Pau Roca, Director General of OIV gives his overview of the 2019 global wine sector and the impact of Covid-19

Speaking from the OIV’s [International Organisation of Vine and Wine] headquarters in Paris, by web conference to over 3,000 international wine journalists, and trade, Director-General Pau Roca presented today [April 23, 2020] details of the 2019 wine production, consumption, and international trade. The impact of Covid-19 in the sector was also highlighted.

Here are the important facts and highlights of today’s Conference:

  • The surface area of the world vineyard is estimated at 7.4 mha, which has been stable since 2016;
  • World wine production is estimated at 260 mhl, a marked decrease, compared to 2018 historically high;
  • World wine consumption is estimated at 244 mhl, marking a +0.1% with respect to the previous year;
  • The world wine export market has expanded both in volume, estimated at 105.8 mhl (+1.7%), and in value with 31.8 bn EUR (+0.9%);
  • 2020 Harvest – first estimates of wine production in the Southern Hemisphere indicate low expected volumes for 2020 (with the exception of South Africa and Uruguay).

Vineyard area stabilization

In 2019 the world area under vines, corresponding to the total surface area planted with vines for all purposes, including young vines not yet in production, is estimated 7.4 mha.

Starting with the Northern Hemisphere, overall stability can be observed in the European Union (EU) vineyards, which stands for the fifth consecutive year at 3.2 mha.

Within the EU, the latest available data for 2019 indicates an increase in the area under vines in France (794 kha), Italy (708 kha), Portugal (195 kha), and Bulgaria (67 kha). The vineyard surface area in Spain (966 kha), Hungary (69 kha) and Austria (48 kha), on the other hand, slightly decreased from 2018.

In East Asia, after over 10 years of significant expansion, the growth of Chinese vineyard (855 kha), second in the world by surface area just behind Spain, seems to be slowing down.

In the United States, the vineyard has been consistently decreasing since 2014, and its estimated surface area in 2019 is 408 kha.

In South America, developments in vineyard surface area between 2018 and 2019 showed a downward trend for the fourth year in a row.

The only exception in the continent is represented by Peru that increased by 7.1 kha (+17% / 2018) its vineyard surface area reaching 48 kha.

South Africa’s vineyard surface area remained stable with respect to 2018, at 128 kha.

Australia the area under vines remained stable at 146 kha in 2019; while New Zealand the surface area grew by 1.6 % reaching a record-high of 39 kha.

Production back to the average

World wine production, excluding juices and musts, in 2019 is estimated at 260 (259,0) mhl, marking a sharp decrease of 35 mhl (-11.5%) with respect to the exceptionally high volume recorded in 2018. Overall, after two consecutive years that can be defined as extremely volatile, 2019 brings global wine production back to average levels.

Italy  (47.5  mhl), France (42.1 mhl), and Spain (33.5  mhl), which together account for 48% of world wine production in 2019, saw a sharp decrease in their wine production with respect to 2018.

Other EU countries that registered a decrease in production with respect to 2018 are Germany (9.0 mhl, -12%), Romania (5.0 mhl, -4%), Austria (2.5 mhl, -10%), Hungary (2.4 mhl, -34%) and Greece (1.9 mhl, -8%). The only EU country that, in 2019, saw an increase in its wine production is Portugal with 6.7 mhl (+10% / 2018).

In Eastern Europe, weather conditions were favourable in Russia (4.6 mhl, +7% / 2018) and Ukraine (2.1 mhl, +6% / 2018), while in Moldova the harvest was less abundant in 2019 and the vinified production was equal to 1.5 mhl (-23% / 2018).

In Asia, the new data available for China indicate an estimated vinified production of 8.3 mhl in 2019, marking a decrease of -10% with respect to the already relatively low production level of 2018.

In North America, wine production in the USA is estimated at 24.3 mhl, a decrease of 2% compared to 2018. This slight decline in 2019 does not depend on bad weather conditions or the raging fires that occurred in California (harvest was just before), but it is a response to overcome an oversupply of grapes and wine.

In South America, the overall trend for wine production in 2019 is negative with respect to 2018. However, while in Argentina (13.0 mhl) and in Chile (12.0 mhl) 2019 vinified productions are lower with respect to 2018 but overall in line or even higher than their five-year averages, Brazil (2.0 mhl) registered a sharp decrease in its wine production in 2019 of more than 1 mhl (-34% / 2018).

In South Africa, 2019 production reached 9.7 mhl. This represents an increase of +3% with respect to the low volume registered in 2018, but it is still far from the average production levels recorded before the beginning of the drought that heavily impacted the country for three years in a row (2016, 2017 and 2018).

With regard to Oceania, Australian wine production registers a decline for the second consecutive year reaching 12.0 mhl in 2019 (-6% / 2018). In New Zealand wine production was 3.0 mhl in 2019, a slight decrease of -1% with respect to 2018.

Expansion of the international trade of wine

In 2019 the world wine export market – considered here as the sum of the exports of all countries – has expanded with respect to 2018 both in volume, estimated at 105.8 mhl (+1.7%), and in value, with 31.8 bn EUR2 (+0.9%).

Strong increases can be observed in exports from Italy (+2.0 mhl), Spain (+1.3 mhl), Canada (+0.4 mhl) and Chile (+0.3 mhl). However, significant reductions in exports are recorded for Australia (-1.1 mhl), South Africa (-1.0 mhl), Ukraine (-0.4 mhl) and Hungary (-0.3 mhl).

In 2019 the global value of wine exports is on the sustained growth path started in 2010 reaching a new record high. France was still the most important world exporter in terms of value, with 9.8 bn EUR exported in 2019. There were rises in the value of exports in many large exporting countries like France (+425 m EUR), Italy (+211 m EUR), and New Zealand (+84 m EUR). The largest declines include Spain (-234 m EUR) and South Africa (-73 m EUR).

In 2019 the international trade of wine in terms of volume was mainly dominated by three European countries – Italy, Spain, and France – that together exported 57.1 mhl, accounting for 54% of the world market.

In 2019 the top three importers in terms of volumes were Germany, the UK, and the USA, which together imported 40.4 mhl, reaching 38% of world total. These three countries represent 39% of the total value of world wine imports, reaching 11.9 bn EUR.

The first importer in 2019 is still Germany with 14.6 mhl, even if its wine import volume decreases by 0.6% compared to 2018.

China for the second consecutive year saw a significant decline in its imported volumes (-11% / 2018), reaching 6.1 mhl in 2019. In terms of value, the trend is similar, with an overall downfall of -9.7% compared to 2018, reaching 2.1 bn EUR. The only category that increased both its volume (+8%) and its value (+8%) is sparkling wine, although it represents only 2% of the total imported volume.

Early estimates of the 2020 harvest in the Southern Hemisphere

First estimates of wine production in the Southern Hemisphere indicate low expected volumes for 2020 for the majority of countries, with the exception of South Africa and Uruguay.

In 2020 a decline in production volumes in all South American countries, with the exception of Uruguay, are expected. In Argentina estimated production is 11.6 mhl (-11%), in Chile 10.5 mhl (-12%) and in Brazil 2.0 mhl (-1%), while in Uruguay 0.65 mhl (+11%).

South Africa seems to continue its recovery path from the drought and expects +5% with respect to last year, reaching 10.2 mhl.

In Oceania, Australia expects a lower production level in 2020 estimated at 11.5 mhl (-4%) due to drought and bushfires while in New Zealand (2.9 mhl, -2%) expectations on wine production are by and large in line with 2019, or just below.

These are preliminary estimates and should be interpreted with caution,  given the current exceptional circumstances.

Impact of Covid-19 in the wine sector

At this early stage the information and statistical data available are insufficient to provide an accurate forecast and anticipate the scenario of the vitivinicultural sector in the future. However, due to communication with OIV members (“Member States”), the OIV has certain qualitative information at its disposal.

The feedback given by the Member States reflects a radical change or transfer between distribution channels. The expected overall balance is a decrease in consumption, a reduction in average prices, and therefore an overall decrease in total sales value, turnover, margins and finally profits of the wineries.

As far as exports are concerned, economies in recession are not a promising market to develop, and during this pandemic, the largest consuming countries have been the most affected. Trade flows may recover along with the economy, but some permanent changes could occur.

Alcohol consumption is also being debated. Messages on the positive effects of wine consumption are totally unacceptable and irresponsible.

The same applies to the issuing, under these circumstances, of general statements or biased messages that are the result of ideological concerns about wine consumption, such as abstention.

The OIV’s work follows the Strategic Plan approved by the General Assembly in October 2019 and covers a 5-year period until 2024. In the current context, the objectives and goals of the OIV go hand in hand with the needs that this crisis has highlighted.

The OIV is the intergovernmental organization of scientific and technical nature of recognized competence for its work concerning vines, wine, wine-based beverages, and other vine-based products. It is composed of 47 Member States. In the framework of its competence, the objectives of the OIV are as follows:

  • to inform its members of measures whereby the concerns of producers, consumers and other players in the vine and wine products sector may be taken into consideration;
  • to assist other international organizations, both intergovernmental and non-governmental, especially those that carry out standardization activities; and
  • to contribute to international harmonization of existing practices and standards and, as necessary, to the preparation of new international standards in order to improve the conditions for producing and marketing vine and wine products, and to help ensure that the interests of consumers are taken into account.

Yoshino Spirits Co. launches the first whisky aged in Japanese cherry tree wood

Yoshino Spirits Co. has launched the “World’s First Sakura & Yoshino Sugi Cask Finish Whisky Brand” under Kamiki Whisky portfolio. “Kamiki Sakura Cask Finish” is a Japanese whisky finished in sakura wood, which is commonly known as Japanese cherry tree wood.

The whisky, which will be launched first in the UK, then globally.

Yoshino Spirits Co. Yoshino is a private company based in Osaka, exporting finest Japanese whisky, wine and spirits to the world.

For more information details visit: www.yoshinospirits.com

 

Italy’s Campari Group to enter champagne sector with Lallier acquisition

The Campari Group is set to become the first Italian company to own a Champagne brand.  Announced last week, Campari has entered into negotiations to acquire French company Ficoma, to acquire 80% of the shares of Champagne Lallier, and other group companies, with a view to total ownership. Campari’s shares ended up 2.9% after the announcement, outperforming a 1.7% gain in Milan’s blue-chip index.FTMIB.

Ficoma sold one million bottles of Champagne in 2019, including 700,000 bottles of Lallier.

If the negotiations lead to a sale, it will mark the entry of the first Italian player into the Champagne category.

Ficoma is the family holding of Francis Tribaut, the heir to four generations of winemakers and Champagne producers in France’s Marne region. The Champagne brand Lallier was founded in 1906 in Aÿ, one of the few villages classified as ‘Grand Cru’ in Champagne.

The potential transaction scope includes the brands, related stocks, and real estate assets including owned and operated vineyards, and production facilities.

Campari Group, founded in 1860, is the sixth-largest player worldwide in the premium spirits industry, trading in more than 190 countries. Campari owns 21 plants worldwide and has its own distribution network in 21 countries.

The company’s growth strategy is to combine organic growth through strong brand building and external growth via selective acquisitions of brands and businesses.

The company has a portfolio of more than 50 premium and super-premium brands, including Aperol, Campari, SKYY, Grand Marnier, Wild Turkey and Appleton Estate.

Asia Pacific Wine and Spirit Institute helps industry professionals with online learning during social distancing

APWASI launched this week 20 online wine and spirit certification courses in 26 languages. The newly released programs include the world’s first certified courses in “Icewine”, “Wines of China”, “Caviar” and “Truffles”.

The APWASI (Asia Pacific Wine and Spirit Institute) board unanimously agreed to move the launch forward to offer support to those in the airline, cruise line, hotel and hospitality industry who are facing uncertain, challenging and life-changing situations because of the global pandemic.

APWASI will be making the important Wine Essentials 1 Course complimentary and other courses qualify for special pricing. The program goals are to allow people to be more productive, acquire new knowledge and get certified during this period at home that many are experiencing.

In 2018/2019 there were over 100,000 wine and spirit students globally undertaking courses from various wine bodies. The wine and spirits market is explosively dynamic and experiencing generational, global and dramatic taste changes. APWASI’s mission when developing these career courses was to combine required fundamental theory and practical skills required for the workplace.

Industry experts were consulted to ensure APWASI courses had the impact and relevance to enable course graduates to be seamlessly and more easily absorbed into new career positions. As a non-profit organization, APWASI wants ensure the courses can be delivered globally and at scale.

Dr. Clinton Lee, Executive Director APWASI said, “It is imperative students have the choice now of a condensed route to attaining new skills with the flexibility to further upgrade those skills during their career. Not only are work skills important but so are cultural awareness levels. I was adamant that APWASI courses incorporate cultural awareness and we have done that. As a lifelong student myself, I can share through my own experience, that lifelong learning is the only way forward.”

APWASI developed a holistic approach for their students, from start to career, by developing strong strategic alliances with pivotal partners in the field. APWASI strategic alliances include Quini (http://www.quiniwine.com), a respected, established online wine tasting software company. Students can taste wine and record professional-grade tasting notes with ease, anywhere, anytime and recall them at the touch of a button. Students can also take online language study components through APWASI’s strategic partnership with Rosetta Stone Language. “Studying Italian wine and language just became much easier,” said Dr. Lee. APWASI students will also be able to keep up-to-date online with the wine industry through our highly valued APWASI strategic partner, Wine Spectator magazine.

Students will be able to access APWASI strategic partners, including global recruitment agencies geared to focus on APWASI graduates, to assist in placement during and after their course completion.

Roger Noujem, CEO of Quini, said, “Global industry requires talent that is digitally savvy in cross-functional areas of business. Going well beyond being personally knowledgeable about wine, for example. It is skills related to bringing automation ideas to the workplace that have now become more important than ever in the wine and hospitality sectors. With the new depth of education, certifications, virtual environment and partnerships that APWASI has crafted, we see a paradigm shift that QUINI is exceptionally proud to help advance and stand shoulder to shoulder with APWASI on.”

For further details: http://www.apwasi.com.

The Rémy Cointreau Group solidarity act to fight COVID-19

Rémy Cointreau releases the following statement last week –

Solidarity actions to fight the epidemic continue at our various sites. We are proud to share the local and spontaneous mobilization of our employees to help healthcare professionals. Their actions reflect our values: Terroir, People and Time.

As all alcohol-related logistics are subject to strict safety and taxation rules, all around the world, the Rémy Cointreau Group is happy to provide its expertise, as a response commensurate with the challenge. Therefore, alcohol donations and hand sanitizer production have been quickly set up and will continue over the long term.

 In France, every production site is mobilized

In France, the Group organizes donations of neutral alcohol (> 96°) and ensures a direct delivery to the users, in the areas we know best: Cognac (Rémy Martin & Louis XIII); Angers (Cointreau); Isère, land of the Domaine des Hautes Glaces; and finally, Paris. More than 10,000 liters of neutral alcohol has been sent to 13 hospitals, central pharmacies and local companies with urgent needs, in four different regions. We would like to warmly thank the Cristal Union cooperative, our supplier, and our forwarding partner Hillebrand, who graciously assisted us in the logistics of the operation.

Rémy Martin has responded to the call from the Houses of Cognac Syndicate which has set up a regional operation to produce, bottle and distribute a hydro-alcoholic solution, with the help of health professionals, elected representatives and the Qualyse laboratory. Rémy Martin has contributed 850 liters of wine alcohol (UNIFAB, now approved by sanitary rules) to this effort. GPs, pharmacies, retirement homes and personal care services in Charente and Charente-Maritime will beneficiate from this donation.

Since March 21th, our production site in Angers also supplies the Angers Faculty of Pharmacy with neutral alcohol (300 liters/day). Since the beginning of April, the objective -shared with the liquorist Giffard- is now to produce a ready-to-use hydro-alcoholic solution, in 2 or 5 liter containers, distributed to the local hospital, which is in charge of its redistribution to other actors in need.

In Europe, donations of alcohol and production of hydro-alcoholic lotion continue

In Scotland, teams at the Bruichladdich distillery are working hard to prevent any outbreak on the small island of Islay that would put enormous pressure on the already limited resources. Hand sanitizer with an alcohol content greater than 60%, then 80% -in accordance with the WHO formulation advisesis distributed to hospitals, emergency services, nursing homes and places where people interact, such as shops.

Although Greece has coped very well with the pandemic yet, the House of Metaxa has pledged to cover the needs for alcohol of the 13 hospitals taking care of coronavirus patients. Up to 35,000 liters of alcohol will be shipped all over Greece over the next three months, to support healthcare professionals working on the front line.

 A direct collaboration with American hospitals

In the United States, our Westland distillery directly contacted hospitals in the Seattle area to send 500 liters of finished WHO-formula sanitizer out the door. The volunteer bottling teams work every day with the challenge of keeping the stations completely separated from each other. They anticipate outputting 400 liters per day, 7 days per week, starting the week of April 6, supported by one of their main suppliers who has generously donated 60 tons of malt to produce ethanol.