For now “minor” but with “big” potential: from Brazil to India, here’s where wine can grow

The world wine market in 2023 generated 9.8 billion liters worth 35.9 billion euros. We are talking about a “global” sector, wine is a universal product, but with pivots in terms of marketing, just think that Italy, Spain and France covered 56% of the volume and 63% of the total value of wine exported worldwide in 2023. A figure that gives a lot about the “weight” of these three countries, France and Italy above all. But the wine market is also something fluid that “absorbs” social changes that in this period are definitely fast, accomplice also to variables such as inflations, energy costs, conflicts, excise taxes, but also economic growth, and, as a result, there is no lack of potential in those nations that are showing an increasingly relevant interest in wine. These are those markets now considered “minor” but which can become increasingly relevant, primarily because of population numbers and economic development possibilities. Area 39, a reality founded in 2017 and leveraging marketing to accompany Italian companies in the Food & Wine sector on the path of growth in Italy and abroad, has analyzed the “minor” wine markets in third countries (where opportunities for the wine sector can also arrive thanks to the CMOs) where it will also be present, with small collectives of Italian companies, at the Prowein fairs in the second half of 2024, and therefore São Paulo (October 1-3), Mumbai (October 8-9) and Shanghai (November 12-14).
The Brazilian market (the country has a population of over 220 million, ed.) is proving attractive for the wine sector and can grow a lot more. In 2023, the value of imports remained basically stable compared to 2022, with a slight increase in volumes. Chile (more than 159 million euros in value in 2023) is clearly confirmed as the leading trading partner, ahead of Argentina but both are down compared to 2022. On the contrary, the shares of European countries grow, with Portugal, the third largest partner, registering a +51% in exported volumes, and France, very positive in value exports (+26%), ahead of Italy, fifth in the ranking with a market share of 8.2% (slightly positive increase in value, while volumes fall by 8.3%) for a value, in 2023, of 35.4 million euros. Brazil’s is now the 16th largest market in the world, even growing by 4.8% compared to 2022 (a record year for wine, ed.), in terms of consumption, including per capita consumption that reached 1.9 liters per person, the highest level since 2015, and equaling 2020. In 2023, Brazil imported 1.56 million hectoliters of wine worth 432 million euros. The trend change, over the same period in 2022, was +1.5% in volume, but -1.7% in value. Bottled wines were the main imported category in the period under consideration, despite a 4% decline in value, and, among all wine categories, the best performance was attributable to sparkling wines, which grew by 13.9% in quantity and 35.91% in value. Although the drop in the average prices of still wines has decreased the overall average price, that of sparkling wines is up 18.4%: the product is also gradually gaining more prominence in terms of positioning. One of the peculiarities in Brazil lies in the fact that “vinho de mesa” (table wine), which constitutes more than 90% of wine production, is made from grapes other than vitis vinifera. Regulations, Area39 points out, do not require table wine to specify variety or vintage, making it a cheap, low-quality product. Only 10% of Brazilian wine production, a small fraction compared to $4 billion in annual sales, is made from vitis vinifera and labeled as “vinho fino”, or high-quality wine. The chances of “climbing the ladder”, then, are there for Italian wine also because the wine market, while enjoying high growth potential, is still characterized by a limited penetration rate. Brazilian wine consumers generally belong to the middle class or the more affluent, and this product, before Covid, was consumed mainly during specific events, celebrations and holidays. Pandemic has revolutionized that paradigm in Brazil with the off-premise channel undergoing sudden growth, also supported by digital channels. Today, 80% of sales belong to the off-trade channel, and the remaining 20% to the horeca channel. While worldwide consumption is gradually contracting, Brazil has also grown through e-commerce, which has been a driving force. A performance driven by still wines, the Brazilian market in fact remains a “sparkling-free” market: this can be explained by the fact that Brazil is culturally linked to South American and Portuguese wines characterized by little sparkling production. Brazilians’ favorite wine is red, which covers 68.5% of sales, but rosé wines are also growing slightly, although the future, according to some analysts, belongs to sparkling wines.
Moving on to Southeast Asia, and more specifically the Asean area, which presents itself as a macro-region with a population of more than 600 million, where Italian exports could have significant growth margins thanks to the constant improvement of all economic indicators. Founded in 1967, Asean represents a political, economic and cultural organization, characterized by free trade within it. Its member states are: Brunei, Cambodia, the Philippines, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, and Vietnam. Asean is the third largest trading partner for the EU, after the U.S. and China. Of the 10 countries in the region, however, only Vietnam and Singapore have signed a free trade agreement with Brussels, Area39 recalls. Within the area, Singapore and Taiwan play a pivotal role: they are the main consumers of Western goods and are key logistics centers for internal redistribution within the Area. In the statistics reported, data attributable to Asean, Area39 points out, are added to those of Taiwan, Maldives and Mauritius, which, although not part of Asean, serve as strategic trading partners for the wine industry. In addition, data on India, which is the most populous country not only in the area but in the world, having overtaken China thanks to its 1.43 billion population, will be incorporated. In 2023, these countries imported wine worth a total of well over 1.1 billion euros. Southeast Asia is composed of realities with relevant differences even on the wine consumption front: in this regard, there are emerging economies such as India, Indonesia, Malaysia and (to some extent) Thailand and Vietnam, where the wine market (and consequently imports) present a limited economic dimension at the moment, wine being a niche product confined to a few specific consumer targets: middle and upper class, tourists, foreign workers. In contrast, countries such as Taiwan and Singapore, are characterized by the high spending capacity of their populations, an increasing focus on Western culture and cuisine, and a historical propensity to consume alcoholic beverages.
India is definitely a “special target” by the wine world. Area39 cites a recent report produced by the Indian Ministry of Commerce that reveals an unprecedented surge in wine imports to India. Between April and October 2023, the country had already imported wine worth $170.48 million (159.4 million euros), far more than the more than $35 million in the entire previous fiscal year. This is a leap that is unparalleled in recent years and reflects a change in consumption habits, fostered by an increasing supply of quality wines and a growth in per capita income. Not coincidentally, while globally alcoholic beverage volumes declined in 2022, they increased by 12% in India, driven by wines (+19%), beer (+38%) and ready-to-drink (+40%), as a recent Iwsr study pointed out. The evolution is also evident in restaurants and hotels, which are greatly expanding their wine lists, and although India remains the world’s largest scotch whisky market by volume, new generations are showing an unprecedented interest in wine. A trend that opens up exciting new opportunities for the wine sector in India. Although alien to centuries-old tradition, wine culture has begun to spread in the last two decades, gaining increasing interest among Indians. Production, conditioned by a climate not always conducive to grape growing, is concentrated in a few states: Maharashtra (85% of national production), Karnataka and Himachal Pradesh. Consumption for 80 percent adds up in four states out of twenty-eight, with a prevalence in large cities such as Mumbai, Delhi, Goa and Bangalore. However, domestic production is gaining international visibility. In fact, Indian wines are increasingly participating in international trade fairs and are beginning to receive awards and recognition. Area 39 recalled that Vinod Giri, director general of the Confederation of Indian Alcoholic Beverages Companies (Ciabc), has expressed support for the reduction of tariffs on wine, calling it a key step in supporting the domestic industry and opening the market to new opportunities.
Staying in Asia, from being the great hope for the wine market, China has quickly become the “patient” to be healed because of a crisis in production but also in consumption. But, for potential, it remains important in the strategies of many producers. According to the International Wine Organization (IWO), in 2023, China’s production volume, after peaking in 2018 (9.3 million hectoliters), has steadily declined to the current 3.2 million hectoliters, amounting to a negative change of 54% from the peak, now worth only 1.3% of global production. More than four years after Covid dramatically changed wine consumption habits in China, no positive signs have emerged, and major domestic producers have posted negative profits for the third year in a row (source cited by Area39: Statista, 2024). The declines in wine consumption that have characterized China in recent years, due first to restrictions following the pandemic, then to the economic slowdown, continued in 2023. China’s market, the eighth largest in the world in terms of wine consumption, has dropped by 6.7% since 2022. According to the OIV, the decline in wine consumption in China is directly responsible for the decline in wine consumption globally: the intergovernmental organization estimates that wine consumption in China declined by 2 million hectoliters each year from 2018, corresponding to about 260 million bottles. The Chinese consumer is characterized by a strong preference for still wines, particularly reds, which currently cover about 74% of total consumption: in absolute values, we are talking about more than 8.5 million hectoliters, allowing China to represent (perhaps for a little longer) the world's largest consumer market for this type of product. This is followed by rosés (22.6%) and then whites and sparkling with shares, however, negligible.
The off-trade is the main sales channel and absorbs 57% of the volumes marketed: within it, a leading role is played by large-scale distribution (where sales of domestic wines are focused). E-commerce channels are also important, specializing above all on imported wines; China is by far the market where the use of the web to purchase wine (and not only) has found the greatest diffusion. On-trade weighs the remaining 47% and is the main marketing channel for imported wines, especially those in the mid- to high-end.
In 2023, China imported 2.5 million hectoliters of wine worth about 1.1 billion euros. The change, compared to 2022, was -26.1% in volume and -21.7% in value. Bottled wines remain the main category imported during the period under consideration, despite a decrease of 30% in volume and 21% in value. Among all wine categories, the worst performance is for sparkling wines, down 28% in quantity and -12.5% in value. Against a backdrop of generalized price growth (+6%), sparkling wines remain at the Top of the list (12.3 euros per liter) in absolute value, while among the main categories the most significant decline was in bulk wines (-25%).