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Global decline in per capita alcohol consumption as change sweeps wine world

Published:  02 March, 2018

Disruption is the new political norm, with fundamental changes in consumer behaviour fuelling an ongoing global decrease in personal alcohol consumption, according to the latest research from Wine Intelligence.

Speaking at a London workshop on ‘Trends, Brand Power and Innovation’, coinciding with the release of Wine Intelligence’s first Global Wine Brand Power Index report, CEO Lulie Halstead described a series of ‘shifts’ in demographics and consumption behaviour that are impacting on the way the world buys and consumers wine.

“What the 21 Century has been about is disruption of the global order, with the economic crisis linking to disruptive politics and policies. As a society, in moments of uncertainty, people tend to put barriers up, and be quite inward facing,” said Halstead.

“Consumer are the same around the globe, the fundamental behaviour of consumers doesn’t change anywhere, [with wine engagement and consumption] it’s about reward and relaxation – these are the key motivations and the relationship with the category is the same in Sao Paulo and Sydney.”

With regard to wine, specifically, Halstead highlighted three mature markets for comparison, charting a decline in the proportion of frequent wine drinkers between 2007 and 2017 in Germany (down from 16% to 11%), USA (down from 12% to 7%) and the UK (down from 16% to 11%).

Moreover, while some consumers have shifted from wine to other categories such as spirits, cocktails and craft beers, research drawn from 1,000 focus groups across 19 markets suggested that the main driver is people generally drinking less alcohol, with health a key factor, driven by government policy in many markets.

Other major changes affecting the global wine drinking topography include a fast evolving age demographic in many significant markets, with OECD figures predicting that 25% of the population will be over 65 by 2050, with over half the world’s 7.5 billion population also now living in urban areas.

With wine production and consumption now approaching parity after the markedly low volumes from the 2017 global harvest now impacting supply, the global surplus of 300 million cases in 2016 (roughly equal to the total consumption of the US market) has largely been drained from the market.

Meanwhile, ongoing falling wine consumption in Europe is being offset by a growth in consumption elsewhere, with markets such as the US and China having grown to account together for 1/5 of global wine consumption (US 14%, up from 12%, and China 7%, up from 2%, in the decade between 2007 and 2017.

These shifts, said Hallstead, would continue to put pressure on established and mature markets (like the UK) where increasingly price-driven consumers contrast with thirsty and more cash-ready markets elsewhere.

Against this backdrop, the ‘winners’ in Wine Intelligence’s Global Wine Brand Power Index – designed around three index, measuring awareness, purchasing and connectivity respectively, rather than straight sales – were Australia and Chile, with the New World dominating the top 15 brands.

Australia’s Yellow Tail sits in pole position, with Chile’s Casillero del Diablo in second place.

Woodbridge, Robert Mondavi, Gallo Family Vineyards, Jacob’s Creek and Beringer take the next five positions, with Europe first cropping up in eighth and joint ninth place with J.P. Chenet, Mouton Cadet and Gato Negro, respectively.

The brands most successful on the awareness index are those that, like FMCG (fast moving consumer goods), have logos that engage with the ‘fast brain’, communicating to consumers without them needing to engage in more energy consuming deeper cognitive thought.

“Wine spends a lot of money to create brands that connect with the ‘slow brain’, which are a lot of work [for the brain], telling a long and complicated story,” said Halstead. “Burt awareness, not loyalty, drives the growth of mainstream brands.”