Global wine consumption has been declining for a long time

Given current concerns about possibly declining wine consumption (e.g. Declining wine consumption a global trend; Global wine consumption declines), it is worthwhile to look at long-term trends, to put the current data into context. We could, for example, look at particular countries (see Worldwide patterns of wine consumption); but in this post I will look at global tends, which are thus averaged (or summed) across all countries.

When working out national consumption of any consumable product, it is of interest to work out the amount per person, rather than just the total amount for each country. The calculation is a simple one (national consumption / population size), but a possible complication for alcoholic beverages is that not all persons are legally permitted to consume alcohol.

An obvious solution is to divide by the population of adults, rather than the total population size. Even this is only an approximation, though, as we then need to define adult, specifically in terms of the legal age for drinking alcohol — adult is often defined as 15 years old, whereas alcohol consumption typically involves an older age. More to the point, we do not really have good past data for adult population size for most countries. So, calculations per capita are the data most commonly available.

For wine consumption, we have data going back to 1835, available in the Annual Database of Global Wine Markets, compiled by Kym Anderson and Vicente Pinilla. In the first graph, I have plotted the per capita beverage wine consumption (in liters of alcohol), starting way back in 1862. Even a quick glance suggests that wine consumption per capita has been declining since its peak a century ago.

There is clearly a lot of variation in the data prior to World War II, presumably due to approximate data estimates for many countries. However, the general trend up until the War is reasonably stable, varying around an average of c. one liter of alcohol per person per year.

Equally clearly, there was a decline during the War (no surprise there), followed by an increase for the first decade after the War. From there, the average remained at c. 0.85 liters of alcohol per person, for the next two decades.

However, since the mid 1970s there has been a continual decline in consumption per capita. There was a steady decline for the first decade (in pink on the graph), followed by a precipitous decline during the next decade, and a steady decline again since 1990 (also in pink on the graph). The graphed data are current to 2018. The decline from 2013 to 2018 was c. 0.005 (liters of alcohol per person) per year— this is about 5% of a bottle per year.

So, nothing seems to be particularly unusual just recently. The initial decline beginning in the 1970s was associated with the worldwide financial downturn (1973–1974 stock market crash) plus the oil embargo (1973 oil crisis). Subsequently, there was a general increase in wine prices that has gone way beyond any possible increase due solely to inflation (The outrageous prices of modern high-quality wines). For my own personal take on prices back then, see: Exponential increase in wine prices (1980-2000).

The Global Wine Markets database also contains data for wine consumption per adult (rather than per capita) starting from 1950. We can thus compare this to the per capita consumption, which reveals an almost perfect correlation. So, the numbers change somewhat (obviously, average consumption is slightly higher per adult than per person), but the patterns through time are almost identical.

If we want to compare wine consumption to that of beer and spirits, then we can do this per adult from 1961 until 2015. The three sets of data are shown in the second graph.

As noted above, the pattern for wine is almost identical to that in the first graph, with a steady decline in consumption since 1990. Beer consumption, on the other hand, rose steadily until the mid 1990s, and has been relatively steady since then. Interestingly, it shows a decrease since 2012, just as occurred for wine.

Clearly, given that almost all beers contain less alcohol than the equivalent volume of wine, beer consumption far exceeds wine consumption, on average per adult. People get c. 2.5 times as much of their alcohol from beer compared to wine, and wine contains 2–3 times as much percent alcohol as does beer. So, per adult beer consumption is c. 7 times that of wine.

Consumption of spirits rose until the mid 1970s, then declined for a decade, and has remained relatively steady since then. The same as for wine and beer, it shows a decrease since 2012.

Given that a bottle of spirits contains much more alcohol than either wine or beer, it is not necessarily surprising that people get more of their alcohol that way, on average. So, it is the trend in spirit consumption that dominates total intake of alcohol, which has remained relatively steady since the mid 1980s, having reached its peak in the mid 1970s.

Conclusion

So, if the wine industry is going to concern itself about recently declining wine consumption, it first needs to take into account declining consumption of alcohol, in general, since 2012. Only after that, should the long-term decline from the mid 1980s be addressed, since this has not occurred for either beer or spirits.

The wine industry is asking the wrong question

We have all seen numerous reports recently, examining the end of the Covid-19 pandemic, and its effect on the wine industry. Many of the comments have been inspired by the recent report from Rob McMillan, of the Silicon Valley Bank (State of the Wine Industry Report 2022). It seems to me that many of the responses miss the point somewhat (Wine marketing strategies fail to attract millenials); and I thought that I might write about this here.

The SVB report is intended to be a bit more holistic than simply wine-focused, in that it tries to look at the big picture, of the industry as a whole (although restricted to the USA). One topic of focus is that the prime wine-drinking population of recent decades is the Baby Boomer generation, which is mostly now either in retirement or departed. The issue is that neither the following Generation X nor the subsequent Millennial generation have shown more than cursory interest in wine. If they consume alcohol, then it is likely to be mixed drinks (except maybe in Australia: Australian millennials drive wine consumption post-pandemic).

The response of the commentators has been to ask the question: how do we sell our wines to the Millennials? I contend that this is fundamentally the wrong question, asked from a wrong perspective.

• Young people are buying less wine, but the industry keeps marketing to aging Boomers
• The wine business sees a problem: Millennials aren’t drinking enough
• Has the wine industry blown it with Millennials?
• US wine market — time for a rethink

I will keep my commentary personal, but I contend that my perspective is a general one. I am a classic Baby Boomer, whose (Silent Generation) parents hardly drank wine (cheap semi-sweet sparkling stuff is all I can remember from my childhood). I started drinking wine at university, at least partly because a bottle shop (liquor store) down the road from my home started having free tastings on Thursday nights (see Some personal anecdotes). From there, I started visiting wineries whenever I was in the vicinity. I now have a small collection of wine maturing under the house, to be consumed by my wife and I.

So, my perspective is not that of an industry insider, but that of an interested consumer. I have read a lot of books, and I read the new web pages each week; and I do wonder about a lot of what I read. I cannot see much of it being of interest to Millennials. Let's take some of the points, one by one.

For example, there are endless articles about apparently esoteric topics that affect wine production: different soils and climates, different clonal selections, different cultivation and vinification. There is also, of course, The enduring mythos of wine, which reeks of snobbery and elitism (USA survey finds rules of wine are intimidating). Even worse are the articles about wine that we will never get to drink, either because we are in the wrong financial bracket or because the wine is no longer available.

Indeed, this latter point still annoys me, even after decades of drinking wine. I am happy to read an article directing my attention to some currently available good-value wines that I have not tried before. However, far too much wine writing is about wines I will never get near, for one reason or another. Why should I read such stuff? How do I identify it before I read it? We will never get people interested in wine if the entry bar is raised too high.

However, what seems worst to me is that most of the writing is nothing more than opinion; and people almost never seem to share the same opinions! Someone will write an introductory book on wine, and other people will denigrate it for over-simplifying what is obviously a deeply complex and fascinating topic. Someone will write a personal reflection, and other people will dismiss it as being out-of-date. Someone else will write a deep dive into a particular wine region, with all of the details, and other people will be totally disinterested. Is this any way to attract customers?

From here, we could consider the issue of variability in quality, which is real. Depending on how you choose your wine, it seems to be depressingly easy to end up with a bottle you are not prepared to drink, once opened. Just about everyone I know has poured a bottle of wine down the sink. However, none of them has ever poured a beer down the sink, nor a mixed drink. If you happen to be a not-yet-very wealthy Millennial, which of the three drinks are you going to prefer? They are making their own conclusion rather obvious (Four reasons why Millennials don’t have any money).

Then there is the matter of storing the stuff. The purchaser does not need somewhere to store much in the way of beer or mixed drinks, because they can be drunk immediately after purchase, with perfect satisfaction. For wine, however, even cheap wine can taste a whole lot better if we wait a while (Does bottle price have anything to do with cellaring desirability?); and many wines positively demand storage, if we are to get any sensory value for our money. This alone raises the bar for entry into the world of wine as something more than a thirst quencher.

Finally, of course, if someone does manage to jump the bar, they need to rob a bank to afford the allegedly top-rank stuff (The outrageous prices of modern high-quality wines). Well, I have, on rare occasions, tried some of these wines, and I can tell you now that not one of them impressed me even slightly, even though I have been told that this is what I should aspire to. Now, maybe this makes me an inverse wine snob, rejecting the supposedly most snobbish stuff; and maybe it makes me a sensory philistine. Either way, I am better off saving my money for the stuff that I like, which almost never gets more than 95 points, and never ever costs me either an arm or a leg, let alone both (Tasting great wines?).

So, that leaves the bottom line, which is to ask what sort of industry are we trying to attract Millennials to? It can not be the one that attracted Baby Boomers. Baby Boomers were the first post-War generation — the ones looking for a bright future after the dark days experienced by their parents. Wine became a part of that, as a luxury good that people could aspire to, and work towards. It represented just how different this new world was going to be, as newly affluent people benefited from their affluence.

This, sadly, ignores the down-side of what happened during that time. The Environment had not yet become a concern, which means that the Baby Boomers did not care for it the way they should have.

The Baby Boomers have not left a legacy that inspires much emulation. The world is a far more serious place, now, as we  try to grapple with long-term problems, not short-term ones, like a war. I have pointed out before that wine-industry data clearly high-light global warming back in the 1970s (Grape harvest dates and the evidence for global warming); but no-one cared back then. The wine industry certainly has a role to play, now, by achieving carbon neutrality, and by caring about packaging (their own, and that of others: Wine brand removes 10 million plastic bottles from the oceans).

However, that will never be enough (Why have we left it so late to deal with climate change in the wine industry?). My background in biological science tells me that reversing global warming may be a pipe dream — the best we may ever be able to do is to stop making it worse. Natural ecosystems are very robust, and they tend to move from one stable state to another, in response to any given disturbance. The new state may not be desirable for human beings, as some species become extinct while others taker over dramatically. The weather may be completely different, and stay that way for hundreds of years — so, you may have to get used to the current droughts (West megadrought worsens to driest in at least 1,200 years), and the loss of cool nights during grape ripening (Winemakers are poised to lose another vital tool to climate change). This has an obvious affect on agricultural pursuits, with desirable geographical locations for each pursuit changing dramatically. This is all "perfectly natural" in the big scheme of things; but it may take a lot of getting used to by human industries, which are all small-scale by comparison.

On top of this is the matter of health. Living a healthy lifestyle is unquestioned by Millennials. This means that any question about wine and health is of paramount importance. There are actually two issues here. One is the increasing pressure being applied to the alcohol business, particularly by the World Health Organization and by the European Union. This does not refer just to whether wine containers should have a list of ingredients (A perfect storm: Nutri-Score, alcohol and health;  Two glasses of wine enough to hit daily sugar limit) but also the extent to which it should contain health warnings (European Union lurches towards Prohibition;  Amendments made to alcohol and health recommendations in Europe). The second issue is whether we ever could work out whether wine is good for us or not (Wine and health — why is there so much argument, pro and con?). The response of parts of the alcohol industry has not been good (How can we get sober from the influence of the alcohol industry?).

None of this is meant to be scare-mongering. The world will be what it will be, and at my age I will not still be here to see it. However, my daughter will be, and she is an archetypal Millennial. She has no interest whatsoever in wine, at least partly because her parents do have one (including her step-mother). She is part of the future, and we are not (for long, anyway). The Millennials are trying to make their own future, just as the Bay Boomers did, before them.

So, the ultimate question for the wine industry is: how do we make the wine industry part of that future? What we are doing at the moment is asking a very different question: how do we make the Millennials part of the wine industry? When you swap those two questions, it is easy to see why the wine industry is having a hard time. Someone has put the cart before the horse. We do not need to get the Millennials to join us; but instead we must join them!

This means that we should stop trying to sell preordained wine to the Millennials, and start making something that they would actually choose for themselves.

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There is an old saying: The customer is always right. This is not a definition of “right”, but instead it is a definition of “customer” — if you think that someone is wrong, then they can never be your customer.

The monetary value of bottled wine imports versus exports

I have written before about the balances between wine imports and exports for different nations (Where does all of this wine come from and go to?). In that case I looked at volume, whereas this time I will look at the monetary value, specifically of bottled wine.

Obviously, the difference between volume and value is the price per bottle (or box). Some countries habitually deal with cheap wines, while others are more up-market (eg. The USA imports more expensive wines than anywhere else).

The data come from Comtrade, the United Nations International Trade Statistics Database. I accessed all of the data available for 2020 in the category: "Wine; still, in containers holding 2 litres or less" (code 220421). So, we are dealing with bottled wine, rather than bulk wine — bulk exports are bottled in the receiving country, and sometimes also mixed with the local produce. Also, the data exclude sparkling or fortified wines.

I have plotted the results in the first graph, which shows the total reported imports (in millions of $US) horizontally, and the total reported exports vertically, with each point representing a single country (as recognized by the UN). Note that both axes have logarithmic scales, so that the most active countries are dealing with up to 4 billion dollars of wine annually.

The pink line indicates a perfect balance between imports and exports. For those countries above the line, their exports exceed their imports, while for those below the line, imports exceed exports. Obviously, most countries are net importers of wine — only two dozen countries are net exporters of bottled wine.

In the next version of the graph, most of these exporter countries are labeled with their 2-letter codes, along with four other countries. There are six unlabeled countries only just above the line, which are (from left to right): Uzbekistan, Azerbaijan, Slovenia, Uruguay, Bulgaria, and Austria. So, for example, Uzbekistan does not export much bottled wine, but it imports even less — it is the second smallest importer by value (only Niger imports less).

France (FR) and Italy (IT) are the clear export leaders for bottled wine, followed by Spain (ES), which is the biggest exporter of bulk wine. Then come Australia (AU), and Chile (CL), followed by Portugal (PT), New Zealand (NZ), and Argentina (AR). Next are South Africa (ZA) and Georgia (for the latter, see: How much does wine contribute to total exports?).

Of these countries, Chile, Argentina, South Africa, and Georgia are not big importers of bottled wine, unlike the other labeled countries — the locals clearly rely on their local wines, for sustenance.

Both the USA and Germany (DE) have big wine production, but they still export less bottled wine than they import.* The United Kingdom (UK) and the Netherlands (NL) are not big wine producers, at all, and they thus import a lot of bottled wine. However, they both re-export a fair bit of it, to other places in Europe — for example, a lot of Australian wine comes into Europe via the UK. So, technically, they are pretty big exporters.

Finally, the third graph simply looks at the relationship between imports and exports for those countries where exports < imports. The black line is the regression line of best fit. The joint relationship between imports and exports encompasses 68% of the between-country variation in the data. It is not surprising that there is a simple (power) relationship between imports and exports, which will be based mostly on population size (more people means more of both imports and exports).

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* The composition of US wine import values by country is detailed here.

Current wine production at the birth-place of wine

The cradle of wine-making is, for the time-being, considered to be within the lands of the current country of Georgia, all of 8,000 years ago. Evidence of wine production has been found in several places in West Asia, including a 4,100 BCE winery site in what is now Armenia, and some 6,000 BCE clay vessels in adjacent Georgia.

The Georgian history is based on the dating of these 8,000 year-old earthenware vessels, called qvevri (or kvevri). The qvevri is Georgia’s best-known wine-making vessel, and it remains an important component of traditional wine-making in Georgia, even today. So, this finding of the remains of grapes and grape seeds in archaeological sites is the oldest evidence we currently have of wine production.

The 14th Annual Conference of the American Association of Wine Economists will be held in Tbilisi, Georgia, August 24–28, 2022. Obviously, this annual conference has not been held for the past 2 years; so it is somehow fitting to pick Georgia for a pandemic-ending restart. In this regard, I thought that it might be appropriate to compile, in one place, some of the current information about the wine industry in Georgia.

Wine-making is still an important business in Georgia, as it is the country’s fourth biggest export commodity. Wine exports contribute 6.5% to the national Gross Domestic Product (in terms of value), a greater percentage than for any other country (How much does wine contribute to total exports?). Somehow, this seems quite appropriate, for the place of origin.

As the homeland of wine-grape production, Georgia is reportedly home to roughly one-sixth of the world's total grape varieties, with more than 500 distinct indigenous varieties (Wine of Georgia: Georgian grape varieties). This does not mean, however, that most of them are used with any great frequency. Indeed, wine production is dominated by one main white variety: Rkatsiteli, with 53% of the vineyard area (47,997 recorded hectares). The following graph, from the AAWE, shows the vineyard hectares for the 21 most widespread varieties in 2016. Clearly, red wine is not a big thing in Georgia.

There are less than a dozen recognized grape-producing regions in Georgia, as shown in the following map, from the AAWE. One region dominates: Kakheti, in the south-east, as highlighted. Note that the region of Abkhazia (in the north-east) is grey, indicating no available data. Most countries recognize this region as an autonomous republic within Georgia; but it has been under Russian influence since the days of the Soviet Union, so that Georgia maintains merely an official government-in-exile.

If we look at the grape production figures for 2020, as shown in the next table (from the AAWE), we can see that the Kakheti region dominates both red and white grape production, with 69% and 78% of the national tons, respectively.

Production has increased in recent years, as shown in the next table (from the AAWE), with a 75% increase in tonnage over the 4 years. Moreover, Kakheti has maintained its dominance (c. 75% on the national tons).

This does not mean, however, that grape-vine yield is necessarily impressive. Indeed, the next graph (from BKwine) shows that Georgia has well below the average yield for wine-producing nations. The countries are in order (left to right) of decreasing total wine production (the dashed line is the average). To be economically effective, a country needs to have either big vineyard area or big yields — and clearly Georgia has neither (eg. Portugal has roughly the same yield, but much more area, and thus bigger production).

We could now look at where this wine goes to. A slowly increasing amount ends up in the USA, as shown in the next graph (from the AAWE). The value has increased nearly 7-fold across the 9 years, which is good for the Georgians. However, there has been a distinct preference for red wines, which is the minor component of Georgian production. This imbalance is being redressed, bit by bit.

So, where does the rest of the production go? A recent report makes the answer quite clear (Georgian wine industry seeks to reduce risk of Russian economic bullying):

The Georgian wine industry, gutted by a Russian embargo 15 years ago, is thriving once again. But success is resting on a shaky foundation. While exports reached record levels in 2021, roughly 55 percent went to Russia ... 

The Georgian National Wine Agency reported 13.8 percent growth for wine export volume during 2021, with more than 100 million bottles distributed abroad by over 420 companies. Export revenue reached $239 million, a 5.6 percent jump over 2020. Most encouragingly for producers, exports increased significantly to the United Kingdom and United States, and broke into new Western markets, including Canada, Czechia and Sweden. 

But the data still show that Georgian wine exports are stubbornly dependent on the Russian market. Among the top five nations that consume Georgian wines, Russia accounts for more than double the volume of the next four (Ukraine, Poland, China and Belarus) combined.

Anyway, I presume that those people who make it to the AAWE conference will enjoy the local wines, first hand, even if they have never previously had any at home.

Valuable updates

There is a recent AAWE graph of Georgia's total wine exports 1996–2021 (value and volume).

Also, a recent AAWE graph of Georgia's wine export prices 2000–2021, by country.

Also, a recent AAWE graph of Georgia's wine exports 2020 and 2021, by country (value, volume and price).

Finally, recently noted is that Georgian wine exports to the U.S. have topped one million bottles.