Troubled Times For Wine In 2023: Global Production And Consumption Shrinking

In 2023, the world wine production declined by 10% to reach 237.3 million hectolitres. Most major wine countries experienced a very difficult year. France regained its position as the world’s biggest wine producer. Wine consumption worldwide also declined. It reached 221 million hectolitres in 2023, which is a decrease compared to 2022 with 2.6%. Equally, the world’s vineyard surface area shrunk in 2023, but only modestly, with 0.5% to 7.2 million hectares. Thanks to the decline in both production and consumption, the market is still in balance but has suffered significant inflationary pressure.

John Barker, director general of The International Organisation of Vine and Wine (OIV), presented today the estimates for the wine industry in 2024. (All numbers given here are preliminary estimates by the OIV.)

World Wine Production — shrinking

The world’s total wine production declined dramatically in 2023, shrinking by 10% from 2022 to reach 237.3 million hectolitres (Mhl). This is a two-decade-long trend. In 2004, the world’s wine production reached around 295 Mhl. Today, it is around 20% lower.

The volume in 2023 is the lowest wine production since 1961. The picture varies from country to country, but most big wine producers saw a decline. Some countries experienced very dramatic declines.

France regained its position as the world’s biggest wine producer and actually increased the volume by 4%. However, both Italy and Spain, the number two and three, saw very significant reductions in wine production, minus 23% and 21% respectively.

The decline is mainly due to the extreme climate conditions that several countries experienced, including rains, floods, fires, etc., and the ensuing problems with vineyard diseases.

Of the top ten countries for wine production, only France, the USA, and Portugal increased output.

It is worth noting that these changes mean that the USA has significantly narrowed the gap to “the big three” (France, Italy, and Spain). Next year (2024) will show if this is a permanent rapprochement or if it was temporary. Following those, we have the traditional southern hemisphere “gang of four”, Chile, Australia, South Africa, and Argentina, which are close to each other in wine volume, but Germany is catching up on them.

The world’s three biggest wine producers, France, Italy and Spain, together only have a hair’s breadth from making half of all the world’s wine.

The world’s top ten countries with the biggest production of wine are:

1. France, 28 Mhl, +4%
2. Italy, 38.3 Mhl, -23%
3. Spain, 28.3 Mhl, -21%
4. USA, 24.3%, +9%
5. Chile, 11 Mhl, -11%
6. Australia, 9.6 Mhl, -26%
7. South Africa, 9.3 Mhl, -10%
8. Argentina, 8.8 Mhl, -23%
9. Germany, 8.6 Mhl, -4%
10. Portugal, 7.5%, +10%

World Vineyard Surface Area — shrinking

The world’s total acreage of vineyards declined moderately, by 0.5% to 7.2 million hectares. Even if a loss of 0.5% may seem modest, the decline in “wine production capacity” is a trend that has been going on for more than twenty years since a peak in 2003. The global vineyard acreage was then just over 7.8 million hectares. Almost 8% has been lost.

Spain remains the biggest country with almost one million hectares. France is second; China is third and Italy is number four.

The world’s top ten countries with the largest vineyard area are:

1. Spain, 945 Mha (million hectares), with a declining ten-year trend and a decline in ‘24
2. France, 792 Mha, stable trend, decline in ‘24
3. China, 756 Mha, uncertain trend, stable ‘24
4. Italy, 720 Mha, slightly upward trend, stable in ‘24
5. Türkiye, 410 Mha, strongly declining trend, decline in ‘24
6. USA, 392 Mhl, significantly declining trend, stable ‘24
7. Argentina, 205 Mhl, declining trend, decline in ‘24
8. Romania, 187 Mhl, declining trend, decline in ‘24
9. Portugal, 182 Mhl, declining trend, decline in ‘24
10. India, 180 Mhl, growing trend, growth in ‘24

The EU countries have 45% of the world’s total acreage and five of the top ten countries. The six biggest countries represent 56% of the total.

It should be noted that these numbers include all vineyards, including those producing grapes for other uses than wine, such as raisins and fruit juice.

World Wine Consumption — shrinking

The world’s wine consumption follows the same negative trend: global wine consumption declined in 2023.

The world’s wine consumption reached 221 million hectolitres (Mhl) in 2023, which is a decrease of 2.6% compared to 2022. This is also a long-term trend. Consumption reached a peak in 2007 when it reached around 250 Mhl. It is now down around 12% from that level.

OIV estimates that the decline in consumption is due to the covid effect and inflation, leading to higher consumer prices.

Most countries have only seen moderate changes in consumption. The exceptions are China, where wine consumption dropped by a quarter, and Romania, where it increased by one-fifth.

The USA remains the world’s biggest wine-consuming country. It is followed by the big European wine-producing countries France, Italy and Germany. Then we have the UK, Spain and Russia.

But this is not the end of the bad news for the global wine industry.

World Wine Exports and International Trade — declining

Wine exports saw a decline in both volume (-6.3%) and in value (-4.7%) in 2023 compared to 2022.

The OIV also tracks another interesting number that they call “the market internationalisation index”. It indicates how much wine is consumed in country other than where it was produced. In other words, it is another way of looking at domestic consumption compared to exports; an illustration of wine globalisation. It is also something that sends a message to wine producers: “export markets are increasingly important”.

The “market internationalisation index” has seen a rapid increase, meaning that more and more wine is consumed somewhere else than in its home market. Twenty-four years ago, in 2000, the market internationalisation index was around 27%. Well over two-thirds of all wine was consumed on the “home market”. Twenty-one years later, the index had reached 48% – almost half of all wine is consumed in another country than where it was produced.

But the last two years, 2022 and 2023, have seen a decline in the internationalisation index. In 2023, it was 45%.

There is no obvious explanation for this. Small harvests or inflationary pressures would likely affect both domestic and international markets, so the answer is probably not there. The OIV pointed to one possible explanation: destocking, particularly in the North American market. Have (primarily) US importers bought too much wine in the two first covid years (2020 and 2021) that they are now releasing into the market, and thus need to buy less from abroad? Possibly. We will see what happens over the next few years.

Some good news for the world wine industry after all

The numbers paint a bleak picture of the world wine industry in 2023. However, there are some bright spots.

With total production dropping significantly in 2023, one might have feared a potential shortage looming. But the parallel drop in consumption negates that. Production and consumption are still in balance, with production exceeding consumption by 5-10%. This difference is needed to satisfy the demand for other uses, such as vinegar production and distillation.

From a producer perspective, the price evolution has also been positive. The average export price for wine reached a record 3.62 euros per litre, an increase of 2% from 2022. Some countries have fared particularly well. Both France and the USA have almost doubled the average export price over ten years. For France, it is now 9.4 euro/l, and for the USA, it is 5.5 euro/l. Most other big exporters have seen a similar evolution over the last ten years. With the exception of Canada.

This is, of course, a clear illustration of the inflationary pressure on the wine industry. And it is, of course, less good news for the consumers.

—Per Karlsson