The world of wine is massive. We at VCM tend to highlight just the European wines since that is what backs your fine wine investments, but actually wine is produced on all continents except Antarctica. This means that the wine industry is as big as its geography is wide!
In 2018, the world saw one of its highest ever years of wine production, equal to 292 million hectoliters. That’s almost 38 billion bottles - or enough wine to give every person on earth 5 bottles! World production has remained somewhat steady on average since the beginning of the 21st century.
Most of the world’s area under vines is in Europe, in countries like France, Spain, and Italy, but surprisingly 12% of the world’s vines are planted in China!
In 2018, world wine consumption was only about 246 million hectoliters, showing that each year, the world produces more wine than it drinks. What is not drunk are generally table wines that are distilled into secondary products like vinegar. Or if they are of better quality, they are stored away for aging - like the wines that back your investments!
While the world produces more wine than it drinks, many countries have seen an increase in wine consumption since 2014. Notably, the US, Australia, China, and Russia have seen increases in wine consumption over the last 5 years.
Who drinks the most wine in the world? Portugal! The Portuguese drank on average 62 liters per capita in 2018. That’s 82 bottles of wine per person per year - or roughly 1.5 bottles of wine per week by every Portuguese citizen!
The volume of wine traded globally has increased steadily since the beginning of the 21st century, and 2018 saw a 0.4% increase compared to 2017. Looking at 2001-2018, the value of wine exports increased from about 12 to 32 billion euros. That’s a 267% increase in value!
Fun fact - the U.S. has more wine merchants (550,000) than Iceland has inhabitants (360,000)!
Global Market Value
The global wine market was valued at 354.7 billion USD in 2019. That’s more than 6 times the global whiskey market, more than 5 times the global cheese market, and a tenth of the global automobile industry. The global wine market is projected to grow 21 percent from 2018 - 2023 to value over 429 billion USD. That’s a compound annual growth rate of about 5.5%!
The U.S. makes up about 15% of the global wine market, at 47.8 billion USD in 2018. Following the U.S. are France and Italy with 27.4 billion USD and 26.1 billion USD respectively.
Opportunities for Growth
There are two markets that stand to grow in the coming years: China and… millennials! A Vinexpo/IWSR study predicts that China will surpass France by 2020 as the second most valuable market in the world, and by 2022, the value of the Chinese market is forecast to hit more than $19.5 billion. And millennials are predicted to overcome Gen Xers as the biggest fine wine drinking generation by 2026.
A Look to the Future
It’s no secret that Covid-19 has given the wine industry a run for their money in 2020. The first growth tracker, Fine Wine 50, is down 3.5% year to date. This is normal - we’re in the middle of a global pandemic after all! The beauty of wine as a hedge investment is that it is a product that can outlast this storm.
Despite the challenges, many winemakers are optimistic. In a survey conducted by SVB State of the Wine Industry, nearly 25% of wineries surveyed reported their best year in history in 2019.
Could we see a repeat of the roaring 20s? Michael Skurnik of New York’s Skurnik’s Wine and Spirits thinks so. “Provided that [people still] have jobs and money they will want to go out and party like the Roaring Twenties, and this is the 20s by the way and history repeats itself.”
The stock market has bounced back after worse scenarios. “If you think back to the 20th century and all the terrible things that have happened, World War I, World War II, the Great Depression and Prohibition of course, the stock market crash of ‘87, 9/11, 2008 financial crisis, what happened after every one of those incidences? We came back, and we didn’t only come back by the way, but we came back with vengeance, the stock market went past its previous high every single time,” says Skurnik.
On that positive note, we hope that you have a newfound appreciation for the size of the global wine industry and the promise of future growth! Get in touch with us today to learn about our exciting investment opportunities!