Holding volumes, but destroying values: wine in 2020 in OIV data

If in 2020, marked by Covid, wine consumption held up in terms of quantity, a positive sign that shows how much the nectar of Bacchus is loved around the world and is part of a daily routine, in some ways forcibly rediscovered and changed by the pandemic, on the other hand, it is once again clear and strong that in one year a good part of the value painstakingly built up over years of work and investment by the supply chain has been destroyed. This is a general trend that applies all over the world, where the numbers show a slight decrease in overall quantities, but not as much as the values. A sign that less has been spent to drink the same, also due to the long closure (still almost total in Europe) of the restaurant industry, which, as it is easy to imagine, means that for the supply chain, from production to distribution, the margins, already generally not very high, have further decreased. And yet, some positive elements can be isolated. Such as the substantial growth in the volume of wine consumed in Italy, the leading producing country, which, in spite of the great and understandable emphasis on exports (of which it is still the world leader in volume and second in value), is still the third most important market in the world in terms of volume consumed, and where many, also due to the “fault” of smart working and lockdowns, have evidently recovered a lost daily routine in their relationship with wine, which can be an important basis for building a recovery today, and a future tomorrow. This is the state of the art of world wine, which like everything else in the economy and in daily life hopes for a complete and definitive exit from the pandemic, photographed in the Oiv’s “Note on the situation of the world wine sector in 2020”, illustrated today in Paris, streaming, by director general Pau Roca. The numbers tell that, in 2020, the pandemic, mainly due to the crisis of the horeca, cost the world wine trade 6.7% of the total in value over 2019 (after uninterrupted growth since 2010), with a turnover dropped to 29.6 billion euros, and a volume of international trade decreased by -1.7%, to 105.8 million hectoliters. With world consumption that, on the whole, held up in quantity, settling at 234 million hectoliters, down by -3%, a loss similar to that experienced during the world financial crisis of 2008/2009. In contrast, world wine production (excluding juices and musts) remained broadly in line with 2019 (+1%), at 260 million hectoliters. Confirming a surplus of production over consumption, which remains one of the great issues of the wine industry, looking especially at the issue of price, net of the contingency related to the pandemic.
Data on production by country do not show significant changes compared to the past. The European Union remains the world’s top producer, with 165 million hectoliters (+8% on 2019), and among individual countries Italy remains at the top, with 49.1 million hectoliters (+3% compared to 2019), ahead of France with 46.6 (+11%) and Spain with 40.7 (+21%), followed in turn by the USA with 22.8 million hectoliters (-11%), Argentina, Australia, South Africa and Chile, all just above 10 million hectoliters, and again, to complete the top 10, Germany with 8.4 million hectoliters, and China with 6.6. What Covid (but also Brexit and tensions over duties between the US, EU and China) has impacted most is consumption, which has returned to the lowest levels since 2002. Although, underlines the Oiv, given the margins of error in the detection of a complex parameter such as wine consumed, the figure is to be taken with a grain of salt. In any case, the EU-27 alone accounts for 48% of world consumption, but with important differences, especially in terms of dynamics, between the various countries. The U.S. remains the leading market in terms of overall consumption (33 million hectoliters, as in 2019), and France also remains stable despite the pandemic, at 24.7 million hectoliters. Those who have seen wine consumption grow the most in the world are Italy, which, with a 7.4% jump in volume, reached 24.5 million hectoliters. Among the major consuming countries, Germany is confirmed at the top with 19.8 million hectoliters, stable, the United Kingdom with 13.3, slightly up by +2.2%, then China, which is down by -17.4%, to 12.4 million hectoliters, and again Russia (10 million hectoliters). In terms of exports, Italy remains at the top in terms of volumes, (20.8 million hectoliters, -2.4%), Spain, (20.2 million hectoliters, -5.9%), France (13.6 million hectoliters, -4.9%), Chile (8.5 million hectoliters, -2.2%), Germany (3.4 million hectoliters, -10.3%) and South Africa (3.6 million hectoliters, -11.9%), all down. On the other hand, Australia (7.5 million hectoliters, +0.5%), Argentina (4.0 million hectoliters, +27.0%), the USA (3.6 million hectoliters, +1.8%), Portugal (3.1 million hectoliters, +5.3%) and New Zealand (2.9 million hectoliters, +6.0%) saw a positive sign compared to 2019. In value, France is confirmed as the leader with 8.7 billion euros, despite a loss of 10.8% (-1.1 billion euros compared to 2019), ahead of Italy with 6.2 million euros (-2.4%) and Spain (2.6 billion euros, -3.4%), and then again Australia (1.7 billion euros, -2.3%), Chile (1.5 billion euros, -7.1%) and the USA (1.1 billion euros, -8.5%). The loss, among the main exporters, is generalized. The only cases of growth were New Zealand, up 4.5%, for 1.1 billion euros, and Portugal, up 3.3%, for 846 million dollars. Even at the import level, beyond a more or less significant drop everywhere in value, the power relationships remain as they always have been. With the US at the top with €5.1 billion (-10.8% compared to 2019, against substantial stability in volume, at 12.3 million hectoliters), ahead of the UK (€3.8 billion, -3.9%, with a +4.2% growth in volume, at 14.6 million hectoliters) and Germany (€2.5 billion, -2.4%, for 14.1 million hectoliters, -5%). Three countries that, alone, import 41 million hectoliters, or 39% of the world total, and move 11.5 billion euros, 38% of the total trade turnover. Other top markets were once again Canada, stable on 2019 levels in value (1.7 billion euros) and China, at 1.6 billion euros, but with a loss of 26.7% in value. Bottled wines (in format less than 2 liters) accounted for 53% of volumes and 70% of overall traded values in 2020, a share in line with the last two years. To be particularly penalized, as it is known, were sparkling wines, which lost -5% in volume and -15% in value. An important fact, as sparkling wines represent only 9% of the world wine trade in quantity, but 19% in value. On the other hand, all formats between 2 and 10 liters have increased, in particular Bag-in-Box. This category is still worth only 4% of exported volumes at world level, and 2% of the total value, but has seen a growth of +12% in volume and +8% in value. On the other hand, total bulk wine exports were stable (with double-digit growth in Argentina, New Zealand, USA and Australia, and significant decreases in Germany, Portugal, South Africa, Italy and Spain), a category which, although accounting for 34% of total wine export volume, is worth just 9% of the total.

Focus - Vineyard area in the world
In 2020, the area planted with vines, i.e. the total area planted with vines for all uses (wine and juice, table grapes and raisins), including young vines not yet in production, is estimated at 7.3 million hectares. A stable figure overall, in recent years, at least since 2017, but which hides heterogeneous evolutions in the different regions of the world. In the northern hemisphere, there is an overall stability of the European Union’s vineyard, which is confirmed for the seventh consecutive year at 3.3 million hectares, also due to the maximum increase of 1% of the area for each member country provided for by European regulations.
Within the EU, the most recent data available for 2020 show an increase in the area under vines in France (797,000 hectares, +0.4% on 2019) and Italy (719,000 hectares, +0.8% on 2019), while decreasing areas under vines in Spain (961. 000 hectares, -0.6% on 2019), Portugal (194,000 hectares, -0.2% on 2019), Romania (190,000 hectares, -0.4% on 2019), Bulgaria (66,000 hectares, -1.8% on 2019) and Hungary (65,000 hectares, -3.9% on 2019). Germany’s area under vines in 2020 remains stable and is estimated at 103,000 hectares, which is in line with the average of the last 20 years. In Eastern Europe, Moldova continues the negative trend that began in 2018, with the area planted with vines decreasing to 140,000 hectares (-2% compared to 2019), which can be explained by the current process of vineyard restructuring and transformation. In contrast, Russia’s vineyard grew slightly in 2020 to 96,000 hectares (+0.6% compared to 2019). Turkey’s vineyard, the fifth largest in the world (but largely for table grape production, ed.), is declining in 2020 for the seventh year in a row: -4.7,000 hectares (-1.1%), with a total area of 431,000 hectares.
In East Asia, after a long period of remarkable expansion (2000-2015), in 2020 the growth of the Chinese vineyard (785,000 hectares, again largely for table grapes, ed.) would seem to slow down again (+0.6% over 2019) for the fifth consecutive year. Based on the findings of the Third National Agricultural Census in China, the data of the area under vines have been significantly revised, thus assigning China the third position in the world for vineyard areas in 2019 and 2020, after Spain and France. In the U.S., the vineyard has steadily declined since 2013 and its area in 2020 is estimated at 405,000 hectares.
This negative trend, and in particular the sharp decline in 2018, is associated with an attempt to solve the problem of excess grape supply. In the Southern Hemisphere, the recent evolution of vineyard area in the main viticultural countries varies between regions. In South America, the overall evolution between 2019 and 2020 of vineyard area showed a negative trend that continues for the fifth consecutive year. The leading vineyard by area is Argentina, which has experienced an average annual contraction of 1% since 2014. Nevertheless, the decline in 2020 was only 0.2% over 2019, with an area of 215,000 hectares. Chile’s vineyard area also shrank (-1.2% over 2019) and is estimated at 207,000 hectares for 2020. Brazil, with a contraction in area of almost 1,000 hectares (-1.2% over 2019), stands at 80,000 hectares in 2020.
For the second year in a row, South African vineyards are not affected by significant changes, standing at 122,000 hectares (-0.7% compared to 2019). This stabilization comes after a period, between 2015 and 2018, in which drought caused serious damage to the vineyard, drastically reducing its extension by more than 10,000 hectares (-8%). In Oceania, Australia’s vineyard remained stable at 146,000 hectares in 2020 for the third year in a row, while in New Zealand it grew by 2% over 2019, recording a new positive record at 40,000 hectares in 2020.