This market bulletin:
- Addresses the key challenges faced by the wine sector,
- Examines some of the key trends that are influencing wine consumption globally, and
- Discusses some of the potential growth opportunities that these trends may offer Australian wine businesses.
The key challenge — long-term decline in global wine consumption
In the five years to 2023, global consumption of wine fell by 3.1 billion litres – that is the equivalent of 31 billion standard glasses of wine. Volumes are now below pre-pandemic levels and IWSR have forecast wine consumption to fall by another billion litres by 2028. If that happens, the global wine market will have shrunk by 20 per cent over the decade. The total loss in wine consumption would be more than four times the size of Australia’s annual wine production volume.
Source: IWSR
The volume of wine consumption is falling due to a smaller population of wine drinkers who are drinking less. Between 2021 and 2024, the number of wine drinkers around the world fell by 5 million people. The decline was particularly strong in some of Australia’s key wine markets. For example, the number of wine drinkers in Japan fell by 2.6 million people, in China by 2.4 million, in the UK by 1.7 million, and in Australia by 1.6 million. Adding to this, between 1990 and 2023, global wine consumption per capita fell from 4.0 litres per head to 2.7 litres per head. The more mature and established wine markets are reporting the most moderate drinking patterns. So, what trends are driving these declines?
Global trends influencing wine consumption
Mindful drinking
One of the major trends influencing wine consumption is the rise of mindful drinking. Increasing numbers of consumers are choosing to reduce or eliminate their alcohol and wine intake due to health concerns. Some people are drinking less but choosing to pay more, while some are seeking no and lower alcohol options. Movements like Dry January and the growing “sober curiosity” movement are also gaining traction, especially among younger consumers.
Health awareness campaigns, driven by organisations like the World Health Organization, have also played a role in this changing perception. Their message that "there is no safe amount of alcohol" has resonated with health-conscious individuals, further contributing to the decline in the demand for wine. This trend is likely to be structural rather cyclical as moderation is becoming the norm, especially in mature markets. The social stigmas and cultural barriers around drinking less alcohol have broken down as health and wellbeing concerns become more prominent. Mindful drinking is evident across all generations. And wine drinkers who are moderating consumption are unlikely to return to previous consumption levels or may reduce their intake by even more.
Sustainability concerns are also impacting consumer choices. While retailers and distributors are increasingly demanding compliance with sustainability policies, most consumers don’t want to pay more for sustainably produced wine. Most believe it’s a brand, industry and government’s responsibility to do the right thing and consumers should not bear the cost.
Demographic shifts
By 2040, the global population is expected to reach 9 billion people, and the demographics of the population will continue to evolve.
On average, global consumers are getting older and living longer as a result of declining birth rates and rising life expectancy. This is leading to a growing number of increasingly affluent senior consumers. It is therefore important to consider how best to cater for the needs of older consumers in the years ahead. They are also the biggest wine drinkers but moderating their consumption.
The battle to recruit younger drinkers to wine continues, as many mature markets become increasingly reliant on older generations. However, younger consumers are drinking less alcohol than previous generations, often choosing to abstain altogether for periods of time. The failure to recruit more enthusiastic younger drinkers will limit involvement in the wine category in future. This poses a significant threat to future value growth globally.
Changing beverage preferences
As consumer needs evolve, preferences are changing across all beverage types.
One major development is a surge in demand for functional beverages that cater to consumers who seek more than just hydration from their drinks. These beverages are specifically formulated with ingredients that offer additional health benefits, such as boosting energy, improving digestion, relieving stress or supporting the immune system. Companies are experimenting with ingredients such as adaptogens, probiotics, and collagen.
The thirst for functional beverages has seen strong growth in products such as energy drinks, sports drinks, vitamin and botanical infused waters, and fermented drinks such as kombucha. While the rise of functional beverages is driven by the mindful drinking trend, the need for refreshment remains an important driver across most of these growing beverage products.
Evolving wine-drinking occasions
The occasions when wine is consumed are also evolving. Wine has become less of an everyday drink and more of an occasion-based drink. This is impacting on both consumption at home and in on-premise venues such as restaurants, nightclubs and pubs.At home, people are drinking less often. And while this is partly due to the moderation trend, importantly it is also because there are less traditional drinking occasions at home such as nightly family dinners.
On the positive side is the rise of JOMO – the joy of missing out – the opposite of FOMO. Linked to health and wellness, JOMO reflects a cultural shift toward enjoying moments at home, away from the noise of social events. Instead of going out, people are investing in creating premium experiences in their living rooms and this is having an influence on beverage trends.
There are also significant changes in the on-premise channel. Motivations for visiting the on-premise, especially among younger consumers, are changing. Younger consumers are increasingly seeking experiences beyond food and wine and wine ranks last in the drinks categories that they consume in the on-premise.
On the other hand, Boomers stick with more traditional occasions centred around food – and wine is their preferred beverage. However, Boomers are less frequent visitors to the on-premise and they are also spending less. Proportionally, this is having a greater impact on wine as it is traditionally consumed during food-led occasions.
One emerging trend is that consumers are increasingly opting for single category drinking occasions. Currently, 66 per cent of drinking occasions involve just one category, up from 49 per cent in the previous year. Beer is the most commonly chosen single-category beverage.
Cost of living pressures
While health concerns are key drivers of the reduction in wine consumption, economic pressures due to higher prices and other financial concerns are also causing many to drink less wine. Due to the cost of a glass of wine rising to the equivalent of a cocktail, there may be an element of risk mitigation for consumers avoiding wine in the on-premise. For the same cost, the uncertainty over the wine style and quality if the bottle has been opened for some time may lead to some consumers not choosing wine.
Geopolitical uncertainty
Geopolitical tensions and international conflicts are disrupting supply chains, making it difficult for wine producers to get their products to market. Trade barriers, tariffs, and political instability can add significant costs to the production and distribution of wine, reducing its profitability. The recent announcement by the US Government of the imposition of sweeping import tariffs across the globe will add further pressure and uncertainty. While it is important to recognise the cost of living pressures and geopolitical uncertainty, they are outside of the control of the wine sector. It is thus more beneficial to focus on the trends that we can do the most about.
Growth opportunities to consider
Most of these trends are not mutually exclusive. While they do present challenges, they also create potential opportunities for growth for Australian wine. The opportunities highlighted may not be relevant or suitable to all wine businesses. And we shouldn’t ignore the wines that we have become world renowned for – the market still exists for the traditional wines we excel in. We also can’t ignore the trends that are influencing consumer behaviour and resulting in wine consumption falling and in preferences evolving – we don’t want wine to become another Kodak case study. Hopefully highlighting these opportunities will prompt new conversations to help the sector evolve and thrive in the years to come.
Lower alcohol, organic and sustainable wines
The mindful drinking trend has seen growth in the consumption of no and low alcohol (NOLO) wines with NOLO being one of the few wine categories to record solid growth in recent years.
As consumers become more health-conscious, there is a growing demand for wines that allow them to enjoy the experience of drinking wine while moderating their alcohol intake. Low alcohol wines, typically with an ABV of 10 per cent or lower, cater to this need, offering an option that aligns with a healthier lifestyle.
IWSR is forecasting consumption of low alcohol wines to overtake no alcohol wines by 2028, with low alcohol wine consumption forecast to grow by 14 per cent per annum over the period, compared to 7 per cent per annum for no alcohol wines. Hence, the NOLO opportunity for Australian wine appears to be greater in low alcohol wines rather than in no alcohol wines.
While moderation trends and demographic shifts have driven the long-term growth in low alcohol wines, ongoing growth will be driven by quality and taste as well as availability and brand recognition, especially among younger consumers. Recent preliminary research commissioned by Wine Australia suggests that the best opportunity may be in mid-strength wine with an ABV of between 7 to 9 per cent, rather than at the very low alcohol end of the spectrum. Modelling quantified the size of the mid-strength opportunity for Australian wine across 10 markets at 146 million litres, indicating value at almost a billion dollars per annum over a 10-year horizon.
Based on Australian consumer data, the modelling suggested:
- The biggest opportunity for mid-strength wine sits with existing drinkers focusing on their calory intake;
- Consumers looking for lower ABV options to allow them to maintain their previous consumption patterns present the next biggest opportunity; and
- Consumers actively cutting back their alcohol consumption, but rejecting non-alcoholic alternatives are the smaller opportunity.
While this initial research provides some clarity on the mid-strength opportunity, more in-depth consumer research is required to define the mid-strength proposition for Australian wine.
Wine Australia has commissioned quantitative and qualitative research to build and scale the market for mid-strength wine across key markets by identifying the most profitable and scalable consumer segments and proposition ideas. The research objectives are:
- Which are the most valuable and promising segments for engagement and are their nuances across markets?
- What moments/occasions are most valuable for mid-strength wine?
- What would the product line look like?
- Which propositions and selling points would create the maximum impact?
The mindful drinking trend also offers opportunities for organic and sustainable wines as they do resonate with Millennials and Gen Zs.
By market, Chinese consumers have by far the highest connection to sustainable wines and are also far more willing to pay more for sustainable wine than consumers in Australia, the UK, Canada and the US.
Younger demographic
While the population is getting older, the wine category is struggling to recruit new generations of drinkers. Millennials represent a highly valuable market segment as they enter their prime income earning years. And when they do buy wine, they are buying more expensive bottles than the average wine drinker. Their preference for premium wine, combined with their growing purchasing power, makes them an increasingly important opportunity for Australian wine businesses to target.
The opportunity for Australian wine is to make our wines more relevant and appealing to Millennials and Gen Zs as part of their experiences and lifestyles. We need to give these drinkers a reason to choose wine over other alcohol options - particularly as preferences continue to evolve. As more Gen Zs reach the legal drinking age and Millennials reach peak earning potential, continuing to engage and recruit these demographics will be crucial in arresting the decline and growing wine consumption in the future. To quote Rob McMillan in the Silicon Valley Bank State of the US Wine Industry 2025 report, “Wine is what the young consumers want, they just don’t know it.”
Refreshment
In line with the broader beverage trends, there has been a shift toward wines that offer consumers something lighter and more refreshing. While a market remains for the big red wines that we traditionally do so well in, consumption and consumer preferences, especially among the young demographics, are shifting.
According to the International Organisation of Vine and Wine (OIV), over the past few decades, the consumption of white, sparkling and rosé wines has grown, while red wine consumption has decreased. This change is largely attributed to evolving consumer preferences, with more people opting for lighter and more refreshing wine options. As such, there are growing opportunities in lighter red wines such as Pinot Noir and Grenache, as well as in white wines, rosé and sparkling wines.
For the younger demographic, these wine styles may better meet their needs in taste and in evolving drinking occasions. For example, rosé is particularly popular among Millennials and Gen Z, who are drawn to its vibrant colour, approachable flavour, and the relaxed lifestyle it represents. The “rosé all day” movement, which celebrates rosé as a fun and fashionable choice, has contributed significantly to its widespread appeal in the United States, for example.
The visual appeal of rosé, with its distinctive pink hue, has made it a favourite on social media platforms like Instagram. The trend of sharing aesthetically pleasing images of rosé in various settings has amplified its popularity, making it not just a drink but a symbol of a stylish and relaxed lifestyle.
Alternative formats
One area of opportunity that has seen significant product innovation is in alternative packaging formats. Reflecting broader trends towards sustainability, convenience, and enhanced consumer experience, there has been a move towards a range of formats as alternatives to the traditional 750ml glass bottle. From a sustainability perspective, there's a growing shift towards using recyclable and biodegradable materials. Glass bottles are being replaced or supplemented with materials like recycled PET plastic, paper bottles, and aluminium cans. And to reduce carbon footprints, many wineries are opting for lighter glass bottles which require less energy to produce and transport.
Wines in cans are becoming increasingly popular due to their convenience, portability, and lower environmental impact. They are ideal for casual settings and outdoor events and may represent an opportunity to make wine more relevant and accessible to the younger demographics in nightclubs. Canned wines are typically available in single-serve sizes, which cater to consumers who prefer portion control or do not want to commit to opening an entire bottle. Kegs and on-tap options may also be appealing to younger consumers in on-premise settings.
Casks are shedding their old reputation and are now seen as a practical and eco-friendly option. They offer longer shelf life after opening and are easier to store and transport. Pouches and cartons are another development, being lightweight, easy to carry, and often more sustainable than traditional glass bottles.
Markets
There are differences in global wine consumption trends by price segment and market. Recent tariff decisions are likely to alter this. If EU exporters redirect wines originally destined for the US, there will be greater competition across other markets where Australia has good share and/or made recent gains. That said, wine consumption at premium price segments has grown, while consumption at the commercial/value end has been declining. This is an indication that consumers are drinking less wine but choosing to increasingly purchase at higher price points, although this premium growth has slowed in the last couple of years due to cost of living pressures.
It is important to put it the two price segments in context – commercial wines make up 84 per cent of the volume and 60 per cent of the value consumed globally and will remain the major segment of the market – but the segment is in steady decline. These price segment trends disproportionally effect Australia, given commercial price segments are by far the largest share of Australian export volumes – and Australia over-indexes in this segment. In the last year, 90 per cent of the volume of Australia’s exports were at the commercial end.
In the next five years, commercial wine sales are forecast to decline by 117 million cases, but premium wine sales are forecast to grow by 18 million cases – less than 20 per cent of the decline in commercial volumes. This indicates that the volume of wine consumption across the globe will continue to decline in the next five years
The major opportunity – recruitment
As global wine consumption is declining, driven predominantly by moderation trends, the major growth opportunity for Australian wine is to recruit new consumers to the Australian wine category, rather than encourage existing Australian wine drinkers to drink more. Importantly, there is a large cohort of people who have yet to discover Australian wine and IWSR reports that there are 380 million people who drink wine regularly – of these, only 68 million drink Australian wine. This suggests that there is an untapped pool of over 300 million people that currently drink wine but do not currently drink Australian wine.The opportunity is to recruit and convert these people into Australian wine drinkers.
Learn more by registering to attend the Wine Australia Global Market Update, 18 July 2025 at the National Wine Centre, Adelaide SA.