Global Wine Production, Consumption and Trade, 1961 to 2001:

Transcription

1 Global Wine Production, Consumption and Trade, 1961 to 2001: A Statistical Compendium Kym Anderson and David Norman

2 2003 Centre for International Economic Studies ISBN X

3 Table of contents List of charts List of tables Technical notes Abbreviations Metric conversion rates Statistical sources Introduction vii viii xiii xv xviii xix xxi I. Global wine trends at a glance (charts) 1 II. Global wine markets in III. Wine markets by country/group: annual data, 1990 to IV. Wine markets by country/group: 5-year averages, 1961 to V. 58 x 10 region bilateral trade, 1990 to VI. 58 x 58 country/group bilateral trade, VII. World rankings of top 20 countries, various indicators, 1961 to VIII. Summary data for each country/group: annual data, 1990 to About the Centre for International Economic Studies 371

4 List of charts I. Global wine trends at a glance Page 1. Grapevine area, top ten countries, and Share of crop area under grapevines, Old World and 2 New World, and Wine production, top ten countries, and Wine production per capita, Old World and New World, and Wine consumption, top ten countries, and Wine s share of total alcohol consumption, top ten 4 countries, and Wine consumption per capita, traditional markets, 1970 to Wine consumption per capita, emerging markets, 1970 to Old World and New World shares of global exports, 1990 to Value of wine exports, various New World countries, 1990 to Wine export value, top ten countries, and Wine export value (excluding intra-eu trade), 7 top ten traders, and Wine import value, top ten countries, and Wine import value (excluding intra-eu trade), 8 top ten traders, and Old World exporters shares of key import markets, 1990 to New World exporters share of key import markets, 1990 to Share of wine production exported, top ten countries, and Imports net of exports as a share of wine consumption, 10 top ten countries, and Relative price of wine exports, selected countries, and Relative price of wine imports, selected countries, and Share of 3 largest firms in global sales of various beverages, Global wine sales, top ten companies,

5 List of tables II. Global wine markets in Page 1. Summary of the world s wine markets, Other key indicators of the world s wine markets, III. Wine markets by country/group: annual data 1990 to Total grapevine area Share of world grapevine area Wine grapevine area Share of total agricultural crop area under vines Total grape production Share of world grape production Grape yield per hectare Volume of wine grape production Volume of wine production Volume of wine production per capita Share of world wine production volume Volume of beverage wine consumption Share of world beverage wine consumption volume Volume of wine stock changes Volume of non-beverage wine uses Volume of beverage wine consumption per capita Volume of beverage wine consumption per capita (lal) Volume of beer consumption per capita Volume of beer consumption per capita (lal) Volume of spirits consumption per capita Total alcohol consumption per capita (lal) Wine s share of total alcohol consumption Volume of wine exports Volume of wine imports Volume of wine net imports Exports as % of wine production volume Imports as % of beverage wine consumption volume Imports net of exports as % of beverage wine consumption Wine self sufficiency (%) in terms of volume Exports as % of world wine export volume Exports as % of world wine export volume, excl. intra-eu trade Imports as % of world wine import volume Imports as % of world wine import volume, excl. intra-eu trade Wine trade volume specialisation index Value of wine exports Value of wine imports Real value of wine exports (1999 US$) 92

6 Page 40. Real value of wine imports (1999 US$) Exports as % of world wine export value Exports as % of world wine export value, excl. intra-eu trade Imports as % of world wine import value Imports as % of world wine import value, excl. intra-eu trade Wine trade value specialisation index Wine s share of value of all merchandise exports Wine s share of value of all merchandise imports Index of comparative advantage in wine Index of intra-industry trade in wine Unit value of wine exports Unit value of wine imports Population Aggregate GNP Per capita GNP Value of all merchandise exports Value of all merchandise imports 126 IV. Wine markets by country/group: 5-year averages, 1961 to Total grapevine area Share of world grapevine area Wine grapevine area Share of total agricultural crop area under vines Total grape production Share of world grape production Grape yield per hectare Volume of wine grape production Volume of wine production Share of world wine production volume Volume of beverage wine consumption Share of world beverage wine consumption volume Volume of beverage wine consumption per capita Volume of beverage wine consumption per capita (lal) Volume of beer consumption per capita Volume of beer consumption per capita (lal) Volume of spirits consumption per capita Total alcohol consumption per capita (lal) Wine s share of total alcohol consumption Volume of wine exports Volume of wine imports Volume of wine net exports Exports as % of wine production volume Imports as % of beverage wine consumption volume Imports net of exports as % of beverage wine consumption Wine self sufficiency (%) in terms of volume Exports as % of world wine export volume 182

7 Page 84. Imports as % of world wine import volume Wine trade volume specialisation index Value of wine exports Value of wine imports Exports as % of world wine export value Imports as % of world wine import value Wine trade value specialisation index Index of intra-industry trade in wine Unit value of wine exports Unit value of wine imports Population 204 V. 58 x 10 region bilateral trade, 1990 to Volume of wine exports to each region Volume of wine imports from each region Value of wine exports to each region Value of wine imports from each region Unit value of wine exports to each region Unit value of wine imports from each region Share of value of wine exports to each region Share of value of wine imports from each region Index of value-based bilateral wine trade intensity 264 VI. 58 x 58 country/group bilateral wine trade, Value of bilateral wine trade Volume of bilateral wine trade Unit value of bilateral wine trade 288 VII.World s rankings of top 20 wine countries, 1961 to 2001, and top 20 wine companies, Total grape area Share of total agricultural crop area under vines Total grape production Grape yield per hectare Volume of wine production Volume of beverage wine consumption Volume of beverage wine consumption per capita Volume of beer consumption per capita Volume of spirits consumption per capita Total alcohol consumption per capita Wine s share of total alcohol consumption 303

8 Page 118. Volume of wine exports Volume of wine imports Exports as % of wine production volume Imports net of exports as % of beverage wine consumption Wine self sufficiency (%) in terms of volume Wine trade volume specialisation index Value of wine exports Value of wine imports Wine trade value specialisation index Index of comparative advantage in wine Unit value of wine exports Unit value of wine imports Top 20 wine companies by global sales in VIII. Summary data for each country/group: annual data, 1990 to France Italy Portugal Spain Austria Belgium-Luxemboug Denmark Finland Germany Greece Ireland Netherlands Sweden Switzerland United Kingdom Other Western Europe Azerbaijan Bulgaria Croatia Georgia Hungary Moldova Romania Russia Ukraine Uzbekistan Other Central and Eastern Europe and Former Soviet Union Australia New Zealand Canada United States of America 342

9 Page 162. Argentina Brazil Chile Mexico Uruguay Other Latin America and Caribbean South Africa Turkey North Africa Middle East Other Africa China Japan Other North East Asia South East Asia Other Asia and the Pacific Islands Western European Exporters Western European Non-Exporters Central and Eastern Europe and the Former Soviet Union Australia and New Zealand United States of America and Canada Latin America and Caribbean Africa and Middle East Asia and Pacific Islands New World Wine Group European Union World 369

10 Introduction The world s wine markets are going though a fascinating period of structural adjustment. For many centuries wine has been very much a European product. 1 That is still the case today, as more than three-quarters of world wine production, consumption and trade involve Europe, and most of the rest involves just a handful of New World countries settled by Europeans. In the late 1980s, Europe accounted in value terms for all but 4 per cent of wine exports and three-quarters of wine imports globally. Since then, however, California and several southern hemisphere countries (Australia, Argentina, Chile, South Africa, and New Zealand) have begun to challenge that European dominance. Between 1990 and 2001, this new group s combined share of world wine exports grew from 4 to 18 per cent in value terms. When intra-european Union (EU) trade is excluded, the decline in Europe s share of global exports is even greater over that period: a fall from 88 to 64 per cent (see Table 41 and 42 in Section III below). That change has been driven in part by rapid growth in the area under vines and hence in wine production, as in Australia and to a lesser extent the United States (Charts 1 and 2 and Tables 3 and 11). Simultaneously, per capita consumption in many traditional wine-consuming countries is declining as consumers switch from quantity to quality, while consumption in emerging markets in Europe and East Asia is growing rapidly from a low base (see Charts 7 and 8 and Table 69). With these major changes, and with a new round of WTO-sponsored multilateral trade negotiations getting under way, there is a greater need than ever for systematic analysis of the world s markets for wine. That requires at the outset a thorough understanding of past trends and recent developments. To that end this compendium brings together data from a wide range of national and international sources and summarizes them in ways that make it easy to see trends over time and draw comparisons across countries, revising and updating our previous compendium which only went to 1999 (Anderson and Norman 2001). The rapid growth in wine exports from the New World over the past decade is ironic, in that it coincides with a decline in world wine production and consumption. Over the 1990s global wine production fell at 0.5 per cent per year before levelling off, and yet global wine trade rose by 5.2 per cent per year in volume terms and 7.2 per cent in nominal US dollar value terms (see Tables 11, 25 and 37). Traditionally the countries producing wine were also the countries consuming it, with only about one-tenth of global sales being across national borders, and most of that was with near neighbours. The proportion traded rose a little over the 1980s but has since risen much more, so that now about one-quarter of the volume of sales is international (Chart 17 and Table 28). That is, despite per capita wine consumption 1 This is despite the fact that vines were first cultivated for wine in the Middle East. The drinking of wine in that part of the world went into decline, however, with Mohammed s decree against it in the 7 th century AD.

11 falling by 1 per cent per year over the 1990s globally (Table 19), wine is becoming much more of an internationally traded product. In terms of global wine production, New World suppliers such as Australia have always been small players. Prior to the 1970s Australia accounted for less than 1 per cent of world production, and as recently as 1987 its share had barely risen to 1.2 per cent. During the following 14 years the share almost trebled, to 3.3 per cent (Table 13), but on its own that statistic still makes Australia look rather insignificant. In terms of exports, Australia was even less significant until the 1990s. As recently as the first half of the 1980s the country accounted, in volume terms, for only 0.2 per cent of global wine exports, the same as its share of global wine imports. The import share has changed little, but the export share has shot up to 5.4 per cent in volume terms and 6.5 per cent in value terms (Tables 32 and 41). In fact Australia s wine exports grew more than three times faster than the global average: at annual rates of 16 per cent in volume terms and 18 per cent in value terms over that period (Tables 25 and 37). Australia's rapid export growth has been matched by that for other New World wine exporters (Chart 10 and Table 37). Those countries comparative advantage in wine has strengthened as Western Europe's has weakened somewhat. Table 48 shows that, for the European Union, wine's share of its merchandise exports has hardly changed from 2.1 times the global average, whereas for the Southern Hemisphere wine exporters that index has risen five-fold since Another reflection of the growth in wine exports fro the new World is the changing importance of wine in total merchandise exports. For the West European wine-exporting countries that share has remained in the 1.2 to 1.5 per cent range. For Chile and Australia, on the other hand, that indicator has gone up about five-fold since 1990, from 0.6 to 3.7 per cent for Chile and from 0.3 to 1.4 per cent for Australia. That makes Chile the highest in the world apart from the small producers Georgia and Moldova. There are different reasons for these high rates of New World export growth. Australia's exports grew rapidly because its production growth was much faster than its consumption growth. The same is true in North America to a lesser extent. In South America production grew much slower or declined, but domestic consumption fell, allowing exports to boom (Tables 11, 14 and 25). Volumes of consumption per capita have become somewhat more equal across regions as a result but, as Table 18 and Charts 7 and 8 show, there is still a wide variance. The world s top ten wine exporters account for more than 90 per cent of the value of international wine trade, with Europe s economies in transition from socialism raising the share to 95 per cent (Table 124). Of those top ten, half are in Western Europe and the other half are New World suppliers, led by Australia. Australia is the world's fourth largest exporter of wine in value terms, after France (alone accounting in 2001 for 42 per cent), Italy (18 per cent) and Spain (9 per cent). The share of France has dropped ten percentage points since 1990, which with smaller drops for Portugal and Germany have ensured that the shares of Australia and other New World suppliers have risen substantially (Chart 9).

12 If the European Union is treated as a single trader and so intra-eu trade is excluded from the EU and world trade data, the EU s share of world wine exports shows a much bigger fall, from 78 per cent to 58 per cent since 1990 (Table 42). With that adjustment, Australia moves to number two in the world. Its share of global exports rises from 4 per cent to 12 per cent. It is this fact, in spite of Australia's small share of global production, that makes Australia a significant player in the international wine market. Meanwhile, the share of the other main New World exporters (Argentina, Chile, New Zealand, South Africa, and the US) rose even faster, from 6 per cent to 23 per cent (Chart 12 and Table 42). That is, while Australia has done very well as an expanding wine exporter, it is not alone: the world wine market as a whole is becoming more internationalized and far more competitive, and most key New World suppliers are expanding their export sales (albeit from a lower base) nearly as fast or even faster than Australia. Not only are wine exports but also wine imports are highly concentrated. The ten top importing countries accounted for all but 14 per cent of the value of global imports in the late 1980s. That 14 per cent residual had risen to 19 per cent by2001, due mainly to Germany's reduced import share, indicating some growth of new markets. But in 2001, half the value of all imports continued to be bought by the three biggest importers: the UK (with 19 per cent), the United States (with 16 per cent) and Germany (with 14 per cent see Table 125). In volume terms, Germany is the largest importer of wine (19 per cent of the world total), followed by the United Kingdom (17 per cent), and the United States and France (both with 8 per cent Table 119). Despite that concentration, the ten top exporters are quite different in their penetration of those and other import markets. The Old World has greater dominance in neighbouring countries in continental Europe whereas the New World has been much more successful in penetrating the growing markets of the United Kingdom and elsewhere in the world (Charts 15 and 16). In Australia's case, it has concentrated on four English-speaking rich countries: the United Kingdom, the United States, Canada and New Zealand. The cost has been not boosting greatly its shares in continental Western Europe (most notably Germany, the world's biggest importer of red wine) and in the emerging markets of East Asia (Table 101). A crude index of the quality of a country's wine exports is the average export price. To see how different exporting countries are faring relatively, Chart 19 shows each exporter's average price as a percentage of the global average, minus 100, at the beginning and end of the 1990s. While France's strong position has changed little, New Zealand has improved its positions considerably to rival the quality dominance of France s exports. New Zealand s average export price is well ahead of France s, and Australia in 2000 was just 36 cents per litre behind France (Table 50). Meanwhile, the price of exports from other Southern Hemisphere suppliers and the US in 2001 was only three-quarters the Australasian average. However, even though the Australian average unit export price rose at 2.3 per cent per year from 1990 compared with the global average of 0.8 per cent, complacency is not called for. The rise for Australia was exceeded by Argentina (7.3 per cent), Chile (5.8 per cent) and New Zealand (4.6 per cent Table 50). Clearly, other exporters are striving to raise the quality of their exports just as much as Australia, albeit from different bases. Note, however, that the quality of wine exports

13 varies markedly across different markets. In 2001, for example, Australia s export sales to North America averaged US$3.02 a litre, whereas they averaged just $2.13 to the UK and $1.84 to New Zealand (Table 106). What are the physical (physiological/climatic, agronomic, water) limits on the future expansion of premium winegrape production in the various regions of the world? The greatest influence on wine quality is the climate for grape growing. Virtually all winegrapes are the sub-species Vitis vinifera which, ten plus millennia ago, grew wild in much of Europe, North Africa and the Middle East (but not in North or Central America or the southern hemisphere). They can be grown successfully only between 30 o and 50 o north and south of the equator where their distinctive annual cycle can be accommodated. 2 That cycle involves winter dormancy when temperatures can be below freezing, but the mean daily temperature has to reach 10 o C in spring before shoots grow and 20 o C in summer for flower clusters to bloom. Frosts in spring can cause severe damage, as can rain prior to the autumn harvest. Hence the idealness of a winter-rain Mediterranean climate, with the addition of local or mesoclimatic features that include the right combination of access to sunlight, shelter from wind, freedom from spring frosts, sufficient irrigable water in case of a summer drought, 3 etc. The next most important influence is what the French call terroir: the soils should preferably be gravelly and well-drained, and not overly fertile. (Beyond those features, the skills of the viticulturalist and winemaker are what matter.) Given that, it is not surprising that the world s top 30 wine-producing countries are in the temperate zone. But as Table 6 shows, there is a huge variance in the vine intensity of cropping in those countries. At one extreme are the traditional producing countries of France, Spain, Italy and Portugal with 5, 6, 8 and 10 per cent of their cropped area under vines, respectively. Nearly as extreme are the Balkan states of Southeastern Europe and also the Caucasus. Having had the opportunity there to cultivate grapes for more than two millennia, and given the financial supports provided by the EU in recent decades, it is likely that virtually all suitable land in Western Europe is already under vines. Hence their only hope for growth is in terms of quality improvement, that is, expanding premium wine at the expense of non-premium. Normally that means lowering vine yields, so such quality upgrading will lower the aggregate volume of wine produced. It is also likely to lower the price of premium relative to non-premium grapes and wine. At the other extreme are the New World wine producers, with the United States and Australia each having only 0.2 to 0.3 per cent of their crop area under vines barely above the ratio for China. Argentina, Uruguay and South Africa also have vines accounting for much less than 1 per cent of their crop area. Hence in those countries, which have ample land with suitable climates for expansion, the main 2 In the tropics the vine is evergreen (no dormancy), but it tends to yield only a small crop of lowquality grapes. The key exceptions are in high-altitude areas where temperatures are more moderate. Genetic engineering may change this in the decades ahead, but not in the medium term. 3 Vines need relatively little water per year once they are established; yet having that water is essential for producing quality winegrapes every year over the long term in a drought-prone environment. That means the wine industry has been able to afford to pay much more than many other rural users for water rights.

14 influence on vineyard area is the expected long-term profitability of grapes relative to that of alternative uses for the land. With both sets of regions in mind, what might be the net effect on global wine markets of recent and prospective trends in grape and wine supply and demand? The trend towards premium and away from non-premium wine production and consumption, together with the data on new plantings (the most recent of which will take until 2005 to produce significant crops), provide enough information to attempt to project wine markets a few years into the present decade. That has been done recently using a global model of grape and wine markets that differentiates not only according to the 47 countries/country groups identified in this Compendium but also as between premium and non-premium segments of each market and each bilateral trade flow (Anderson and Wittwer 2001; Wittwer, Berger and Anderson 2002). The Anderson and Wittwer projection has the world market for premium wine (40 per cent of global wine output) growing by 38 per cent over the six vintages to 2005 while that of non-premium wine growing very little. It has premium production more than doubling for Australia, while it increases by a bit over 50 per cent for the US and nearly doubles for other Southern Hemisphere wine-exporting countries. However, it grows by only one-fifth in Western Europe. That growth in premium output is projected to outstrip the expanding demand because of income and adult population growth and preference changes, causing premium producer prices to fall. In the model s base case they fall most for Australia, by 12 per cent for premium wine, reflecting the country s very large premium acreage expansion over the past few years. 4 Meanwhile non-premium prices change little because the assumed slowdown in its demand is matched by a slowdown in supply. This base projection has Australia exporting nearly three-quarters of its premium wine by 2005, compared with a bit under three-fifths in The usefulness of that base case projection is less in providing a market forecast (improvements in such things as a super premium/commercial premium/nonpremium data split are needed first an initial attempt to do that is to be reported in Anderson, Norman and Wittwer 2003), than in providing a basis for comparison with alternative scenarios over which participants may or may not have control. Several are analysed quantitatively by Anderson and Wittwer (2001). Not captured in that model, nor in most of the data presented in this compendium, is the fact that globalization is also altering the structure of firms within the wine industry and among those distributing and retailing wine. It is doing so by lowering the transactions costs of doing business across space, including across national borders. Rapid growth in supermarketing and in concentration among distributors is driving wine companies into mergers and acquisitions so as to better meet the needs of those buyers and their customers. Since knowledge about the various niches and the distributional networks in foreign markets is expensive to acquire, new alliances between wine companies are being explored with a view to capitalizing on their complementarities in such knowledge. The purchase by the owner of Mildara Blass (Fosters Brewing Group) of Napa Valley-based Beringer, the 4 Note from Table 50 that the unit value of Australian exports fell by one-fifth in nominal US dollar terms between 1999 and 2001 alone.

15 alliance between Southcorp/Rosemount and California s Mondavi, BRL Hardy s joint venture with the second-largest US wine company, Constellation Brands (to operate as Pacific West Partners), and the purchase by New Zealand s biggest wine firm (Montana) of the second largest (Corbans) were all cases in point during These may achieve the desired result much quicker than direct foreign investment, although that has been happening increasingly too (not least from the US because of the strong US dollar in ). As well, in this era of floating exchange rates, crossborder operations can be a form of currency hedge; and it can also serve as insurance against a major disease outbreak (e.g., Phylloxera, Pierce s Disease) in the home country. This trend which is occurring in many industries as part of globalization may increase concentration in the wine industry. But, as Chart 21 shows, the wine industry has a long way to go before it approaches the concentration of other beverage industries. It would seem from Chart 22 and Table 130 that the New World is well ahead of the Old World in terms of firm concentration, which is another difference that is likely to shape the future of the global wine industry. The data in this Compendium draw on three earlier statistical compendia published by the CIES (Anderson and Norman 2001, Berger, Anderson and Stringer 1998, and Berger, Spahni and Anderson 1999). To keep the printing task manageable, the world has been divided into 47 countries and country groups. Also shown are 10 regional aggregates plus the world total. For analysts interested in accessing all the individual years of data back to 1961, and all the bilateral trades at the 58 x 58 region level for years before 2001 (data for that single year are reported in Tables 104 to 106), a CD-ROM version of the Compendium is purchasable from We welcome feedback so that a more-accurate and more-comprehensive set of data, summarized in a more-useful set of tables, can be put together in future. Please send comments and suggestions to Professor Kym Anderson, Director, Centre for International Economic Studies, University of Adelaide, Adelaide SA 5005 Australia, phone (+61 8) , fax (+61 8) , cies@adelaide.edu.au The authors wish to acknowledge with thanks the various data providers listed in the Statistical Sources section above. Especially important were the United Nations Statistical Division COMTRADE collection as the source of the bilateral trade data ( the Food and Agriculture Organisation s FAOSTAT file ( as the source of most of the national vine area and wine production data, the World Drinks Trends 2000 booklet produced by NTC Publications Ltd in Schiedam, Holland for per capita alcohol consumption data for numerous countries, and issues of the Bulletin de l O.I.V. published over the past dozen years for the industrial use and stock estimates and wine consumption data for major wine-consuming countries. Also, our thanks to individual researchers who have helped us fill gaps via national data sources, including William Forster, Bith-Hong Ling, Nivelin Noev, Nick Vink, and Glyn Wittwer. Finally, thanks are due to the Grape and Wine Research and Development Corporation for assisting with the costs of production and publication of our first two statistical compendia on which the current one was built, to Lawrie Stanford and Susan Bell of the Australian Wine and Brandy Corporation and Nick Berger at LECG for helping us improve on those earlier compendia, and especially to the Australian

16 Research Council for the research assistance funds needed to compile the present Compendium. References Anderson, K., D. Norman and G. Wittwer (2003), Globalization of the World s Wine Markets, The World Economy Vol. 26 (forthcoming, but an earlier version is downloadable at Anderson, K. and G. Wittwer (2001), Projecting the World s Wine Markets to 2005, Paper presented at the VDQS Enometrics VIII Conference, Napa Valley, May. Berger, N., K. Anderson and R. Stringer (1998), Trends in the World Wine Market, 1961 to 1996: A Statistical Compendium, Adelaide: Centre for International Economic Studies, June. Berger, N., P. Spahni and K. Anderson (1999), Bilateral Trade Patterns in the World Wine Market, 1988 to 1997: A Statistical Compendium, Adelaide: Centre for International Economic Studies. Wittwer, G., N. Berger and K. Anderson (2002), A Model of the World s Wine Markets, Economic Modelling Volume 19 (forthcoming, but an earlier version is downloadable at