Photo: Andre Castelluci / Wine Australia

Global demographic trends and what it means for wine

Market Bulletin | Issue 129
Photo: Andre Castelluci / Wine Australia
16 Oct 2018
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Euromonitor International recently highlighted that demographic changes such as ageing populations, urbanisation and migration ‘have the power to transform the world we live in’ as they ‘reshape consumer lifestyles and purchasing decisions’.

So, just how do demographic shifts affect wine consumption? Wine Intelligence has suggested in its Global Workshop series: Driving future value in wine that there are three major demographic trends to consider – ageing population, gender equality and shrinking households.

Image: Andre Castelluci / Wine Australia

Ageing population

The United Nations (UN) has predicted the world’s population will grow by 12 per cent to reach 8.5 billion people by 2030. But much of this is coming from markets that are not currently big consumers of wine; such as India, Nigeria, Pakistan, Congo and Ethiopia.

Despite this, there has been a slowdown in fertility rates globally and, coupled with increasing life expectancy, the proportion of older people is now growing steadily. This trend is also projected in most regions.

McKinsey & Company noted in a 2016 podcast Getting to know urban elderly consumers that when it comes to urban consumption in developed regions, people aged 60 years and over are predicted to account for more than half of all growth in the next 15 years.

Data from Wine Intelligence indicates that the proportion of regular wine drinkers aged 65 years or more in Australia has risen from 12 per cent in 2012 to 20 per cent in the last 6 years (Figure 1). There has also been growth in the United States of America (USA) and in Germany. Of the Australian respondents surveyed in 2018, there was a significantly higher number with a household income of $70,000 or less compared to the other age groups. Therefore, individuals in this segment spend less on average in both the off- and on-premise occasion (Figure 2). For example, those aged 65 and over typically spend around $13.90 on a bottle of wine at a party/celebration at home whereas those aged 25 to 44 years will spend up to $17.00 a bottle. This trend is also the same in the USA, although there is a much larger proportion of regular wine drinkers aged 65 years and over that have a household income above $70,000.

Figure 1: Proportion of older wine drinkers in developed markets

Source: Wine Intelligence

Figure 2: Average typical spend of regular wine drinkers on a bottle of wine during the following occasions

Source: Wine Intelligence

Note: Coloured figures represent statistical significance at a 95 per cent confidence level – Red higher than total sample, Blue – lower than total sample.

Image: Ewen Bell / Wine Australia

Gender equality

One of the influences on reduced fertility rates around the world is that urbanisation and globalisation have led to more women entering the workforce, getting married at older ages and having fewer children. This change has resulted in women being considered the most powerful consumers across the developed world with more disposable income, opportunities to socialise and greater influence on purchasing decisions. In Northern America, the UN has reported that around 47 per cent of households are headed by women, followed by Europe at 37 per cent.

Many businesses in the alcoholic beverage sector acknowledge this new trend. Euromonitor International highlighted in its Alcoholic Drinks in Japan 2018 report that attempts to attract females and younger consumers have led to innovation with health and wellness product offerings focusing on sweeter, lower alcohol, a lack of artificial ingredients and reduced carbohydrate content. This has led to higher awareness and purchase intent of female Japanese regular wine drinkers for several niche types of wine compared to men, such as preservative-free and organic wine, based on data from Wine Intelligence.

When it comes to wine consumption, the proportion consumed by women is relatively consistent across most markets and these have not changed considerably over time (Figure 3).

Figure 3: Proportion of female regular wine drinkers in developed markets

Source: Wine Intelligence

But where changes are being observed is in women’s confidence in their knowledge of wine. Research conducted by Wine Intelligence shows that, while globally women are less confident with choosing wine compared to men (indexed at 49 compared to 53 respectively), they are becoming more knowledgeable (indexed at 32 for both men and women). This is even more apparent in China where 51 per cent of women and men feel competent about their knowledge of wine and more women disagreed that they know less about the subject of wine at 31 per cent (Figure 4). Women from Australia, the USA, United Kingdom and Japan though are still lagging in their confidence of their wine knowledge compared to men. This trend partly explains why women have a higher preference to stick to what they know and are less likely to try something new. But, like in China, fewer females in the USA agreed that they knew less about the subject of wine.

Figure 4: Involvement and perceived expertise of wine drinkers

Source: Wine Intelligence

Note: Percentage of those that agree or strongly agree with the statements. China survey base is urban upper-middle class imported wine drinkers. All other in-market surveys are based on regular wine drinkers. Coloured figures represent statistical significance at a 95 per cent confidence level – Red higher than total sample, Blue – lower than total sample.

Image: Ewen Bell / Wine Australia

Shrinking household size

As more people across the globe move from rural to urban living at a significant rate, so too come changes in lifestyles, attitudes towards marriage, consumption patterns and household sizes. These present new opportunities for business.

Increases in the number and share of single persons households have been noted in several developed countries. According to Wine Intelligence, 20 per cent of USA regular wine drinkers live alone. This is closely in line with the proportion of single person households, which was around 28 per cent in 2014. In Australia, this proportion was at 24 per cent in 2016, up from 20 per cent in 1991.

From this trend, Wine Intelligence has observed changes to shopping patterns as well as pack sizes, including single serve options such as canned wine. IRI Worldwide reported a 26 per cent increase in off-trade canned wines sales in the USA when comparing the year ending June 2018 to the previous year. While off a very low base, this was the only container type that grew in sales in an overall flat market. This trend has taken longer to hit Australia, but according to IRI Market Edge (moving annual total 19/08/18), canned wine sales in the domestic off-trade have been growing in the last year but represented only 0.04 per cent share of total wine.

Of course, single person households are not solely responsible for this new trend. As highlighted in the Wine Australia Market Bulletin The more things change… lessons from innovation across the drinks industry, other drivers are environmental concerns, convenience and novelty, and much of this is being led by younger and female consumers.