August 2017
Wine Market
The market is valued at USD 304 billon and is expected to reach at USD 380 billion by 2022, at a 3.4% CAGR. The wine market is huge, largely dominated by the European and North American countries. The USA, France, Italy, and Spain are the largest producers and consumers of wine. In the international trade, the European region has more than 50% share of the global wine trade. Currently, there are about one million small and big wine makers globally and the world’s most famous brands (around 84%) are French. The wine consumption is declining in the traditional markets. It is growing rapidly (x4 since 2000) in the Asian markets. Asia-Pacific accounts for 16% of value of global wine imports.
Industry Developments
Market Dynamics
The global wine market is driven by the consumption habits of wine, rapid urbanization, the changing lifestyles and high disposable incomes, and popularity of wine products during social celebrations and aging population preferring wine over hard drinks. Another important growth driver of the market is the increasing wine production in developing countries and new markets. The consumption of wine is increasing around the globe, and it is mainly due to the increasing consumption of wine by the younger generation.
Heavy taxation and legal regulations by governments and availability of other substitutes for wine would create a hindrance for the growth of the market. The growing popularity of craft beer and spirits are also a major restraining factor. The craft beer category has grown by 500% in value over the last ten years and quadrupled its market share in that same timeframe in North America. The major opportunities in wine market identified in the sector are innovative wine products with different flavors and growing demand for wine in the non-traditional market.
Market Segmentation
The global wine market can be segmented into five categories - by taste, by wine style, by color, by body type, and by geography. In the taste type, wine can be classified into dry, medium, and sweet wine. By wine style, wine market can be segmented into still wine, sparkling wine, dessert wine, and fortified wine; wherein still wine accounts for most of the market share. Sparkling wine consumption is expected to experience the highest growth as a celebration wine. The major wine types as per color are red wine, white wine and rose wine. The market is further segmented by body type into light, medium and heavy. Still wine and sparkling wine as the two main segments of which still wine accounted for more than 83% of the total market in 2015. In 2015 Red wine accounted for over 54% of volumes consumed globally; white wine for 37% and rosé just 9 %.
Regional Analysis
By region, the European Union is a market leader in wine production, consumption and trading, accounting for half of the market share. Italy, Spain, and France are the countries which account for half of the global wine production. North America is the other major region where the USA alone accounts for the highest per capita consumption of wine. The country has surpassed France as the world’s foremost wine consumer, with average annual consumption of 12 liters per person. The USA is the largest wine producer in North America. In the South American region, Argentina and Chile are the major producers and consumers of wine. Asia-Pacific is the fastest growing market for wine consumption, supported by the high adoption rate of Western culture & lifestyle, large population, and the largest growing middle-class households. China, Japan, and India are the big markets in this region. Africa is growing at a slow rate in wine consumption. South Africa is the largest market for wine in Africa.
Competitive Analysis
The competition in global wine market is reported to be large, mostly in developed countries of North America and Europe, with static growth over the years. Around 43% of the global wine consumption is in the non-wine producing regions. It is because of a huge population driven demand of wine products in such non-traditional wine consumption countries; all big brewers are growing their business in such regions. The market is fragmented because of the presence of several local and international vendors, a few players hold major shares. Wine vendors mainly compete on the basis of portfolio, product differentiation, and pricing and are now concentrating on expanding their business in the market by setting up new manufacturing plants and introducing new products.
Multiple product launches, flavored, innovative product packaging and crafted wine products, huge marketing & promotional activities, and mergers and acquisitions with smaller level players have been a strong business strategy for market growth here. Companies are making acquisitions in order to improve their positions with the wholesalers and to gain entry into the new markets. For example, E. & J. Gallo acquired small wineries in 2015 and 2016 to extend its market share in the wine market. In June 2016, Gik which is a Spanish company, launched a new wine. The company claims that it is the world's first blue wine. Actor Tituss Burgess launched a new wine under the brand name Pinot Noir in 2016. The partnership between the Botanic Gardens of South Australia, National Wine Centre, and Jacob’s Creek winemakers is launching a new botanic garden wine label in September 2016, and the product is claimed to be world’s first wine produced solely from grapes grown within a botanic garden. The top players of wine markets are-
Investment Opportunity
Rare wines will continue to be the most sought-after vintages. Because they are decreasing in quantity and finite, they are now chased by a global clientele. While Bordeaux and Burgundy Vintage Wines are the focus of most fine wine investors, many emerging markets are starting to come online. Innovation in wine products with flavored wine is also a huge Opportunity for the companies for investment.
Key Deliverables in the Study
