The global wine market was valued at US$ 296.3 Billion in 2016, according to the Global Wine Market Report by Product Type (Still Wine, Sparkling Wine, Fortified Wine), by Color Type (Red Wine, White Wine, Rose Wine) The wine market is anticipated to exhibit a CAGR of 3.23% during the forecast period (2017-2025).
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Key Trends and Analysis of the Wine Market:
In terms of wine consumption, still, wine held a dominant position with over 83% share of the market in 2016. Still wine offers several health benefits such as lowering the risk of heart disease, type 2 diabetes. Such health benefits and evolving consumer lifestyle is a major factor driving the growth of the market. Sparkling and fortified wine had a preference amongst consumers, owing to which the segment is expected to witness the fastest CAGR growth of around 5% till 2025. In terms of color, red and white wine held a dominant position in the market with both contributing over 90% of the market in 2016.
Key Takeaways of the Market:
- Asia Pacific is pegged to be the fastest growing market for wine owing to increasing middle income population, rising disposable income and evolving lifestyle pattern in the region. Countries such as China and India stands to be the fastest growing markets in the region as imports continue to rise from Europe and Americas, whereas Japan has witnessed slowdown in sales due the maturity of the market.
- Baby boomers remains the major consumers of wine and although the market for millennials is small, there is rising demand for wine amongst them. This age group are willing to try out new things are looking for substitute for beer and spirits which is further enhancing the growth of the market. Additionally, the focus on healthy lifestyle by this generation has further resulted in the growing demand for organic wine. The process of growing grapes without the use of harmful chemicals such as herbicides and fungicides offers better health benefits and has resulted in creating a niche market for organic wine manufacturers.
- In terms of pricing, mid-range segment stands to be the most preferred option among the consumers with many shifting from the economic price range. The premium segment is mostly catered by the high income urban customers with countries such as the US and China being the leading countries in this segment.
- Rise in government tax is also play an important factor in the growth of wine market. For instance, the proposal to change the tax structure of alcohol based drinks in Australia will impact the pricing of wine as price of cheaper wine will increase with the new tax structure. Additionally, new excise tax set by the government of Thailand and Russia in 2017 will increase the price of imported wine which will impact the sale of wine in these countries. Owing to the ongoing increase in price of wine post Brexit, the price of wine is further expected to rise in UK owing to 3.9% rise in alcohol duty in 2017.
- Product innovation stands to be one of the major factor driving the growth of the market. For instance, a new botanic garden wine label was launched in 2016 in partnership with Botanic Gardens of South Australia, National Wine Centre, and Jacob’s Creek winemakers. Additionally, wine infused with marijuana is also being sold in the US market to offer new varieties and flavors to customers.
- With the growing demand for wine, several small and private label brands are increasing their market presence as several retailers and full service restaurants offer their own private label brands to customers due to the high profit margin offered by the private brands. For instance, leading retail chains such as Tesco and Walmart offer their own range of wine catering to its customer groups and offering stiff competition to the branded wine companies. Consumers are increasingly opting for these brands as they are priced much lower than branded wine.
- Key players operating in the global wine market include E. & J. Gallo Winery, Concha y Toro, The Wine Group, Bacardi Limited, Constellation Brands, Pernod Ricard, Treasury Wine Estates, Caviro, Grupo Penaflor. Some of the major strategies adopted by these players include product innovation, mergers and acquisition, new product launches, marketing initiatives and others. For instance, in 2016, Jackson Family Wines acquired Penner-Ash Wine Cellars and Copain Wines.