Wednesday, January 6, 2010

Trends in the Global Wine World - Old World, New World, Emerging Wine Countries

Picture: Trends in World GDP Shares, from Greg Mankiw's Blog

Within the past 40 years, the shares of the three main regions --- EU, USA and Asia/Oceania --- have converged to around 27 percent, with the US going steady, the EU falling by roughly 10 percentage points and the Asia/Oceania region increasing by this amount. If you do a trend projection, than you end up, say in 40 years, with something like on the left-hand axe, with the only difference that the top line at above 35% is Asia/Oceania and the line in the middle at 15% is Europe. There is a dramatic shift in purchasing power going on and will continue to go on, with implications for the wine market.

This is in broad terms the economic set up for the global village in which people consume and produce wine. Often, one distinguishes two groups of wine countries, Old World wine countries and New World Wine countries, but I think one should add a third category, Emerging Wine countries.

Old World wine countries comprise continental western Europe, with France, Italy, Portugal, Germany being the main countries. They are considered to be very much terroir driven although one is wondering what this means in the days of global warming. The President of the French wine makers recently predicted that if the climate change continues at the current pace, in 2050 the Bourgogne region will no longer be able to make its famous Pinot Noirs. The Old World will be terribly hit by global warming.

New World wine countries are the US, Latin America, Australia and New Zealand and South Africa. Not all of them are new comers. Latin America has been producing wine, and large amounts, for centuries. But it was all done for the local market. Sure, when the Spanish came, they wanted to continue to drink wine, but wine was not exported in a meaningful way and was not present in the world market. While most of the wine production in Latin America is based on Old World varieties, the wine growing regions of Latin America often have "adopted" grapes that are particularly closely identified with them, such as Argentina's Malbec and Chile's Carmenere (both from France).

Picture: Christian G.E.Schiller

Other countries, like Australia and the US are real newcomers. Here, the terroir concept is on the back burner and the grapes are at the center of winemaking. Also, these are all countries with warm weather and New World wines tend to be juicy, high in alcohol and fruity. Old world consumers tend to feel that there is too much hanky panky going on in the wine cellars of New World wine makers, but many of them have never seen a wine cellar in the new World with their own eyes but still continue to assume this.

Until the latter half of the 20th century, US wine was generally looked upon as inferior to European product; it was not until the surprising American showing at the 1976 Paris Wine Tasting that New World wine began to gain respect in the global market.

As for Australia and New Zealand, their wine product was not well known outside their small export markets. Australia exported largely to the United Kingdom, New Zealand kept most of its wine internally. South Africa was closed off to much of the world market because of apartheid, although in the 18th Century the largest exporter of wine to Europe was the Cape Province of what is today South Africa.

There is another set of countries that has started to appear in the international wine market or may do so in due course. These are the emerging wine countries. They are emerging for two reasons. Some of them are benefiting from climate change as the northern border for wine growing is pushing up. Others are emerging countries and with the general economic expansion, the demand for wine and the production of wine is also going up.

England is a prime example of an emerging wine country because of climate change. Many eastern European countries are emerging wine countries. Hungary has a long tradition of wine making and at some point in its history it was among the top wine producers of the world. But it lost contact to Western Europe as a result of the iron curtain and fell back, but is now clearly reemerging as major wine producer. Slovenia has reentered the international market quickly after the collapse of Yugoslavia in the mid-1990s and is producing now outstanding wines. Croatia is a bit behind, but has excellent potential. Serbia still has a long way to go. Poland has never been a major wine producer, but may benefit from climate change.

Another major emerging market is China, with a wine boom going on since 2000. China has emerged as the fifth biggest wine producer, mainly for domestic consumption, although Chinese wine has reportedly started to appear on the shelves of the West Coast of the US. On the demand side, the Chinese rich and famous have developed a taste for top French wines and are driving up the prices for them so that Lafite Rothschild for example has decided to set up a winery in China. China is projected to become the largest wine producing country by the middle of the century. On the other hand, China, where traces of wild wine dating from the second and first millennium BC have been found is clearly on the fast track and projected to become the world largest wine producer in some years.

Some of the New World and emerging wine countries are in fact very old. Archaeological evidence suggests that the earliest wine production came from sites in Georgia and Iran, dating from 6000 to 5000 BC. Georgia is one of the emerging wine countries following the collapse communism. Greece is another example with a long history, but only now emerging on the global wine market. Indeed, much of modern wine culture derives from the practices of the ancient Greeks. We all know, Dionysus, the Greek god of revelry and wine. Greek wine was widely known in ancient times and exported throughout the Mediterranean basin. The Greeks introduced the vitis vinifera vine to their numerous colonies in Italy, France and Spain.

Schiller Wine - Related Postings:

Emerging wine country: China's wine boom since 2000

New World wine country: New Zealand - facing the fate of neighboring Australia?

New World wine country: Chile and the Carmenere grape


  1. Came across your blog, interesting stuff. Had no idea the Chinese even drank wine, let alone have potential become the biggest producer in the world anytime soon.

    Just would like to point out a misunderstandnig, wine was first cultivated in Macedonia, however the country called Macedonia isn't actually part of the historic region of Macedonia where Ancient Macedonian civilization lived (aside from a the southern fringe area near the Greek border) nor are the people/culture particularly related---their legacy is from the Bulgarians of the Middle Ages.

    Macedonian wines that you'd be referring to as upcoming and resurging are those from the famous winemaking region of Macedonia region in Greece, such as the Xinomavro variety.

    Its important to not get them confused with Former Yugoslav Macedonia as its a whole different land and people than the original region of Macedonia in Greece which is reknowned for its wine.

  2. In response to Robert, I would like to stress that current scientific community supports the theorey which states that the wine cultivation was originated in transcaucasus region, particularly in Georgia. The archeological findings in the village of Shulaveri, Georgia discovered wine jars with vintage wine residues. In addition, during the examination of jars, archeologists came across a series of tiny, stylized relief images of Stone Age people celebrating the vine. Thus experts believe they stumbled upon the prehistoric origins of what much later evolved into wine cults such as those of the Greek god Dionysus and Dionysus's Roman equivalent, Bacchus. This theory is further supported by the fact that Georgia has over 500 indigenous grape varieties and millennia old unique wine making tradition called Kvevri. Therefore, Greece and Macedonia could be considered as successors of winemaking traditions of Georgia, much like other cultural traditions of Kolkhi culture (western Georgia) which is symbolically depicted in the Greek mythological story of Argonauts stealing the Golden Fleece from Kolkhs.