Back in April 2020, at the height of the first global Covid lockdown, the wine category was understandably nervous. One of its key routes to market – on-premise – was shut; going to the shops was difficult (and, in some cases, a danger to health); and major economies were looking at double digit falls in GDP. And yet, the overall impact of Covid-19 on the global wine market in 2020 was not as bad as had been expected: global wine volume consumption declined by less than -7% and global wine value declined by approximately -5%, according to IWSR data.
“The world drank less wine in 2020, but spent relatively more on it than in previous years, bringing unexpectedly strong profits to businesses that were more off-premise focused or could pivot quickly to e-commerce,” remarks Lulie Halstead, CEO Wine Intelligence.
The major wine markets of the UK and US actually saw volume growth in 2020 (in the UK’s case, reversing a 10-year trend of decline), and a number of developed world wine markets (Germany, South Korea, Canada, all the Scandinavian countries, plus Ireland and Singapore) also saw growth. In Brazil and Colombia, consumers overcame economic and pandemic concerns to turn towards still and sparkling wines and away from local beverages such as rum and cachaça. Although some of these wine market increases were short-term changes that will revert to previous trends, in some cases, 2020 led to double digit percentage increases on the previous year.
More predictably, wine markets that were heavily dependent on tourists, and whose bars and restaurants were relatively more important to domestic consumption, suffered in 2020. High volume markets such as Spain, France, Portugal and China led the declines. Emerging wine markets were generally down in 2020, partly due to the loss of tourism, but mainly because the wine category in these countries is more tied to socialising in the on-premise or in big groups, both of which were severely curtailed in 2020. Markets such as South Africa and Russia also saw big consumption declines, with the former experiencing multiple temporary bans on alcohol sales, and in the case of Russia, a significant decline in the purchasing power of the ruble, which made imported wines much more expensive to buy.
The net result of the Covid-era disruption, as well as broader market, economic and demographic variables have been analysed to produce the Wine Intelligence global wine market attractiveness model 2021, covering the world’s key 50 wine markets.
The United States has once again topped the list of the most attractive wine markets in the world, though its lead over #2 South Korea has been cut. Below these two non-movers, the top 15 has quite a different look to it: the UK rises to #3, despite the disruption of Brexit, while Ireland, Norway and Sweden burst into the top 10 for the first time. China fell out of the top 10 for the first time, falling 13 places to 17th, as did France (down 7 to 16th) while Russia fell 12 places to 22nd and Spain dropped 11 places to 25th.
Market attractiveness, as measured by Wine Intelligence, is not just about wine volume changes. The model looks at value per bottle, market access and ease of doing business, profitability of players in the supply chain, as well as broader economic and demographic factors, including population growth trends.
Hard as it is to look beyond the Covid-led impact on the world wine market, it is worth examining the other factors that are driving global consumer behaviour. One reason that the US clung on to its top ranking was its success in mitigating the economic fallout from Covid via government stimulus spending; Ireland’s high value export and knowledge-oriented economy managed to record economic growth in 2020, and its knowledge economy workers are highly correlated with wine drinkers.
In many global markets, the immense surge in ecommerce during Covid lockdowns has also been a positive for wine, particularly where regulation surrounding distance selling of alcohol has either been light-touch or has been relaxed specifically as a result of Covid – which was the case in South Korea in 2020. Wine Intelligence consumer research data suggests that wine drinkers are committed to continue with online purchasing even as Covid restrictions are lifted. In the UK, for instance, a larger proportion of consumers have said they would be more likely than pre-pandemic to continue using online channels when purchasing beverages.
Looking further ahead, some of the long-term changes in demography and economies will start to have more of an impact on the model in the coming years. For instance, Poland dropped back to 12th place in the market attractiveness rankings this year, but on a long-term basis has been progressing steadily up the charts since 2016, when it was 19th. The engine of growth in Poland has been a sustained economic growth story in the past decade, combined with a population that has stabilised, due, in part to the return of expatriate workers, who have brought home wine drinking habits from their time in other EU countries such as the UK.
Further down the rankings, it’s worth noting the opportunities emerging in sub-Saharan Africa. Nigeria’s burgeoning adult population, up 16 million in the past 5 years, is destined to grow exponentially over the next 30 years, according to United Nations population studies. Wine is currently a fringe player in the Nigerian alcohol scene, but even considering this and the economic setbacks of the past 5 years, wine volumes are growing. Nigeria made its debut in the top 40 in 2021 (up 9 places to 39).
These insights, as well as the full ranking of wine’s attractiveness in 50 focus countries, are explored in greater detail in the Wine Intelligence Global Compass 2021 Report.
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