The IWSR has released its 2022 update on global alcohol consumption and in this Market Bulletin, we will analyse the global consumption trends based on the newest figures. Wine Australia's Market Explorer has also been updated with latest data.
Overall, the volume of wine[1] consumed globally has decreased by 3 per cent in volume to 2.46 billion 9-litre case equivalents in 2022. This is a slightly faster rate than the previous 5-year CAGR[2] (2017–22) of -2 per cent. Growth is projected to remain stagnant over the next 5 years.
In terms of retail value, wine sales increased by 2 per cent to US$193 billion, driven by premium wine sales. Sparkling wine observed the highest growth in value at 6 per cent from the prior year, followed by still wine and fortified wine, both growing by 1 per cent.
Premium sales slowing while commercial is stagnant
Premium wine sales have slowed down, compared to last year’s growth of 9 per cent, to only 2 per cent growth in value from 2021, driven by economic and inflationary pressures. Nonetheless, premium wine sales (US$10 per bottle or equivalent and above) are forecast to steadily grow at 2 per cent per annum from 2022 through to 2027 to a market share of 46 per cent of total wine sales. On the other hand, commercial wine sales (below US$10 per bottle or equivalent) only grew by 1 per cent in value from 2021 and are forecast to decline and stagnate through to 2027.
Figure 1: Premium vs commercial market share by value
Markets driving value growth in premium wine sales are the United States of America (US), the United Kingdom (UK), Italy, Canada, Australia, Japan, Brazil, South Korea and New Zealand. In Australia, Japan, Brazil and South Korea in particular, the growth rate in premium wine sales outweigh the decline in commercial, suggesting consumers in these countries are trading up.
Markets driving value growth in commercial wine sales are Spain, Argentina, Portugal, Romania and South Africa. However, as these markets have a faster growth rate in premium than commercial wine sales, this indicates some consumers in these markets are also trading up.
On the other hand, markets driving value decline in commercial wine are Germany, China and Denmark. These markets are declining at both ends of the price spectrum, with a slightly larger decline in commercial than premium. Combined with the decline in total year-on-year growth, this indicates some consumers are trading up or leaving the category all together.
By price segment, prestige plus showed the strongest growth during 2022, albeit from a small base at 20 per cent, followed by super premium at 6 per cent by value.
Figure 2: YOY value growth by price band
Emerging markets driving growth
The largest wine market by volume and value, the US, recorded no change in value during 2022 and a 3 per cent decrease in volume. The top 5 largest wine markets (US, UK, France, Italy and Germany) are forecast to have a CAGR of between -1 per cent and 1 per cent through to 2027.
Figure 3: 5-year CAGR in large wine markets by value
The impact on global value in 2022 was uplifted by strong growth in emerging markets, particularly Southeast Asia, as well as Japan and South Korea. In particular, Thailand, Malaysia, Indonesia and Vietnam recorded growth rates between 27 per cent and 36 per cent in value.
Another wine market in Asia that recorded a strong growth rate is India, which grew by 21 per cent, bringing their value to US$392 million, the third highest value for an Asian market in 2022 after Singapore and Thailand. Over the past five years, India had the second highest CAGR among the Asian countries mentioned at 9 per cent, only lower than South Korea and is projected to have a 6 per cent CAGR through to 2027.
Figure 4: Year-on-year growth in emerging Asian markets by value
These markets are forecast to have a CAGR of between 5 per cent to 14 per cent through to 2027.
Figure 5: 5-year CAGR in emerging markets by value
In terms of consumption, according to the latest IWSR data on the Market Explorer, the top five largest wine markets consumption of premium wine is US$48 billion in 2022, up 1 per cent from the prior year of US$47.5 billion.
In contrast, although Southeast Asia’s consumption of premium wine is not as high as the top five markets shown above (46 per cent share vs 48 per cent), Southeast Asia's consumption of premium wine has grown by 21 per cent from the prior year to US$0.7 billion.
Source: IWSR (via the Market Explorer)
On-premise recovery still underway
The volume share of wine consumed in the on-premise channel (restaurants, bars) has increased to 22 per cent in 2022 from the previous year. However, it is still below 2019 levels of 26 per cent as consumers have been slow to return to the on-premise after the COVID-19 pandemic due to outlet closures and cost of living pressures.
Source: IWSR (via the Market Explorer)
No-alcohol and low-alcohol growth stabilising
Low-alcohol wine experienced strong growth in 2020 with 64 per cent volume growth. The following year, no-alcohol recorded its highest at 16 per cent year-on-year. In 2022, growth in both no-alcohol and low-alcohol eased and is forecast to stabilise through to 2027.
Figure 6: No-alcohol vs low-alcohol volume
Although no-alcohol and low-alcohol wines have a small market share in the total wine category, low-alcohol has a slightly higher market share than no-alcohol globally.
Figure 7: 2022 No-alcohol and low-alcohol market share by volume
Nonetheless, preference for low-alcohol or no-alcohol differs by country as depicted in the bar chart below. The US, Spain and Australia have a preference for low-alcohol wines whereas European countries such as Germany, France and the UK have a preference for no-alcohol wines. Despite being in the top 10 countries of wine consumption, Italy, Argentina and China have little to no consumption of low and no-alcohol wines, preferring to stick to alcoholic wines.
Figure 8: Low-alcohol vs no-alcohol for the top 10 countries alcohol wine consumption by volume
Sparkling wine is the most popular style across both low-alcohol and no-alcohol wines, the preference being more evident in low-alcohol wines.
Figure 9: No-alcohol vs low-alcohol volume by wine type
Forecasted demand for Australian wine
Demand for Australian wine has decreased 8 per cent in value globally in 2022, an improvement from last year’s decrease of 12 per cent. Looking ahead, CAGR 2022–27 is forecast to be 1 per cent in value. In terms of premium and commercial price segments, both price segments have declined by 12 per cent and 5 per cent respectively. However, premium is expected to have a CAGR of 5 per cent from 2022 to 2027 whereas commercial is expected to have a CAGR of -1 per cent from 2022 to 2027.
Within the premium price segment, value growth to the top three export markets, the UK (- 2 per cent), the US (no change) and Canada (2 per cent), is expected to soften for the next five years. Instead, growth is forecast to come from Hong Kong, Japan, Netherlands, Vietnam, Indonesia, Poland and India over the same period. Of these markets, Vietnam, Indonesia and India are projected to have the most accelerated growth rates.
As for the commercial price segment, the UK, US and Canada are forecast to decline by between 2 and 3 per cent for the next five years. However, Indonesia, Japan, Philippines, Brazil and Vietnam are forecast to have a CAGR between 8 per cent and 13 per cent over the same period.
Domestically, Australians are drinking more premium Australian wine, reflected by the 5 per cent growth in value in 2022. This is expected to slow into the future with a 1 per cent growth rate through to 2027. Consumption of local commercial wine has not changed from 2021 and is forecast to decline by 3 per cent for the next five years.