Global consumption of wine is expected to rise slightly by 1.4% from 2015 – 2019, led by the maturing Asia-Pacific market, according to the latest research by theInternational Wine and Spirits Research (IWSR). That is an improvement compared to the 0.1% decrease in 2010 – 2014, which was dragged down by Europe.
The IWSR study was commissioned and revealed by wine trade show organizer Vinexpo on Thursday, ahead of itsHong Kong Vinexpo in May.
The United States, which is the world’s top wine consuming country, is expected to slow down from a 9.4% growth in 2010 – 2014 to 2.1% in 2015 – 2019, mainly due to the millennials’ different tastes.
“In the U.S., wine was consumed more by the parents of the millennials, so it’s not a new thing for the millennial generation … they’re more attracted to beers, ciders and spirits,” said Guillaume Deglise, CEO of Vinexpo.
Top 10 wine consuming countries in the world by volume. (Vinexpo/IWSR)
On the other side of the world, China’s millennials see wine as “a new thing” and is “trendy,” said Deglise. China, including Hong Kong, is the fifth largest wine-consuming country globally and the largest in the Asia-Pacific region. “This new generation travels more and see people in the Western world drinking wine, so they want to drink wine back home,” he said.
That, together with the developing e-commerce industry which provides the growing middle class more access to wine, fuels China’s (including Hong Kong) wine consumption, which is expected to grow by 3.8% in 2015 – 2019.
However, that expected consumption growth is much slower than the 21.4% growth China enjoyed in 2010 – 2014. The consumption of imported wine by volume is set to slow as well, from an 84.8% increase in 2010 – 2014 to 16.1% in 2015 – 2019. The slow down in wine consumption is mainly due to the country’s economic slowdown, turmoil in its stock markets, and anti-extravagance policies.
Top 12 wine consuming countries in Asia-Pacific. (Vinexpo/IWSR)
Meanwhile, Hong Kong’s wine market is unfazed from what goes on in the mainland. The city by itself is the fifth largest wine consumer in Asia Pacific, below New Zealand and just above South Korea, with a 2014 – 2019 forecasted growth of 2.6% in still wines.
“Hong Kong has no tax on wine, so this is important … the other markets are very heavily taxed on wines, so being a tax-free zone creates more demand for wines,” said Deglise. He also notes that it was the Hong Kong government’s decision to make the city a wine hub in Asia, promoting wine instead of spirits, as well as “supporting a lot of initiatives,” like the wine and dine festival and theVinexpo Hong Kong.
A group of visitors taste red wine from France during the Vinexpo Asia-Pacific in Hong Kong on May 2014. Vinexpo Asia-Pacific is one of Asia’s biggest wine and spirits fair. More than 1,300 exhibitors from 30 countries attended the expo. (Kin Cheung/AP)
Thailand is the only other Asia-Pacific market among the top 12 wine-consuming countries other than China that is expected to shrink – by 0.3% in 2014 – 2019. But while China is “stabilizing,” Thailand’s drop is due to its destabilizing politics.
“Political turmoil was the main reason [for Thailand’s drop], which created tourism difficulties,” explained Deglise. For example, there were protests in Thailand in late-2013, triggered by a controversial government amnesty bill, and the country was declared a state of emergency in Jan. 2014. In August, there was a deadly bomb blast at a popular tourist attraction in Bangkok.
All Asia-Pacific markets are expected to see slower consumption growth rates in 2014 – 2019, except for India, which is forecasted to grow 13.8%, almost double from 7.4% in 2009 – 2014. But the world’s second most populous country remains a “tough market” for wine, said Deglise, adding that the market is seventh among the top global consuming-wine Asia-Pacific markets, just above the Philippines.
“India has one main problem – its taxation system. It’s different from one territory to another, but very high in any case, and the distribution is hard,” he said. “India is also a wine producing country, but they were facing some troubles with the weather conditions, so they are struggling in the wine production as well … we don’t see India being as promising as China, even though their population are both large. Basically India is a market for spirits.”
Workers walks past Sula Vineyards of Nashik Vintners Pvt. Ltd. in Nashik Valley north of Mumbai, India. (Dhiraj Singh/Bloomberg)
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