In 2022, the International Organization of Vine and Wine (OIV) estimates that 258m hectoliters (hl) of wine were harvested worldwide, 1% less than in the previous year. Global consumption is also expected to have declined by 1% to 232m hl.
Global vineyard area
As expected for a perennial crop, the global vineyard area has remained relatively stable at 7.3m ha (about 18m acres), experiencing a slight decrease of 0.4%. Since reaching its peak in 2003, the vineyard area has decreased by nearly 6%, which is equivalent to four and a half times the vineyard area of Germany.
A closer examination of the vineyard area reveals that it serves more than just wine production purposes. For instance, China ranks third with 785,000 ha (about 2m acres), surpassing Italy. However, similar to Turkey, which ranks fifth with 410,000 ha (about 1 m acres), a significant portion of the grapes in these countries is not utilized for wine production.
Other nations also showcase the diversity of viticulture. Countries like India, Afghanistan, Uzbekistan, and Iran have a larger vineyard area than Germany. Moreover, Egypt has experienced growth, expanding from 80,000 to 92,000 ha (about 198,000 to 227,000 acres) between 2018 and 2022.
The French situation is remarkable, when considering the discussions surrounding overproduction and the need to grub vineyards in Bordeaux. Surprisingly, between 2018 and 2022, the vineyard area in France actually increased by 20,000 ha (about 49,000 acres). This development reflects a unique trend in the country's viticulture landscape.
Concerns about China and global consumption
While global wine production is prone to significant fluctuations due to varying vintages, its average has only slightly declined over the past 20 years. In contrast, global wine consumption exhibits clearer trends. From 2000 to 2007, there was a consistent upward trend. Subsequently, it remained stable for a period until a continuous decline was observed from 2017 onwards.
Consumption dropped by 6% within five years. This decline is closely linked to the Chinese market. This decline is strongly tied to the Chinese market, where consumption decreased by half from 17.6m hectoliters to 8.8m hectoliters between 2018 and 2022. Therefore, any hopes for a revival of the Asian market post the lifting of the COVID-19 restrictions would essentially be hopes for a reversal of a long-term downward trend.
International trade declines
Over the past two decades, a consistent trend has been the growth of internationally traded wine. However, in 2022, this growth is expected to halt. Global wine exports have declined by 5% to 107m hectoliters, but their value has increased by 9% to €37.6bn. Despite the decrease in volume, the rise in value suggests a higher average price per unit and potentially reflects a shift towards premium and higher-priced wines in the global market.In the process, positions were redistributed.
Germany lost its role as the world import champion to the USA. The USA experienced a 3% increase in wine imports, reaching 14.4m hectoliters. In contrast, Germany saw a 9% decrease in imports, totaling 13.4m hectoliters. Moreover, Germany is among the few markets that also reduced its spending on wine imports, experiencing a 4% decline to €2.7bn. These shifts highlight changes in global wine trade dynamics and consumer preferences.
In terms of value, the USA (€7bn, +17%) and the UK (€4.8bn, +22%) have surpassed Germany.
Overall, price-sensitive markets such as Germany and the Netherlands saw a more pronounced decline. However, the UK managed to develop against this trend, potentially due to compensation effects following Brexit. Despite the ongoing war and imposed sanctions, Russia saw a slight increase in the volume of imported wine, reaching 3.9m hectoliters, suggesting no sign of economic difficulties.
Bulk remains unqiue
In the bulk wine segment, Germany continues to maintain its position as the largest importer. Additionally, Italy, France, and Portugal also emerge as significant importers. This could potentially indicate the presence of re-exporting activities, utilizing existing trade networks among these countries.
Germany also holds the minimum of the major exporters in terms of gross exports with a bulk wine share of 5%. This is probably due to Germany's role as an efficient bottling location, which also makes it an important re-exporter. If these re-exports are also taken into account, Germany is probably only third in net imports behind the UK, where re-exports have ceased to play a role since Brexit.
New export champion
Italy has surpassed Spain to become the world's largest wine exporter, with a marginal decline in volume at 21.9m hectoliters. In contrast, Spain experienced a 10.6% decrease, reaching 21.2m hectoliters. However, both countries were able to increase their export value, similar to many other nations.
- Italy saw a 10.1% increase, reaching €7.8bn.
- Spain had a 3.1% rise, reaching €3bn.
These figures highlight the shifts in the global wine export landscape and the ability of both countries to maintain or increase their export value despite changes in volume.
France maintained its position as the top exporter in terms of value, reaching €12.3bn with a growth rate of 10.9%. However, France experienced a decrease in exported volume by 4.5%.
Only a few major exporters were able to increase their export volumes.
- New Zealand successfully rebounded to a normal volume after a very small harvest in 2021.
- Australia's export volume increased by 1.3%, but the overall value increase was only 2.2%.
There appears to be a clear correlation between the volume of internationally traded wine and the increased prices. The OIV reports an average price of €3.51 per liter in international trade, reflecting a significant increase of 14%. This follows a 9.4% price increase observed in the previous year. Countries where producers implemented more modest price hikes, such as Italy, Portugal, or Australia, were generally able to maintain their export volumes in 2022. Conversely, countries that implemented larger price increases experienced volume losses.
According to OIV Director General Pau Roca, the international wine industry has demonstrated great resilience. Despite concerns, significant declines have not materialized, and the industry has been able to pass on some of the increased costs in international trade over the past two years.
However, there is still a persistent structural production surplus in the global wine industry. Furthermore, the full effects of purchasing power losses resulting from the war in Ukraine are anticipated to be felt in 2023. This means that the wine industry will face the challenge of showcasing its resilience once again in the following year.