ike every year in this time, ProWein has published the business report created by the University of Geisenheim by interviewing over 2,000 operators in the wine business in the main wine production and consumption countries. To better understand the results of the analysis it should be remembered that in the sample of operators interviewed there are producers, importers, distributors, hoteliers and restaurateurs.
The study is divided into 5 chapters which start from the defining the general framework of the sector’s expectations and gradually delve into the most relevant aspects.
1. The general mood of the industry
The main threats faced in 2023 were rising costs (but to a lesser extent than in 2022) and global economic recession. This is followed by the decline in consumption, low profitability, and climate change, all of which have increased compared to 2022.
To respond to these challenges, companies in the sector have implemented both actions focused on profitability and actions aimed at turnover. In the first case, the most important was the reduction of costs, followed by the delisting of products with low profitability for trade operators. On the turnover side, the main actions were to increase sales prices, adapt the assortment to market trends, strengthen marketing and sales activities, open new markets and launch new innovative products.
Despite this, in 2023 profitability fell compared to 2022 for 54% of trade companies and for 60% of wineries.
For 2024, expectations are slightly positive, with more optimism from the trade than from the wineries.
2. Price segment trends.
Trade operators observed an increase in wine sales in the low range in 2023, a reduction in the medium range and a strong reduction in the premium range.
This is a different scenario from that encountered by producers, in fact the number of wineries that have detected an increase in sales of low-end wines is the same as those that have observed a decline. The evaluation for mid-range wines, however, is the same for trade and wineries, while in the premium range the decline observed by wineries is lower than what was declared by the trade.
However, it should be underlined that this survey does not consider the volumes sold, but only the number of operators who observed a variation for the different price levels. This could explain the contradiction with the growth in sales in the premium and superpremium range found in various surveys in all the main consumer markets.
Regarding expectations for the next few years, the trade continues to focus on the lowest price range, while wineries expect growing sales for both this price range and the premium one.
3. The reasons for the decline in wine consumption.
The main reason for the reduction in wine consumption cited by the operators involved in the research was the reduction in consumer income, followed by the trend towards healthier lifestyles and finally the change in preferences on the part of consumers who prefer other types of drinks alcoholic.
It is interesting to note how the responses of trade operators differ for the different countries. In Germany the decrease in income is indicated by 75% of those interviewed compared to only 21% who indicate a change in consumer preferences. Conversely, in the USA and Canada the latter is indicated by 64% of operators compared to 56% who indicate a decrease in disposable income.
As regards the choice of healthier lifestyles, the percentage of responses is around 65%, with the maximum in Austria (83%) and the minimum in Scandinavia (52%).
Also in this case, the operators’ responses partially differ from those of numerous consumer research conducted in different countries, which indicate a substantial difference in the preferences for alcoholic beverages between older consumers, where wine is the prevalent alcoholic beverage, and young people, who prefer beer, hardseltzer and cocktails.
Overestimating the effect of income could be dangerous, because the effect on wine consumption of a recovery in consumer purchasing power would lead to a lower-than-expected recovery in consumption.
4. How to restore balance between supply and demand for wine?
The vast majority of wineries are convinced that there is an imbalance on the market due to excess supply.
Half of the producers are convinced of the need for public support to finance the removal of vineyards.
In terms of supporting demand, the main action indicated by the wineries is to better target young consumers (45%) followed by reducing costs and therefore sales prices (19%) and only 16% believe that balancing the market can be reached by increasing the marketing investments (which raises the question of how wineries intend to better reach young consumers without increasing marketing investments).
Here too there are differences between producers from different countries with less than half of French producers considering the wine market to be unbalanced, compared to 81% of Germans and 78% of New World wineries.
In Italy only 45% of producers believe that the market imbalance should be resolved by reducing supply and only 36% believe public intervention is necessary to uproot the vineyards. These are the lowest figures of the entire sample.
France, Italy and Spain are the countries where producers see the involvement of young generations as most important to recover consumption (over 60%) and France and Italy are also the main supporters of cost reduction in order to reduce sales prices ( 35%). Only 9% of Italian wineries, compared to 36% of French ones, believe that increasing marketing expenses can increase demand to rebalance the market.
5. The future of wine marketing.
Wineries and trade agree that other types of alcoholic beverages reach young consumers better and that to reach these consumers, wine must be simpler to understand. However, they differ on the need for the sector to be more profitable to communicate more effectively to the market: 70% of the wineries agree, but only 45% of the trade.
Consequent to this response is the different opinion on the greater capacity of other alcoholic beverages to be able to support extensive marketing activities compared to wine: 61% of producers versus 45% of the trade. It should also be underlined that 39% of the wineries and 33% of the trade believe that offering the wine with a more premium and exclusive positioning can increase sales.