In recent days, one or two striking diagrams showing the decline in wine consumption have gone viral on social media, revealing significant drops in some regions.
In a radio interview at the beginning of the summer, I also discussed the strong possibility that the global wine market is seeking a new equilibrium point, likely moving towards a stabilization of both production and consumption at lower levels.
Let's examine where we stand today within the context of a 'vulgar,' i.e., one-sided, management analysis: If you search for terms like 'uproot,' 'grubbing up,' or 'vine removal,' you'll sense the nervousness among producers (and traders). Proposals suggest that the cultivated areas should be reduced globally by around 15% (currently approximately 7.2 million hectares). Within this framework, 9,500 hectares in Bordeaux (currently 120,000 ha) are awaiting liquidation, with 100,000 hectares targeted for removal across France (currently 750,000 ha), and 12,000-12,000 ha reductions proposed in California and Australia, among others.This suggests that the official response to declining consumption is to reduce production areas, thereby curtailing supply.
However, on the consumption side, the situation is not as dramatic: developed wine-consuming countries have generally seen declines of 1-4%, with only Portugal and the Netherlands showing more significant drops. China, however, has been the standout, with a staggering two-thirds decrease in less than five years. (It's worth noting that Chinese per capita consumption remains between 0.6 and 1.1 liters, assuming we trust the notoriously unreliable statistics of the comrades, compared to 20-45 liters in Europe. Thus, it’s clear that the much-heralded 'grand opening' has yet to turn the Chinese into wine lovers.)
This disparity raises the question of what justifies the more radical production restraint ideas compared to the relatively modest reduction in consumption. It appears that, in addition to accounting for accumulated existing stocks, the industry is also trying to anticipate the future by radically narrowing supply, thereby attempting to adapt to changing consumption habits and create a healthier supply-demand balance and pricing structure, ultimately leading to more favorable profitability.
Every reorganization brings opportunities, so let’s explore a few: It would be naive to believe that production cuts will only affect the top wine-producing countries. However, the proposals suggest a reduction in the production area of global varieties. A potential response could be to focus on local (regional) varieties, which, being present in 'consumable quantity' on the market, often align with current trends. With a smart sales strategy and close cooperation with other tourism service providers, these wines could maintain a loyal customer base and become sought-after products.In short: a philosophy backed by ABC slogan and a differentiation strategy built on a strong narrative.
The real question is whether wineries—especially domestic producers—are prepared for these changes. And the bigger question is what the future holds for wine (or the wine of the future) in terms of quantity, style, presentation, and sales channels.
*"When you produce 20,000, 30,000, or 40,000 bottles, if you can't sell them, it’s probably because the wine is not good." While this may be a bit radical, we should consider our country’s specific characteristics and adjust the benchmark accordingly.
**This is only one of the possible answers.
Photo: AI generated
See also: MakeItGreat Communication and Advisory