Global Study

Global Study 2015-2020 Asia to gain the most Premiumisation to continue China to become second most valuable market by 2020 January 2017

Contents Notes... 5 Benefits of the Report... 5 About the IWSR... 5 Quality segmentation... 5 About the Editor... 5 Executive Summary... 6 The Long View... 6 Category underpinned by local wine... 6 Wine consumption on the up... 6 The long view... 6 Still Light Wine... 7 Asia & Americas rising... 7 Rosé to grow share... 7 Table: Top growth regions 2016-2020... 8 Table: Top growth regions imported wines 2016-2020... 8 Table: Top 10 growth markets 2016-2020... 8 Table: Top 10 imported growth markets 2016-2020... 8 Table: Top 10 red growth markets 2016-2020... 9 Table: Top 10 white growth markets 2016-2020... 9 Table: Top 10 rosé growth markets 2016-2020... 9 Americas to drive value growth... 10 Standard-and-above to grow most... 10 Table: Top value regions 2015... 11 Table: Top value growth regions 2016-2020... 11 Table: Top 10 value markets 2015... 11 Table: Top 10 value growth markets 2016-2020... 11 Table: Top 10 super-premium-and-above growth 2016-2020... 12 Table: Top 10 premium growth 2016-2020... 12 Table: Top 10 standard growth markets 2016-2020... 12 Table: Top 10 value/low-price growth 2016-2020... 12 Sparkling Wine... 13 Growth across most regions... 13 China drive... 13 Prosecco growth to continue... 13 Table: Top growth regional markets 2016-2020... 14 Table: Top 10 growth markets 2016-2020... 14 Table: Sparkling wine by subcategory growth 2016-2020... 14 Table: Top prosecco growth markets 2016-2020... 14 Production & International Trade... 15 Production to outperform consumption... 15 Italian exports to dominate... 16 Table: Top 20 producers 2015... 17 Table: Top 10 growth countries of origin 2016-2020... 17 Table: Top 10 growth imported countries of origin 2016-2020... 17 North-West Europe... 18 Still Light Wine... 18 Volume decline to continue... 18 Rosé flat in difficult market... 18 Premium-and-above to grow... 19 In focus: Germany... 19 In focus: Switzerland... 19 In focus: United Kingdom... 20 Sparkling Wine... 21 Growth to accelerate... 21 Prosecco to grow fastest... 22 In focus: France... 22

In focus: United Kingdom... 22 Wines by Origin... 23 Italian wines stable; French to lose... 23 Australia to outperform other imports... 23 Southern Europe... 24 Still Light Wine... 24 Decline to soften by 2020... 24 Italy & Spain to see premium growth... 24 Rosé to grow in difficult market... 25 In focus: Spain... 25 In focus: Innovation... 25 Sparkling Wine... 26 Growth to continue... 26 In focus: Prosecco... 26 In focus: Cava... 26 Prosecco boom to continue... 26 Wines by Origin... 27 Italian & Spanish to lose overall... 27 Imports to remain stable... 27 Central Europe & Balkans... 28 Still Light Wine... 28 Poland remains dynamic... 28 In focus: Poland... 28 Sparkling Wine... 29 Half a million cases growth expected... 29 Other sparkling wines dominant... 29 Wine by Origin... 30 Romanian wines dominate region... 30 Italian to grow among imports... 30 The Nordics... 31 Still Light Wine... 31 Limited volume growth... 31 In focus: Lighter-style wines gaining traction... 31 Rosé to grow; red to lose share... 31 Premium wines to grow... 32 Sparkling Wine... 33 Continued growth expected... 33 Prosecco growth to continue... 33 Wines by Origin... 34 Old World to grow most... 34 Italian wines dominant... 34 The CIS... 35 Still Light Wine... 35 Russia to rebound... 35 In focus: Russia... 35 Red & white to benefit... 35 Sparkling Wine... 36 Russia to rebound... 36 Other sparkling wines dominate... 36 Wine by Origin... 37 Russian to grow most overall... 37 Moldovan to grow among imports... 37 Asia-Pacific... 38 Still Light Wine... 38 China growth to resume at slower pace... 38 Shift to mainstream... 38 Red to dominate due to China... 39 In focus: China... 39

In focus: Australia... 39 In focus: Innovation... 39 Sparkling Wine... 40 Japan approaches Australia... 40 In focus: Japan... 40 In focus: China... 40 Other sparkling wines to grow most... 41 In focus: Champagne... 41 In focus: Prosecco... 41 Wine by Origin... 42 Chile and France to grow the most... 42 Chinese wines to suffer most... 42 The Americas... 43 Still Light Wine... 43 US volume growth to soften... 43 Rosé growth continues... 43 Premium to grow the most... 44 In focus: premiumisation... 44 In focus: United States... 44 In focus: Canada... 44 In focus: Rosé... 44 Sparkling Wine... 45 US growth continues apace... 45 In focus: United States... 45 Other sparkling to drive growth... 45 Wine by Origin... 46 Italian wines to prosper among imports... 46 US growth due to domestic market... 46 Italian & Chilean to perform well... 46 Africa & Middle East... 47 Still Light Wine... 47 South Africa to drive region... 47 Rosé to grow most... 47 Value-for-money to drive growth... 48 In focus: South Africa... 48 Sparkling Wine... 49 Nigeria to recover... 49 Other sparkling wines to grow most... 49 Wine by Origin... 50 South African to remain dominant... 50 Spanish imports to grow most... 50 South African the dominant wine origin... 50

Notes Benefits of the Report The IWSR Vinexpo Report is the most comprehensive survey of the global wine market covering still light and sparkling wines up to 2020, informed by local experts and updated by researchers on the ground. The report covers still light wine and sparkling wine consumption trends and volumes across 45 key countries from 2010 to 2020. It comprises a global summary with overview of key regional and individual markets, including sales volume by colour and price point, volume development by country of origin, and value developments to date and projected forward; consumer trends; production developments in 2015 and 2016; and finally, wine s position in the context of the broader alcohol category today and moving forward. About the IWSR Over the past 40 years the IWSR has built the world s largest database on wine and spirits, spanning 125 markets. It is the only market research company to visit key operators every year (distributors, importers, producers, retailers, duty-free and grey operators). In total, its analysts survey over 1,500 companies through face-to-face interviews, with input from a further 350 companies. This allows the IWSR to gain deep understanding of the dynamics of a market, helping to explain why trends occur, as well as the global picture. It also allows for cross-checking company claims as local experts have a deep understanding of what is sold in each country, rather than shipped. Visiting each key market also means that the IWSR can reach players in certain markets such as grey market operators who would not otherwise commit anything to record, but who nevertheless have a significant impact on the market. The IWSR measures actual consumption in all countries. This means that all figures, official or otherwise, are adjusted where known stock, parallel, contraband or re-export issues occur. Its figures therefore vary from official data in most markets. Its research covers both on- and off-premise consumption and provides data on retail value by collecting retail prices in major local stores. Quality segmentation Quality segments are based on a product s retail price relative to other brands. Given issues with price positioning and disparities in taxation, the US dollar price bands below form a guide for assigning price brackets, but not a hard and fast rule. In many Asian markets or the Nordics, for example, where wine tax is significantly higher than in mainland Europe or the US, actual price segmentation does not reflect the US dollar price bands below; however, their relativity is the same. Quality Approx. US$ equivalent Super-premium-and-above Over $20.00 Premium $10.00-$19.99 Standard $5.00-$9.99 Value $3.00-$4.99 Low-price Under $2.99 For consistency, local market value has been converted here into US dollars. Exchange rates are based on the annual average rate for the latest year, taken from www.oanda.com, and carried backwards to mitigate against forex changes. About the Editor Giles has been with the IWSR since January 2011 and has travelled extensively through his work for the company. He is currently responsible for and consults on German-speaking markets and specialises in the global wine trade with a specific interest in Australia and New Zealand. He has edited the IWSR Vinexpo Report since 2013 and is the IWSR Magazine s wine editor.

The Nordics Sparkling Wine Continued growth expected Sparkling wine volumes grew strongly between 2011 and 2015, driven by the development of prosecco in Sweden. In truth, though, sparkling wine s growth is more a regional phenomenon, the rise of prosecco in particular. The latter has managed to tap into the broader trend towards lighter wines. Prosecco growth to continue Growth is expected in all sparkling wine subcategories, except asti. Possible price rises, as prosecco growers shift focus, could benefit other sparkling wine subcategories further. Prosecco consumption grew to 750,000 cases in 2015, an increase of nearly 300% on 2011 levels. Key to its success has been price and the fact that it appeals to a broad range of drinkers. While Champagne remains the celebratory drink par excellence, prosecco has increasingly moved into this space. Norway is the second-largest market in the region, behind Sweden, where it has benefited from its adoption as an everyday aperitif. Denmark is lagging behind, given the traditional local propensity towards sweeter styles, but there is now some shift from asti to prosecco and this trend is expected to continue.

The Nordics Wines by Origin Old World to grow most Italian wines dominate the category, due in part to their good quality-tovalue ratio, ample supply, love of the Italian lifestyle and the current taste for fuller-bodied red wines. Italy dominates the red wine segment in Sweden. Amarone and ripasso have for a long time been highly sought-after. This preference remains in place, but there is some shift to other styles such as Italian 'zinfandel' (as opposed to primitivo). This shift within the segment means that Italian red wines are likely to continue to dominate in Sweden over the forecast period. Italian wines dominant The Old World is in a good position entering the forecast period. Danes generally regard Old World wines as offering good quality to cost; Spanish, French and, to a lesser degree, Portuguese wines are benefiting as a result. As Danes seek out higher quality, this perception should boost the segment. The level of wine literacy continues to grow in Sweden consumer engagement and education is a priority for the retail monopoly. The distinction between wine regions is growing. Naturally, the Old World is very well placed to cater to this. Old World wines should also profit from wider premiumisation in the country.

Key markets 2010-2020 Volume and value development Still light and sparkling wines International trade Production January 2017

Contents Notes... 4 Benefits of the Report... 4 About the IWSR... 4 Quality segmentation... 4 About the Editor... 4 FRANCE... 5 Still light wine... 6 Sparkling wine... 9 International Trade... 11 Production... 13 GERMANY... 14 Still light wine... 15 Sparkling wine... 18 International Trade... 20 Production... 22 UNITED KINGDOM... 23 Still light wine... 24 Sparkling wine... 27 International Trade... 29 Production... 31 NETHERLANDS... 32 Still light wine... 33 Sparkling wine... 36 International Trade... 37 BELGIUM & LUXEMBOURG... 39 Still light wine... 40 Sparkling wine... 43 International Trade... 44 Production... 46 SWITZERLAND... 47 Still light wine... 48 Sparkling wine... 51 International Trade... 53 Production... 55 ITALY... 56 Still light wine... 57 Sparkling wine... 60 International Trade... 62 Production... 64 SPAIN... 65 Still light wine... 66 Sparkling wine... 69 International Trade... 70 Production... 72 SWEDEN... 73 Still light wine... 74 Sparkling wine... 77 International Trade... 78 DENMARK... 80 Still light wine... 81 Sparkling wine... 84 International Trade... 85 NORWAY... 87 Still light wine... 88 Sparkling wine... 91 International Trade... 92

FINLAND... 94 Still light wine... 95 Sparkling wine... 98 International Trade... 99 RUSSIA... 101 Still light wine... 102 Sparkling wine... 105 International Trade... 106 Production... 108 UNITED STATES... 109 Still light wine... 110 Sparkling wine... 113 International Trade... 114 Production... 116 CANADA... 117 Still light wine... 118 Sparkling wine... 121 International Trade... 122 Production... 124 CHINA... 125 Still light wine... 126 Sparkling wine... 130 International Trade... 132 Production... 134 HONG KONG... 135 Still light wine... 136 Sparkling wine... 139 International Trade... 140 JAPAN... 141 Still light wine... 142 Sparkling wine... 145 International Trade... 146 Production... 148 AUSTRALIA... 149 Still light wine... 150 Sparkling wine... 154 International Trade... 156 Production... 158 NEW ZEALAND... 159 Still light wine... 160 Sparkling wine... 163 International Trade... 164 Production... 166

Still light wine Consumption vs. per capita Volume by colour Consumption vs. per capita and colour Volume - '000s nine-litre cases CAGR 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010-15 2015-20 Still Light Wine 5,979 5,942 5,847 5,708 5,698 5,691 5,632 5,626 5,626 5,632 5,636-1.0% -0.2% Per Capita 12.6 12.4 12.2 11.8 11.7 11.6 11.9 11.8 11.8 11.8 11.8-1.6% 0.4% Red 3,350 3,300 3,194 3,000 2,920 2,890 2,810 2,775 2,721 2,682 2,650-2.9% -1.7% Rose 84 87 90 97 99 131 142 151 165 170 186 9.3% 7.3% White 2,546 2,556 2,563 2,611 2,679 2,670 2,680 2,700 2,740 2,780 2,800 1.0% 1.0% Source: The IWSR

White to overtake red as demand for lighter wines grows The number of consumers drinking wine is unlikely to grow over the immediate future. More important, however, is the clear trend away from quantity to quality wines, especially for purchases intended for consumption at home. Having said this, wines around the 9.00 mark currently maintain the largest share of the market. The biggest average growth rate is currently found in the price range between 10.00-12.49, followed by healthy increases in the 17.50-19.99 price bracket. For most countries of origin, value wines are expected to lose volume over the coming years, simply due to the high taxes in the Finnish market and it becoming virtually impossible to offer wines at a retail price below 7.00. Generally, Finnish consumers are happy to spend more on wine they recognise as being of good quality. Knowledge about wines is increasing as a direct result of this. The main channel for premium wines is the ordering assortment from Alko, ostensibly a click and collect service. Distribution As in most countries in the Nordic region, Finland s alcohol market is strictly regulated and highly taxed. All retail distribution of alcoholic drinks above 4.7% ABV is in the hands of the government-controlled Alko stores. An online shop will be available on the Alko website towards the end of 2016 to make shopping more convenient by ordering and paying for all products in advance. This is not expected to dramatically impact the market, as consumers will still pick up their purchases at their nearest Alko outlet, much like the ordering assortment service currently in place. Passenger imports from Estonia remain one of the biggest problems for the domestic Finnish alcohol market. These have reportedly stabilised, perhaps having reached saturation point. Booze cruises remain a viable way of accessing alcohol cheaply, despite a recent tax increase in Estonia. Consumption of white wine continues to grow. Sweet white wines are declining at the monopoly, but smooth, lighter white varietals are gaining. This development is expected to continue throughout the forecast period. Rosé is also growing strongly. Summer remains peak season for the segment. French and Portuguese wines are benefiting the most. Overall, category volumes are expected to be relatively static over the coming period, but with a notable shift from the standard to the premium segment, as well as from red to white varietals.

The wider context 2015-2020 Category Blur January 2017

Contents Notes... 3 Benefits of the Report... 3 About the IWSR... 3 Quality segmentation... 3 About the Editor... 3 The Wider Context... 4 Executive Summary... 4 Spirits consumption growing... 4 The long view... 4 National spirits to grow global growth... 5 Leading growth categories... 5 Largest spirits markets 2020... 5 Bourbon... 6 Growth set to continue... 6 Growth across all major regions... 6 Scotch Whisky... 7 Scotch to enter new period of growth... 7 Asia to see strong growth... 7 Tequila... 8 Solid growth to continue... 8 Americas dominate global development... 8 Cognac/Armagnac... 9 Cognac/Armagnac to grow... 9 Americas and Asia-Pacific to drive growth... 9 Brandy... 10 Decline set to continue... 10 Asia-Pacific to lead decline... 10 Gin/Genever... 11 Global gin to grow... 11 Europe takes on the mantel... 11 Rum... 12 Global decline set to continue... 12 Asian mass drags market down... 12 Liqueurs... 13 Global decline to continue... 13 Decline expected in Europe... 13 Vodka... 14 Decline expected to accelerate... 14 The CIS to drag category down... 14 National Spirits... 15 National spirits consumption to increase... 15 Asia-Pacific dominates global market... 15 Category Blur... 17 Executive Summary... 17 Still light wine to pick up from 2017... 17 Flavoured beer to grow strongly in North America... 18 Still light wine to improve slightly in North West Europe... 19 Beer and cider to grow most in Australasia... 20

Vol - 000s 9l-cases Vol - 000s 9l-cases The Wider Context Scotch Whisky Scotch to enter new period of growth 96,000 94,000 92,000 90,000 88,000 86,000 84,000 82,000 80,000 78,000 83,681 93,802 86,529 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Asia to see strong growth 100,000 4,044 90,000 3,429 9,470 80,000 8,628 70,000 14,099 16,585 60,000 50,000 40,000 30,000 20,000 10,000 0 24,736 26,513 35,675 37,190 2016 2020 Europe Americas Asia Pacific Africa & Middle East CIS Scotch whisky will enter new growth after three difficult years. Malt Scotch, benefiting from its craft and provenance credentials, will continue to erode share of premium blended Scotch. A slowdown in North America, Russia and Australasia will drag down category performance, but strong growth in Asia and Latin America will bring overall year-on-year growth. From their smaller base, malts are forecast to grow faster than blends. The higher price segments continue to gain market share. North America and Asia will see the fastest development of malt Scotch over the forecast period. Following the category s peak in France, more dynamic segments within whisk(e)y and outside will erode volumes from blended Scotch as part of a gradual long-term switch. Trendier malt Scotch brands will continue to grab share from premium blends in the future. The rapid development of malt Scotch in the US will help to offset the continuing decline of the blended Scotch subcategory, leaving overall volumes largely flat throughout the forecast period. Premium blended Scotch continues to lose ground in the UK as core consumers either age or transition towards other more on-trend categories. Malts are likely to see higher growth at the super-premium level.