Global Wine Consumption and Production

Picture: Christian G.E. Schiller and Ernst Loosen in Washington DC. Ernst Loosen not only makes wine in the Mosel Valley, but also in the Pfalz region in Germany and in Washington State as well as in Oregon in the US, for more see:

Ernst Loosen and Dr. L. Riesling - His Hugely Popular Entry-level Wine Sold Throughout the World 
The Doctor Made a House Call - A Tasting with Ernst Loosen, Weingut Dr. Loosen, at MacArthur Beverages in Washington DC, USA
A Riesling Guru and a Killer Guitarist cum Cult Winemaker: Ernst Loosen and Jay Somers and their J. Christopher Winery in Newberg, Oregon
Wine ratings: Two American/German wines - Eroica and Poet's Leap - on Top 100 Wines from Washington State list for 2009
German American Wines: (1) Pacific Rim Riesling (2) Eroica and (3) Woelffer's Schillerwein
Riesling, Pinot Noir and Indian Cuisine: A tête-à-tête Dinner with Winemaker Ernst Loosen, Weingut Dr. Loosen, at Rasika in Washington DC, USA

Global wine consumption has increased by about 1 percent per annum in the past 10 years and is forecast to grow by about the same rate in the coming years. The US, China and Russia are driving growth in global wine consumption. The Old World is a drag on growth, as per capita consumption is declining and the population stagnating. The US has just become the largest wine market in the world and China is projected to become the second largest wine market in 2016.

Weinrallye # 63: EU Ban on New Vineyard Plantings

This posting is being published as part of the Weinrallye, a monthly blog event in Germany. Participating wine bloggers - mainly in Germany - are all releasing postings today under the heading "EU Ban on New Vineyard Plantings" . Weinrallye is the brainchild of Thomas Lippert, a winemaker and wine blogger based in Heidelberg, Germany. This month's wine rally is organized by Sebastian Holey, who runs the wine blog “Weinbau und Oenologie".

Picture: Weinrallye

Currently, there are restrictions to planting vines across the European Union. The European Union wants to change this. If the planned reform goes through, by 2019 there will be no restrictions to planting vines across the European Union, even in countries that today have no vineyards. This posting offers some background information on the topic, by shedding some light on which countries produce and which countries consume the wine made in the world.

Old World, New World and Emerging Wine Countries

Old World and New World

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.

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).

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.

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.

Emerging Wine Countries

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 experiencing a major restructuring of their wine industry, notably the former Soviet Blog countries.

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.

Top 12 Global Wine Producers (in Mio. hl)

I am using numbers from the year 2010 to shed some light on the question: Who produces the wine in the world and who consumes it?

Picture: Global Wine Producers

1. Italy 48
2. France 45
3. Spain 36
4. USA 20
5. Argentina 16
6. China 13
7. Australia 11
8. South Africa 9
9. Chile 9
10. Russia 8
11.Germany 7
12. Portugal 7

Global wine production stood at 264 million hectoliters in 2010.

Three Old World countries account for about half of global wine production: With 48 million hectoliters, Italy is the largest producer, followed by France with 45 million hectoliters. The third country in the leading trio is Spain with 36 million hectoliters.

The New World country United States is ranked next in the list of top wine-producing countries, producing around 20 million hectoliters of wine. Zinfandel is the most popular grape, followed by Cabernet Sauvignon.

Argentina produces around 16 million hectoliters of wine each year. Only about 10 per cent of the wine produced is exported.

Then comes emerging wine country China. Around 80 per cent of the 13 million hectoliters of wine produced in China is red. Only a small amount of wine from China is exported currently but the wine industry is starting to take note of Chinese wines. Most of the grapes used are indigenous to China but Cabernet Sauvignon and Merlot have a small presence in Chinese vineyards.

The New World countries of South Africa, Australia and Chile follow China. They produce between 8 and 11 million hectoliters of wine each year. Australia is the fourth largest exporter of wine, after Italy, France and Spain. Chile is a predominantly red wine producer with around three quarters of the country’s vineyards planted with red grapes.

The Emerging wine country Russia as well as the Old World wine countries Germany and Portugal, each with 7 to 8 million hectoliters, complete the list of the top 12 wine producers in the world.

The Top 12 Global Wine Consumers (in Mio. hl)

Now, who consumes the wine?

1. France 29
2. USA 27
3. Italy 25
4. Germany 21
5. China 14
6. UK 13
7. Spain 11
8. Argentina 10
9. Russia 10
10. Australia 5
11. Portugal 4
12. Canada 4

France, the US, Italy and Germany are the largest wine consumers in the world, each exceeding 20 million hectoliters. In fact, in 2011, the US became the largest wine market in the world. All these countries also export a lot of their wines.

Whereas France and Italy have a high (and declining) per capita consumption, as does Germany, although a bit lower, the US consumes very little per capita (only a bit more than 10 liters), but there are a large number of American consumers. In addition, American wine consumption per capita is growing.

Emerging wine country China, the next country on the list, is different. The majority of wine produced is consumed domestically, although their exports are growing. The Chinese per capita consumption is dismal, but the number of consumers is huge. Furthermore, per capita consumption is on an upward trend. If the per capita consumption increases just by as much as – for example – the Australian per capita consumption increased between 2007 and 2001, China would become the largest wine market in the world, overtaking the US, France, Italy and Germany.

Then follows the UK, another outlier on the list: The UK is a major consumer but produces almost nothing itself. All is imported. This may change in the future.

Spain, Argentina and Russia follow in the 10 to 11 million hectoliters range. Given its high production level and low consumption level, Spain is a major exporter. Argentina, though very present in the global wine market is the opposite picture: Almost 90% of its production is consumed domestically.

At the bottom of the list are 3 countries with an overall market of 4 to 5 million hectoliters: Portugal, with a very high per capita consumption, and Australia and Canada.

The Macro-economics

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.

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

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.

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Ernst Loosen and Dr. L. Riesling - His Hugely Popular Entry-level Wine Sold Throughout the World 

The Doctor Made a House Call - A Tasting with Ernst Loosen, Weingut Dr. Loosen, at MacArthur Beverages in Washington DC, USA

A Riesling Guru and a Killer Guitarist cum Cult Winemaker: Ernst Loosen and Jay Somers and their J. Christopher Winery in Newberg, Oregon

Wine ratings: Two American/German wines - Eroica and Poet's Leap - on Top 100 Wines from Washington State list for 2009

German American Wines: (1) Pacific Rim Riesling (2) Eroica and (3) Woelffer's Schillerwein

Riesling, Pinot Noir and Indian Cuisine: A tête-à-tête Dinner with Winemaker Ernst Loosen, Weingut Dr. Loosen, at Rasika in Washington DC, USA