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31 May 2022
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Despite seismic disruptions to world trade and consumer behaviour in 2020 and 2021, global wine production and consumption have remained relatively stable, according to the OIV1 State of the World Vine and Wine Sector 2021 report published in April 2022. 

Production slightly below long-term average for third consecutive year

Total production of (grape) wine in 2021 is estimated by the OIV to be 26 billion litres, 1 per cent below 2020 and 2 per cent below the 5-year average. Production has been almost flat, and slightly below its long-term average, for the past three years. 

Although the overall production was largely unchanged from the previous year, this hides very different results from the main contributors. Production in the northern hemisphere was down by nearly 20 per cent as a result of severe frosts and unfavourable weather conditions in France and (to a lesser extent) Spain, while the southern hemisphere was up by the same percentage to reach a record high production, driven by record or well above-average vintages in Australia, Chile and Argentina. Only New Zealand went against the trend, being down by 19 per cent after having a record vintage the previous year.

As a result of these uneven contributions, the southern hemisphere increased its share of total production from 39 per cent in 2020 to 43 per cent in 2021. Australia increased its share from an unusually low 4.1 per cent in 2020 back to a more average 5.5 per cent in 2021 (Figure 1).

Figure 1        Share of global wine production by country 2021

Underlying vineyard base is declining

The world’s vineyard area2 is in long-term decline. It has reduced from 7.8 million hectares (mha) in 2003 to 7.3 mha in 2021 – a reduction of 6 per cent over 20 years. Most of the decline occurred between 2003 and 2010, and there has been little change in the past four years3. While again there have been some ‘swings and roundabouts’ with losses and gains in individual countries underpinning the overall trend, as well as changes in viticultural end use (e.g. in China), there have been no major changes in area in the large wine-producing countries for several years. This suggests that although another large vintage such as 2013 and 2018 is possible, it is becoming less likely, particularly in the context of long-term drought conditions in many regions. 

Supply continues to exceed demand

The OIV estimates that wine consumption was 23.6 billion litres in 2021, an increase of just 0.7 per cent compared with 2020. While this was a very small increase, the positive news is that it reversed a fairly steep decline that had been occurring since 2017, driven primarily by reduced consumption in China and exacerbated by the impacts of COVID-19 on consumption patterns and tourism in 2020. Most markets apart from China saw an increase in consumption in 2021, although several markets – and the world overall – were still not back to 2019 consumption levels. 

On the downside, supply still exceeded demand (consumption) by more than 2 billion litres. The world has essentially been in over-supply of wine for at least the past 10 years (Figure 2).

Figure 2        Excess global wine supply by year based on production and consumption estimates

Source: OIV

Despite less wine, more of it is being traded

Although consumption and production changed very little in 2021, the amount of wine exported increased to a record 11.2 billion litres – meaning that 43 per cent of wine produced globally was consumed in a different country from its origin. The amount of wine traded has doubled since 2000, when it accounted for around 22 per cent of production. This largely reflects the freeing up of international trade generally, as well as being driven by consumer preferences and international tourism. In Australia, the volume of imported wine has increased from 16 million litres to 107 million litres since 2000 (an increase of more than 500 per cent).

The record amount of wine exported comes at a time when the global wine sector is facing major transportation issues, increased costs and reduced consumer discretionary incomes due to rising costs of living in several markets. These factors, as well as slow recovery of international travel, are likely to have an impact on exports in the next few years.

Australia exports approximately 60 per cent of its wine, with its top 10 export destinations accounting for around 90 per cent by volume.  

Looking ahead 

Early indications for 2022 are for another average global crop, this time as a result of the northern hemisphere recovering from the steep decline in 2021 while southern hemisphere producers revert from the record highs of last year. Generally good winter conditions in Europe mean that there is the potential for an above-average crop in these larger producing countries.

The IWSR forecasts that global (grape) wine consumption will decline by 1 per cent in 2022, with imported wine declining by 3 per cent while domestic wine is static. After that the trend is expected to reverse, with imported wine projected to grow each year by 1 or 2 per cent while domestic wine consumption is projected to remain static and overall consumption to grow by a maximum of 1 per cent per year from 2023 to 20264

Given the likelihood of a small decline in consumption in 2022 and the limited potential for a significant decrease in production, overall conditions are unlikely to improve for wine exporters in the next 12 months. 

1. International Organisation of Vine and Wine

2. Includes vineyards for tablegrapes and other viticultural purposes not just wine.

3. OIV 2022

4. IWSR 2022

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This content is restricted to wine exporters and levy-payers. Some reports are available for purchase to non-levy payers/exporters.