Economy and health are weighing on the wine market, which needs to conquer GenZ

Reduced revenues are due not only to falling sales, but also cost, production and money increases. These are factors that many wine producers have been experiencing first-hand, looking at the balance sheets, which will almost certainly be “unwelcome guests” in 2025, too. More than anything else, it is the uncertainties and fears about what the evolution of the global wine market could be in the medium-long term that are weighing heavily on professionals. This is the same sentiment as the “Economic situation of the wine sector in Italy in 2024 and needs with respect to future trajectories” Report, signed by ISMEA (Italian institute of services for agro-food markets), emphasizing “there is widespread awareness regarding the fact that although Italian wine’s International position was solid in 2023, and data in the first eight months of 2024 indicated growth in Italian exports compared to the same period in 2023, a general decrease on the market would seriously damage the overall sustainability of the Italian wine system in its current structure”. However, a further drop in consumption seems to be the most likely scenario, among struggling economies, growing health concerns, and more.
“Up until last winter, authoritative agencies were open to positive expectations. For instance, Statista indicated that wine consumption should have grown 10% from 2023 to 2028, while consumption of sparkling wines, especially, should have grown 14%, in the same period. Furthermore, the Global Wine Market Size report by Research & Marketing, which was released last spring, predicted that growth of the global wine market between 2023 and 2027 would be 2.1% per year in volume and 8.8% per year in value. The evolution of the global market situation then led Statista to revise the forecasts. In June 2024, they were reformulated, predicting a progressive, though slight, reduction in global wine consumption between now and 2029, estimated at a 1% annual rate”, ISMEA pointed out. Various analyses agree that the difficulties of 2023 and 2024 were linked to cyclical phenomena - such as wars - and structural ones, but the long-term forecasts “would indicate the risk of a structural decline in consumption, added to changes in preferences for types of wine”. And, as ISMEA further emphasized, the European Wine Market Observatory and other experts in the sector identify three main factors that contribute to the decline in wine consumption. Inflation and economic recession is first and foremost, as a reduction in disposable income has led to lower wine consumption, while the impact of this factor could decrease with economic recovery. The second one is health concerns and social changes, since greater awareness of health problems has led to a decline in alcohol consumption, a trend that is expected to be long-term. Finally, change in preferences, as consumers, ISMEA underlined, more and more prefer other alcoholic beverages over wine, such as beer and spirits.
The report explained in detail, among other things, that “while the total volume of pure alcohol consumed is decreasing in many Countries, wine is losing market space in proportionally larger terms than beer and spirits. In this context of intensified competition, prices and the size of the beverage industry's marketing investments put wine at a competitive disadvantage”.
This is the motive for which in Italy, as in other Countries or territories (for instance, France, Australia or California), we are thinking about how to contain, or at least not increase, the production potential of wine. This is also why there is an important discussion in the European Union regarding support for uprooting vineyards. According to analysts, hope that there will be a recovery in demand is linked to the ability to win over young people, and therefore adapt the offer. The Boomers, who have driven the market growth, are physiologically decreasing, so the “big target” is becoming GenZ. All in all, however, the “communication capacity of the wine business system is still considered structurally inadequate”.
It is equally important to pay close attention, ISMEA continued, to the progressive change in preferences that is increasingly rewarding whites and sparkling wines, compared to red wines. “The shift in interest towards white and rosé wines is now a consolidated phenomenon. Red wines still represent the majority of consumption, at 43% (2021), but their share was 47% in 2007. This evolution stresses the need to identify styles more suited to new needs, in terms of consumption occasions as well, within the typical and sensorial identities of the various areas and denominations”.
Furthermore, ISMEA explained, “we must work diligently on evolving the relationship with end markets, accelerating digital transformation of the communication system, and adapting the offer to new needs in terms of extrinsic and intrinsic quality requirements. In this regard, we must also aim towards “light” production processes that are more environmentally sustainable and cost-optimized, and encourage maintaining viticulture in the most suitable areas. In addition to shifting the center of gravity of communication to new social channels, using the necessary evolution of communication codes, it seems necessary to rethink the general approach to wine communication. We must overcome the current communication model that emphasizes the elements of wine’s complexity, which sometimes make purchases anxiety-provoking, and move towards a more open model. in other words, one that first of all encourages an easy and pleasant consumption of wine, and keeps the paths towards more demanding and sensorially more substantial purchases and consumption open. It should be a model that, above all, eliminates the conflict of labeling wines “considered good”, “considered bad” or “not adequate”, thanks to the fact that progress in viticultural and oenological techniques objectively now make cases of unacceptable quality wine truly rare. This, of course, must be accompanied by rethinking pricing policies, without obsessively pursuing premiumization, involving the distribution system in a structural way, and paying special attention to catering, a place where consumption habits are now consolidated, due to the "destructuring" of family meals”. Evidence of the market's growing interest in affordable, high-value products, ISMEA concluded, comes from the growth of bottling and sales of the two large Italian denominations focused on this type of product, in 2024, namely Prosecco DOC and Pinot Grigio delle Venezie. “Working on the products and the processes to preserve and increase the harmony of the Italian wine offering, definitely requires a significant commitment in terms of introducing innovations aimed at achieving important goals to reduce the environmental impact, within the context of containing production and marketing costs, which will require adequate upstream activity. The urgency of achieving these significant goals has been accentuated because of the new regulation on IG (geographical indication), reg. (EU) 1143/2024, going into effect, in which articles 7 (sustainability) and 8 (sustainability report) effectively open a new level of competition between denominations, based precisely on sustainability in all three of its dimensions. It is a challenge for which Italian denominations will need to be perfectly prepared to deal with”.