Global wine trade in ‘fragile situation’ says Vinexposium CEO

The global wine business is in a precarious position, with stocks mounting and consumption declining, but there are still reasons for optimism, according to Vinexposium CEO, Rodolphe Lameyse.

During a press briefing in London yesterday, at which Lameyse outlined the plans for a significantly bigger Wine Paris show in February, the head of the exhibition organiser painted a fairly bleak picture for the drinks trade, especially for those making and selling inexpensive wine.

Drawing on IWSR data, he said that the biggest declines in 2022 and projected for the end of this year are in the ‘value and below’ wine sector, which covers the cheapest end of the market, with the fall-off in sales much greater than in beer or spirits – although these categories are also suffering from decreasing sales at this low-price-level sector.

In contrast, for wine – along with beer and spirits – there is growth in ‘superpremium and above’, which Lameyse said covers bottles of wine priced in retail at €20 or more, while he expressed hope for a comeback in sales of wine in the US, and more immediately, China too.

“The main question concerns the level of stocks, which are high in the US, and very high in China, and consumption is not picking up,” he began, before adding, “It is a very fragile situation, and the next coming months will be crucial.”

Explaining further the shaky nature of the current situation, he said that many of the major drinks companies have invested heavily in operations over the past five years, which has been “financed by debt, when interest rates were low.”

“Now the cost of everything is increasing, including financial charges, and stocks are rising, it means these companies are in need of cash, which could mean selling at a discounted price to get that cash in,” he said, while also commenting that he expects to see further consolidation in the sector as a result of such challenges.

But the positive side is a belief that “depletions will be high in the US in the coming months”, particularly with Thanksgiving and Christmas, while China should also start reducing its stock levels with Chinese New Year in January. “This is the first time since 2019 when the Chinese will be able to prepare for a big celebration, because last year, the opening of travel restrictions was a bit last minute,” he said.

Continuing, he remarked, “I’m hoping this year it will happen… China can be a game changer here.”

At the moment, however, whatever the market, Lameyse recorded the same negative trend in terms of wine consumption, which he blamed on price rises due to the rising costs of production and transportation, and a change in behaviour among younger drinking-age consumers.

“People are moderating for health reasons,” he said, “whether it’s in Holland or France, the US or Japan.”

Indeed, he recorded that “One third of generation Z in France are not drinking alcohol because of health reasons and the taste of wine – and this is much more than 20-30 years ago.”

Such a development he blamed “on pressure from the anti-alcohol lobby,” which he described as “very powerful”, although he also said that younger consumers may be drinking less, but still tend to binge, commenting, “they don’t drink during the week, but a lot on the weekend, maybe too much.”

In terms of wine supply, while stocks are high, Lameyse noted that this year’s smaller global wine harvest, which is the least productive since 1961, could help bring supply into balance with demand in the coming year.

“There will be less volume available in the coming months,” he said, while some markets, such as India, are forecast to grow in wine consumption, along with a projected rebound in the US and China.

Summing up, he commented, “I don’t want to be too negative,” before stating, “And I’m more optimistic for next 12 months.”

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