Consumers now spend as much each year on wine as they do on cosmetics, or three times as much as they do on recorded music - good news for wine producers and distributors gearing up for the Vinexpo show later this year in Bordeaux.
The latest world wine consumption figures were released late last month by Vinexpo in association with the UK-based International Wines and Spirits Record (IWSR). The jointly-produced study features information on 28 producer countries and 110 consumer countries.
In 2002, the retail turnover of the global wine market was $101.5 billion (€92.1bn), according to the Vinexpo/IWSR report, up nearly 8 per cent on the 1998 figure. In volume terms, total consumption of still light wine and sparkling wine reached 224.759 million hectolitres. The report predicts that this growth will continue, with value sales set to increase by nearly 9 per cent to $111 billion by 2006.
Dividing sales up into product sectors, the Vinexpo/IWSR report shows that the market, not surprisingly, is dominated by still light wine, which accounts for 80 per cent of world consumption. This segment is also growing the fastest in terms of volume and value, and the report predicts a 10 per cent increase in sales by 2006 - an additional 11.308 million hectolitres - equivalent to more than the annual production of Australia and twice that of Bordeaux.
The report also confirmed that the post Millennium decline in sales of sparkling wine is over, and predicts a rise in consumption of around 3 per cent between 2001 and 2006.
But as consumers are buying more wine, they are also spending more on it as well. The biggest increase in still wine purchases is coming from wines priced at $5 or more a bottle, which now represent 12.9 per cent of the total market after a 7 per cent increase in sales over the past five years. As consumers become increasingly sophisticated and knowledgeable about wine, the report predicts a 42 per cent increase in sales of wine priced at $10 or more by 2006 - a spectacular rise considering that this category currently represents only 3.7 per cent of the market in volume.
Wine has always been an international business, but the growth in wine trading is continuing unabated. The growth in consumption of imported wines is now more than two-and-a-half times that of wines produced locally, and the international trade in wines grew by 12.2 per cent between 1997 and 2001, reaching a total of 63.7 million hectolitres.
Exports are forecast to rise by another 14.9 per cent, taking imported wine sales to 73.2 million hectolitres - one-third of all wines consumed throughout the world.
Consumer countries driving growth
Of the 11.308 million hectolitre increase in still wine sales predicted for the next five years, the Vinexpo/IWSR report said that quality wines, retailing at more than $5 per bottle, would account for 88 per cent and imported wines 84 per cent. In terms of volume, the US, UK, Germany, China and France will account for 60 per cent of the increase, with the US, UK, Germany, France and Italy accounting for 70 per cent of the increase in volume of wines retailing at more than $5 per bottle.
There is also likely to be a major shift in consumption patterns towards non-producer countries. The 10 top consumer countries who do not produce wine (the UK, Netherlands, Belgium, Japan, Denmark, Sweden, Poland, Norway, Ireland and Finland) accounted for only 10.4 per cent of world consumption in 2001; by 2006, these countries will account for 31.3 per cent of the growth in global wine consumption, the report claimed.
The increase in consumption predicted by the report does not, however, mean that excess production will be eliminated - although it is likely to be lower than previous estimates. Between 1997 and 2001, the excess of wine produced in relation to the volume of wine consumed included two of the largest vintages on record - 1999 and 2000 - but the report said that the surplus should fall by 11.6 per cent between 2002 and 2006.
This is due not only to the increase in world wine consumption but also to the fact that it is statistically unlikely that there will be two such large harvests in consecutive years again.
UK market goes from strength to strength
The Vinexpo/IWSR report also looked in greater detail at the UK market, one of the world's biggest wine consuming countries and the most important non-producer nation.
In 2001, the UK consumed 9.771 million hectolitres of wine, the equivalent of 1.302 billion bottles. Wine consumption in the UK has increased year on year for the last 20 years, rising by 19.1 per cent between 1997 and 2001. Per capita consumption (adult population over 19 years) of wine is now 21.8 litres per year, up from 18.7 litres per year in 1997.
Consumption per capita is double that of the US (9.8 litres), but UK wine drinkers have some way to go to catch up with their Danish (38.9 litres), Belgian (30.6 litres) and Dutch neighbours (26.2 litres). Nonetheless, the report predicts that per capita consumption should reach 25.4 litres by 2006.
Britain is also the market where the average price of a bottle of wine is increasing faster than anywhere else in the world. Even considering that 70 per cent of all still light wines in the UK retail for less than £4.99 (€7.33) per bottle, the average price of a bottle of wine remains relatively high at £4.65 (2001 figure). This represents a 6.9 per cent increase since 1997 and is largely due to country's high level of taxation on wine (£1 per bottle) and recent restructuring among suppliers.
In 2001 the retail turnover from wine sales was £5.76 billion, growth of 26.9 per cent since 1997, but the report predicts a slowdown in growth in the period to 2006. However, this will come not from changing consumer habits but rather from weaker confidence in the economy - and in any case, retail turnover is still forecast to increase at an average rate of 4 per cent per year from now until 2006, when it will top £6.9 billion.
France still number one
France is still the UK's largest wine supplier, despite the growth in New World wine sales there. France's market share declined during the 1990s (from 38 per cent in 1990 down to 28.9 per cent in 2001), but there has been a marked recent increase in consumption of French wines, undoubtedly in some part due to the growing cross-channel trade with the UK.
But France will have to work hard to stave off the challenge of New World producers - and even one or two Old World countries - in the years to come. The report said that Australian (+87.7 per cent), South African (+69.1 per cent), Chilean (+38.2 per cent) and Spanish wines (+39.7 per cent) have all seen their sales grow since 1997. However, the report predicts that given the current and future supply problems of France's main competitors, the upward trend in the UK consumption of French wines is likely to continue.
The phenomenal success of wine in the UK market has often been attributed to the supermarket sector, and the Vinexpo/IWSR report shows that the multiple grocers still dominate the market.
Approximately 70-75 per cent of all wine consumed in the UK is sold through the off-trade, with 73 per cent of this sold by the supermarkets. The on-trade counts for 25-30 per cent of wine sales.
The 12th Vinexpo Bordeaux exhibition will take place from 22-26 June 2003, and approximately 2,500 exhibitors from 40 countries will be presenting wines and spirits to an expected audience of 55,000 trade visitors from 140 countries. More information about the show can be found from the Vinexpo website.