The availability of older wine vintages in Sweden?

I live in Sweden, where the local retail chain for alcohol products is owned by the government. The European Union (EU) officially discourages monopolies, but actually bans only commercial ones, not government-owned ones. The Nordic countries have long had government ownership of alcohol sales, and for a good reason, as I have discussed before (Why are there wine monopolies in Scandinavia?). However, the only alcohol monopoly left in the EU is Systembolaget, in Sweden, although Vinmonopolet continues to operate in Norway (which is not part of the EU). *

The objection to government monopolies is usually that they “manifestly cause waste and inefficiency, while denying consumers the range of price and service options they desire”. I have previously argued that this is not true for Systembolaget: (i) I have pointed out that, as the third biggest alcohol retailer in the world, Systembolaget provides me with a wide range of wines of all styles and origins (Wine monopolies, and the availability of wine), and (ii) decent wine is less expensive in Sweden compared to most other places, and sometimes cheaper even than in its homeland (Why is wine often cheaper in Sweden than elsewhere?). Also, Systembolaget was recently voted among the most trusted institutions in Sweden, with 71% of the respondents having high confidence (Most trusted institutions/companies in Sweden in 2023).

It therefore seems to be an obvious extension of this topic to ask about the availability of older vintages of wines, as well as simply the current release from any given winery. Price is not everything, in the wine world. So, what I will do here is look at the availability of older vintages of Australian wine (because that is where I come from), currently in bottles in Systembolaget. As an aside, Systembolaget reports that boxes represent roughly 60% of wine sales, rather than bottles. [This retailer is known to the locals as “Systemet” = The System.]

The table below shows the results of my searching in the database. These are all of the Australian wines at least 5 years since vintage. I have shown the Swedish (SEK) price for each wine. Note that US$ 1 ≈ 10 SEK, which makes the conversion easy. The prices are usually not discounted after initial release, but sometimes it does happen, presumably to clear the stock. For example, the Paulett Chardonnay was recently reduced to 99sek.

I should point out that most of these wines were originally released as the current vintage release, and they have simply gone unsold by the importer / distributor. This does not matter in practice, provided that the wines have been stored suitably. According to what I can find out online, all of these wines should still be quite drinkable, as indicated in the third column of the table (best years in which to drink).

This looks to me like a reasonable selection (two dozen); and provided that the wines are still drinkable it is worthwhile. However, people used to specialist wine shops might find that this selection is nothing to write home about, especially in countries like the USA, where specialty retail is expected, and Australia (eg. Wynns Black Label hits purple patch). However, for the Swedish national retail chain, where almost all of the alcohol sold is budget stuff for everyday drinking (the classic “wines for the table not the cellar”), it is as good as I would expect. These wines have effectively been in a cellar (the importer) for several years, and they can be in a cellar (mine) for a few more yet.

These wines are rarely actually in any of the retail stores, but are still in the importer / distributor warehouse. ** They can be ordered through the Systembolaget online order system, and arrive a few days later at my local store, where I collect (and pay for) them.

It has been suggested to me that these wines might be specific inventory that went unsold during the Covid19 pandemic. However, to me this seems unlikely, as it is customers not restaurants ordering through Systembolaget, and they could continue to order exactly as usual all during the pandemic slowdown.

On a disappointing note, I recently ordered three of these wines, and in one case I was substituted the 2018 vintage instead of the 2016 — on a brighter note, I got a 30% discount.

---

* Small-scale farm-producer sales of alcohol are to be allowed in Sweden by 2025, according to the government. Yay!

** A recent survey indicated that, for younger people, Cost of shipping, Customer service, and Communication about order status are more important than Wide variety of choices.

Is Australia likely to recover from the devastating loss of the China wine market?

I come from Australia, where in the 2000s the wine industry literally rode upon the camel’s back of the Chinese wine consumption market. Sadly, this market collapsed in late 2020, when the Chinese government retaliated in response to one of Australia’s senior politicians suggesting publicly that China should be officially investigated about the origin of the SARS-CoV2 virus (and the ensuing Covid19 global pandemic). The Chinese were never investigated, but Australian wine was slapped with an onerous import tariff (as high as 218%), making the wine uncompetitive in China.

This went on for several years, during which the Australian wine industry suffered badly from the loss of one of its biggest export markets (How China is devastating Australia’s billion-dollar wine industry). The Chinese tax was removed in March this year (China lifts penalties on Australian wine after more than three years), and it is therefore of interest to see how things are faring now.

Back in 2019, before all of this occurred, I innocently asked in a blog post: Will the slowdown in the Chinese wine market catch up with Australia and Chile? China had, at that time, been the world’s fastest-growing wine market, being then ranked as the number 2 still-wine consumer by value and number 5 by volume. Given the small size of Chinese wine production, this made China a significant import market, worldwide.

Australia had had considerable success at targeting this market, as I showed in that blog post. Therefore, the effective loss of this market was a devastating blow to the Australian wine industry.

However, in a later (2021) post I noted that there had already been a decrease in wine consumption in China dating from 2016 (So, why has China gone off the boil?), and a decrease in production that had started in 2012. China thus downgraded from been the second largest wine market in the world; and so Australia was already losing a large market anyway.

Furthermore, earlier this year, in another blog post (The demise of the Australian wine industry? Part 2), I noted that there has been a downturn in the global wine industry, with an over-supply of wine; and Australia’s situation with China is at least simply a part of this broader issue. So, the anticipated return of the Chinese market as a destination for Australian wine may not be the hoped-for panacea.

Indeed, the changed China wine market was analyzed in 2023 by Kym Anderson (What’s happened to the wine market in China? Journal of Wine Economics 18:173-183). He produced the graph below, and commented:

Coinciding with COVID has been the imposition of punitive tariffs on China’s wine imports from Australia since the end of 2020. While that has had a large impact on Australian producers, on its own it is estimated to have reduced China’s total wine imports by less than 1%, because China was able to, and did, source more wine from other wine-exporting countries. So if Australia were to be able to claw back its 2018–2020 share of China's wine imports (one-quarter by volume, a little over one-third by value), that would amount to an export increase of not 130 ML or U.S.$750 million per year but perhaps only half those amounts.

So, things have changed in China, with a smaller market, established players, and emerging trends. For Australia, we now seem to have (What are Chinese wine importers seeking in Australian wines in post-tariff era?):

The most notable difference from three years ago is wineries’ current emphasis on securing reliable, long-term partnerships over merely chasing volume. This marks a more rational approach in today’s dealings. When asked about the support they anticipate from Australian wineries, wine merchants expressed a desire for marketing assistance, including winery tours, tasting events, and exhibitions. Recently, the South Australian government has launched a AU$1.85 million support scheme to help wineries to re-enter China. AU$600,000 of the grant was earmarked for two-way market activations and support.

So, the current 2024 situation (Australian wine pours back into China as tariff-free shipments surge to over US$10 million in April) appears to be:

China imported over US$10 million of wine from Australia in April, up from US$126,000 a year earlier, after it lifted punitive imports tariffs at the end of March. This represents a roughly eighty-fold increase, according to Chinese customs data. Imports by volume, meanwhile, increased more than seven-fold year on year to 462,518 litres (813,918 pints). As a result, Australia’s share of China’s wine imports rose from 1.45 per cent in March to 10.52 per cent last month, making it the third largest wine supplier after France and Chile.

This is certainly good news. However, at the same time, Jeremy Oliver, the Aussie wine critic most active in China, explains the post-tariff market:

“So the tariffs came in when Australia was selling (depending on which numbers you read) something like between $1.4 and $1.5 billion of wine to China per annum, and our next biggest export market at the time would have been the US at about $3.33 million, so [it was] nearly four times the size of our next biggest export market” said Jeremy Oliver, one of Australia’s leading wine critics. “My guesstimate based on a whole series of rational assumptions: we might be able to get that market back to about $250/$300 million or thereabouts; nothing like the $1.4/$1.5 billion,” he said.

Indeed, if we look at the new market in China (Here are China’s 50 top wine importers), in terms of companies, we have:

In the first five months of the year, the total number of bottled wine importers had contracted to 4,175. Among them, only a handful are identified as large wine importers with import value exceeding US$10 million. The bulk of China’s wine imports is driven by medium- and small-sized companies. Wine companies importing less than US$10 million per year represent more than 82.3% of the country’s total imports. Furthermore, small companies importing between US$1 million and US$5 million, account for more than half of the total imports — 52.4% to be exact, according to the association.

So, the current practical response to the global wine situation is still that Australian farmers rip out millions of vines amid wine glut:

Millions of vines are being destroyed in Australia and tens of millions more must be pulled up to rein in overproduction that has crushed grape prices and threatens the livelihoods of growers and wine makers. Falling consumption of wine worldwide has hit Australia particularly hard as demand shrinks fastest for the cheaper reds that are its biggest product, and in China, the market it has relied on for growth until recent years. Red wine has suffered the most. In regions like Griffith, prices of the grapes going into it fell to an average of A$304 ($200) a ton last year, the lowest in decades and down from A$659 in 2020, data from industry body Wine Australia show. “It feels like an era is ending”, said Andrew Calabria, a third-generation vineyard owner and wine maker at Calabria Wines.

Sadly, the Australian government does not fund growers to exit an industry (Inland wine grape growers seek government support to exit industry with dignity amid wine glut), as opposed to the support package they have announced (described below). *

That is, the Good Old Days are definitely gone. Indeed, just for irony: China threatens retaliatory tariffs on EU wine amid trade disputes. What goes around comes around again.

---

* The Australian government has announced a new support package for the Australian wine industry; and it has been claimed that 350 Australian wine producers and businesses have re-established exports to China since the tariffs were removed (Exports to China surge $86 million as government reveals support package). This is the optimistic point of view, which I am suggesting here may not be too realistic in the long term.

There cannot be a single or uniform approach by the wine industry to climate change

The wine industry, on the whole, has tried to Be a Good Citizen, by caring about its affect on the world’s climate. All agricultural products have a so-called Carbon Footprint, which is an attempt to measure how well this is being done.

There have been several review articles discussing this topic over the past 15 years, and it is worth looking at some of them here, to try to clarify where the wine industry currently stands. After all, 2023 was apparently the warmest year recorded globally, so we do need to take things seriously; and the potential health effects of wine are not the only important thing (There is much medical evidence that wine consumption is good for your health).

According to Wikipedia:

A carbon footprint (or greenhouse gas footprint) is a calculated value or index that makes it possible to compare the total amount of greenhouse gases that an activity, product, company or country adds to the atmosphere ... A product’s carbon footprint includes the emissions for the entire life cycle. These run from the production along the supply chain to its final consumption and disposal.

That last part, about the life-cycle, is important. The affect of the wine industry includes growing the grapes, making the wine, packaging the wine, transporting the wine, consuming the wine (hopefully!), and disposing of all of the refuse from these processes. As has been noted: The drinks industry has a huge carbon footprint: there are solutions.

One of the first good reviews of the topic was that by:

Tyler Colman, Pablo Päster (2007) Red, white and “green”: the cost of carbon in the global wine trade. American Association of Wine Economists Working Paper No. 9.

The authors note that:

Climate change is altering a wide range of human activities, including wine making. While wine may appear to be one of the most natural alcoholic beverages, it is not without carbon inputs and emissions, which contribute to the very change in climate that is altering both wine and wine making.

One of the most important points made in that paper, especially at that early stage, was that not all countries have wine industries that are equivalent to each other, in terms of their impact. The authors produced this next graph, showing the carbon use of six different wine-producing regions, illustrating that some regions produce twice as much carbon as others.

This effect happens at all six of the listed wine-industry life-cycle stages, but some are far worse than others. In particular, the authors emphasize that it is shipping that can be the killer. They note:

To underscore the fact that not all transportation miles are alike, many New Yorkers may be surprised that holding bottle mass constant, it is more “green” to drink wine from Bordeaux (1.8 kg carbon) with a long sea voyage as opposed to a wine from Napa (2.6 kg) with a long truck trip.

A decade later, this next review appeared:

Flavio Scrucca, Emanuele Bonamente, Sara Rinaldi (2018) Carbon footprint in the wine industry. In: Environmental Carbon Footprints, pp. 161—196.

They further emphasize the different components of the wine-industry life-cycle stages, and refine the estimates of seven different components of what they call a “generic wine bottle” (they have added Vineyard Planting as the extra component). They provided this next graph, where the carbon footprint is in units of kgCO2/bottle. Note that the two biggest components are Packaging Processes (mainly glass bottle production) and End-of-life Processes (including landfill disposal, reuse, recycling), followed by Viticulture (including use of pesticides and fertilizers, and diesel consumption for field activities).

They further emphasize the global variability in the estimation of the size of the carbon footprint, by comparing nine different red wines, as shown in the next figure. The carbon footprint of some wines is twice that of other wines, indicating that there can be no single global response by the wine industry to climate change. The components of the life-cycle for each wine need to be assessed independently, and appropriate adjustments made if deemed necessary.

Finally, a recent review article appeared:

Cornelis van Leeuwen, Giovanni Sgubin, Benjamin Bois, Nathalie Ollat, Didier Swingedouw, Sébastien Zito, Gregory A. Gambetta (2024) Climate change impacts and adaptations of wine production. Nature Reviews Earth & Environment 5 pp. 258—275.

These authors are particularly interested in the opposite situation to the above: what effect climate change will have on the wine industry. They produce an interesting stylized map, with each of the major wine-producing regions as a hexagon, as shown in the next figure. They consider two scenarios for climate change: an increase of up to 2 degrees (celsius) and up to 4 degrees (both of these are reasonable current estimates). They then evaluate the suitability of each region to continue making wine under each of these scenarios, as well as for new regions to become suitable.

The important thing to note is that the warmer a region currently already is then the less suitable it will be for future viticulture. This basically means that wine-making is going to move north in the northern hemisphere. You will all soon be drinking Scandinavian wine, quite happily!

The authors produced a second map in the same format, showing drought projections for the wine-making regions under the same two warming regimes. Their conclusion from this is what you would expect: the drier a region already is then the drier it is going to become. We therefore need to start developing drought-tolerant grape-vines now, which produce the wines we want but can do so in the climates as they will soon be.

Certificates of social and environmental responsibility (like organic or biodynamic credentials) have become important markers for wineries (Why are wineries around the world seeking this certification?). However, there has to be action as well, which will always be visible on The Bottom Line. One obvious recent example of moving forward is: New glass alternatives lower shipping costs, carbon footprints.

Global wine production has exceeded consumption for decades

Grapes have been cultivated for hundreds of years in Europe, often for the purpose of making wine; and even in the USA grapes are currently among the three largest crops of non-citrus fruits, in terms of utilized production (Adding up some of the latest grape production data). 

However, for quite some time now we have repeatedly been told that there is a turning point in the global wine industry (eg. Wine in crisis: Navigating prohibitionist waves and market shifts). For example, John Barker, director-general of the International Organisation of Vine and Wine (OIV), recently presented preliminary estimates on the state of the world wine and vine sector in 2023 at the OIV annual conference, in which wine production exceeded wine consumption (Wine production and consumption declining). Such a situation is obviously not sustainable, and it is thus worth looking into here.

Most commentators simply compare current consumption to current production, which is actually not much help for our current purposes (see below). Nevertheless, the global production each year since 2000 is shown above (in mega-hectoliters); and the annual global consumption is shown below. These graphs come from the OIV’s State of the World Vine and Wine Sector in 2023 report.

Note that production varies greatly from year to year, depending mainly on the growing conditions. Consumption, on the other hand, varies much less between years, but it has generally been decreasing since 2007, and there has been a more rapid decrease in the last two years. It is this latter observation that seems to be of most concern to many of the commentators. Indeed, it has been reported now that US cannabis use outpaces daily alcohol consumption.

However, what we actually need to know is how the two measurements (production and consumption) directly compare to each other through time. This is shown in the next graph, where each point represents one of the years since 2000. I have taken the data from the OIV database, and plotted it myself. If annual consumption equals production then the points would lie along the along the pink line (one of them is close). However, all of the points are actually below that line, meaning that production exceeds consumption, considerably, and has done so every year since 2000. That is, the so-called “current problem” has actually been situation–normal for more than 2 decades!

There is a (small) technical problem here, however. Since both production and consumption vary from year to year, and in response to completely different factors, it matters which years we compare. Notably, in the northern hemisphere any given year’s wine consumption occurs mostly before that year’s wine production, while in the southern hemisphere it is afterwards (ie. their vintage is early in the year). The OIV data show that most production and consumption occurs in the northern hemisphere. So, the next graph compares annual production to consumption the year before, and plots it through time (NB: for points above zero, production exceeds consumption).

Note that the excess wine production over consumption varies greatly from year to year, mainly in response to variation in production. However, for 2 decades now, wine supply has exceeded consumption by an average of 13% and a maximum of more than 24%. The authorities and commentators need to get their collective heads around this simple fact — up to 15% (one-seventh) of vineyards have apparently been in excess of requirements during this century, and presumably could usefully be removed.

Looking in a bit more detail, we can also consider different types of wine. The next graph is taken from the Focus OIV 2023: Evolution of World Wine Production and Consumption by Colour report. It shows the global consumption data separated into the three different main wine types. It makes clear that red wine consumption has generally been decreasing since 2007, while white wine consumption has generally been increasing (until 2017), and that rosé has remained steady (and inline with production). So, we might conclude that it is the red-wine vineyard area that has gradually become more and more in excess of requirements.

Export of much of wine production means that it difficult to identify exactly where production is in excess — eg. Sweden produces wine but nowhere near enough to meet local demand (Swedish wineries — who'd have thought it?). Production in Sweden thus cannot be in excess of local requirements! Moreover, the top eight global producers made 75% of the world’s wine last year, so this is presumably where we should look.

Interestingly, as shown in the next graph (taken from the OIV’s State report, referenced above), global vineyard area has generally decreased since 2003, by about 7.5% (one-thirteenth). That is, we are actually trying to get there already! Indeed, some places are explicitly into it, calling it “sustainable vineyard removal and recycling” (Washington vineyards reduce acres, reuse and recycle).

Mind you, with the effects in the USA of the impending WHO dietary guidelines, which adopt a zero-tolerance alcohol policy, there may be even bigger problems ahead for the Americans (Wine industry braces for impact of trickle-down health recommendations).

Sadly, this sort of thing is apparently not being taken on board. As but one example, the Bordeaux data do not look good (Bordeaux 2023 — in the balance), Bordeaux has responded to this, not by reducing its vineyard area, but with: Bordeaux wines unveils striking new global campaign developed by its winemaking community. Elsewhere, the response is not much better (US wine industry fights back with new marketing campaigns).