storage (60%). Their own ability to supply was also negatively affected (44%).
When it comes to supply issues, the wine trade seems to be less affected. Only half of the traders reported problems, which then mostly affected only a small part of the product range.
Reactions to the economic crisis
The wine industry is reacting to the crisis with the expected measures (60% reducing costs, 57% looking for new markets, 46% picking up on market trends and as many as 36% reducing investments). The view on consumers is interesting: the majority of the industry assumes that consumers will reduce their wine spending either by trading down on price (67%) or by reducing their overall wine consumption (53%).
The most attractive import markets
Overall, the three big European wine producers dominate. Italy, France and Spain are ahead almost everywhere. But wines from the New World are catching up. There are also regional distinctions emerging, for example due to geographical proximity or cultural similarities. A good example is Brazil, where wines from Portugal, Argentina and Chile dominate. Or the German-speaking countries, where one's own region and neighbouring countries play a major role. Such regional differences offer opportunities for export.
View of the producers
Looking at the three largest wine origins in the world, France, Italy and Spain, their producers see the USA as the most attractive sales market.
Among the Asian markets, Japan has moved to the forefront and is even in second place behind the USA for France's wine producers and in third place for Spain's wine producers. The shooting star is South Korea, which is seen as the most attractive market by the USA.
China has clearly fallen out of favour. Nevertheless, the country is still in the TOP 10 for the USA and Argentina. And in Chile even in 3rd place. There is probably a connection here with the high Chinese import duties on Australian wine.
Wine industry outlook too negative?
At the presentation of the ProWein Business Report, Prof. Dr. Simone Loose from Geisenheim University of Applied Sciences pointed out that the survey had already taken place in November 2022. Since then, the overall economic outlook had brightened: "We now see the first light at the end of the tunnel. If we would do the same survey now, the picture would probably be less pessimistic," Loose said at the presentation of the report. “That is because this crisis is different from the last ones. Many people are keeping their jobs. And this, of course, is good for the industry." CG/AZ