Cost increases remain the biggest challenge to the wine industry for the second year running, according to the Prowein Business Report 2023.
The annual report – which surveyed around 2,000 industry workers and producers from “all over the world, including wine producers from the most important wine-growing countries in Europe and overseas,” – found 73% of respondents consider cost increases to present the biggest threat to the industry.
While this figure is down from 2022 (85%), cost hikes remained the top concern among those surveyed in 2023, followed by the global economic downturn (59%) and decreasing wine consumption (48%).
Although decreasing wine consumption was not cited as the biggest challenge to the industry, the percentage of respondents who expressed concern over this rose considerably from 2022, where only 30% mentioned it as a potential threat.
Simone Loose, head of the Institute for Wine and Beverage Business at Geisenheim University which conducted the research on behalf of Prowein, said: “Rising costs with falling demand currently present the wine industry with major economic challenges, aggravated still further by the long-term trend towards a healthy lifestyle and altered consumer preferences.”
The majority (84%) said costs have increased during 2023, with over half (54%) noting a decline in profit.
In response to rising costs and decreased consumption, 72% of respondents said they have increased sales prices, while one in three mentioned that they have adapted their portfolio to feature more affordable and “popular” products so as to appeal to more consumers.
In terms of consumer preferences, 2023 saw a strong shift towards more basic/popular wine styles, with 32% of the trade and 25% of producers seeing an increase in sales for this category. On the flip side, premium and super-premium wines saw an overall decline in popularity, with the majority of the trade (38%) seeing a decrease in sales.
Looking ahead to the rest of 2024, the majority expect costs to rise further. However, most of those surveyed (68% of producers and 70% of merchants) predict that any cost increases will only be moderate compared to 2023.
In terms of the consumption decline and changing consumer drinking habits, Loose said it is vital for the future of the industry to engage younger drinkers: “Industry experts agree that the wine sector will have to adapt its communication to the needs of young consumers to succeed in reaching out to the next generation of wine drinkers.”
Loose’s words echoed those of Prowein director Peter Schmitz, who spoke to Drinks Retailing last month.