One bottle less – A report of German wine
At the start of every year, the German Winegrowers’ Association presents the past year’s report on wine based on official statistics. It is the only wine market study systematically created to provide independent information about overall wine sales in Germany – including direct sales to end customers, wine sales through specialist, food and mail order retailers, and restaurants.
The economy and international crises have an effect on the German wine production and imports but also German wine consumption and exports. It is clear that political crises, the climate debate, and global economic ups and downs have indeed left their mark on wine consumption. While Germany remains in a comparatively good economic situation due to its healthy domestic economy and lively tax surpluses, it appears that Germans are less inclined to party and consume these days. “Changing nutritional habits, the demographic shift and effects related to climate change are having a definite impact on the current wine industry,” say officials from the German Winegrowers’ Association about the trend in wine sales.
Hot summers dampen wine sales
Climate change and its immediate noticeable effects on the weather, and population growth are two factors that appear to have the greatest direct impact on wine sales. The rise over the last 50 years in the average temperature of around one degree Celsius is leading to noticeable changes, at least in terms of observable weather phenomena. This will likely have a direct impact on the consumption of beverages and wine. One clear difference is that people drink less wine during the hot summer months. This reduction is more prominent for red wines than for white and rosé wines. As retailers have experienced over the past two years, the demand for mineral waters and other thirst quenchers increases while the demand for alcoholic beverages decreases during hot summers. “Changed consumer behavior in the summer months has definitely had an impact on the wine industry. Sales of red wine, in particular, were weak in those months,” commented a Tübingen-based wine retailer about his experiences. In the 2018/2019 fiscal year, from August 1, 2018 to July 31, 2019, only 19.45 million hectoliters of still and sparkling wines were sold in the German wine market. According to the figures from the wine industry report, this means that total sales were 1.5 percent lower than in the same period of the prior year (2017/2018). This corresponds to a drop of 0.3 million hectoliters.
When calculated per German citizen, this corresponds to an average consumption of still and sparkling wines of 23.4 liters annually per person. Of this wine, 8.7 liters are domestic still wines, 11.4 liters are foreign still wines and 3.3 liters are sparkling wines. “This means that consumption remains in a good average range for Europe. It could have been worse,” say many market watchers. The scenario does not reflect an absolute collapse in consumption. Statistical effects also contribute to the picture, since the underlying population figure in Germany has continued to grow to its current 83 million inhabitants. Overall, the result amounts to an acceptable balance for 2018/2019.
Ups and downs in the wine market
How is the German wine market to be assessed now? At 19.45 million hectoliters, the volume in the 2018/2019 fiscal year was below the 20 million hectoliter threshold that had been maintained for many years. Is that bad? Are German consumers losing their fondness for wine? When we look at the figures more closely, we see little need to panic: The first five-month period of the wine industry in 2018/2019 was still facing challenges due to the small 2017 vintage experienced throughout Europe.
Prices rose dramatically and, whether they wanted to or not, retailers had to increase prices. With a lack of volume, some categories were eliminated entirely and dropped by grocery retailers, which noticeably impacted sales. In the subsequent seven-month period of 2019, the retail market gradually regained its losses from 2018 and readjusted prices downward. This helped sales regain momentum, and food retailers were reportedly pleased with sales in the second half of the year.
International wine consumption over the past 20 years shows a mixed picture: In Germany, the number of liters consumed has remained around the 20 million hectoliter level. On the other hand, wine consumption in the U.S. has increased by more than a third and peaked in 2018 at 33 million hectoliters. In France and Italy, wine consumption fell by more than a third in this period.
Great 2018 vintage changed the course of the wine industry
The 2018 vintage, first marketed in early 2019, yielded much stronger numbers in the official quality examination. By the end of 2019, the quantity tested, which is roughly equal to the quantity marketed, climbed to 5.03 million hectoliters in Rhineland-Palatinate, which is the largest wine-growing state and decisive for the wine market in Germany. In 2019, wineries had above-average numbers of quality examinations, rising into the double-digit percentage range, and the winegrowing cooperatives and producer groups also grew strongly at 7.5 percent. Overall, the quantity inspected in 2019 climbed by 5.3 percent and once again reached its long-established level.
With their availability secured, German wines are therefore emerging quite well from the situation. Foreign wines, however, have been hit harder. For 2019 as a whole, foreign wine imports were significantly below the level of previous years. As current import figures show, it was only at the end of the year that imports appear to regain strength.
It becomes clear that there has been a critical change in the wine market when looking at the import volumes of individual wine categories. Quality wines, i.e. wines with the EU quality label “with protected origin” (PDO) or “with protected geographical indication” (PGI), now make up only a 17 percent share of imports; “other” wines now hold a share of 83 percent and represent the majority of imports with almost 11 million hectoliters. This development reflects the fact that wine categories such as Rioja, Bordeaux, Chianti and others, also offered as no-name products that characterize the selection at large discount chains and other food retailers, are less sought after than before. The growth of the wine industry report as a sales barometer highlights the fact that European regions are refining their wine profiles and investing more money in quality and marketing.