The annual ProWein Business Report aims to be the most comprehensive analysis of the global wine business. For publication in the week starting 24 December 2018.

China has become the world’s most attractive wine export market, according to the annual ProWein Business Report. In last year’s survey China was rated the ninth most attractive. The report noted China’s rising demand for imports and the big increases in volume and value of exports there from Australia, France and Chile.

This is the second report ProWein has commissioned. ProWein is the world’s leading wine trade fair, and the largest gathering of professionals from viticulture, gastronomy and the wine business. Their next wine fair will be in Dusseldorf from March 17-19.

ProWein commissioned the Institute for Wine and Beverage Business Research, headed by Professor Simone Loose, at Germany’s Geisenheim University. The institute surveyed more than 2,300 experts in the wine industry from 46 countries about international markets and trends, and developments in online sales.

The number of participants this year rose 60 per cent from 1,487 to 2,364, making ProWein’s Business Report the most comprehensive barometer of the international wine industry, ProWein said in a press release.

Other countries rated as the most attractive export markets after China included Japan, Hong Kong, Scandinavia, the USA and Canada. South Korea, Poland and Switzerland dropped in the listing. The focus of the wine world increasingly was seeing a shift “away from the traditional wine production countries … to the East, Asia and in part also Eastern Europe”.

The first ProWein report said Russia, China and Brazil would become the most attractive markets, and the latest report confirms those predictions. Russia rose from rank 16 to 11 while Brazil went from rank 15 to 13.

The large populations of the BRIC group (Brazil, Russia, India, China) suggested high potential for wine exports, last year’s report said. But tapping into this potential was also associated with high market risks due, in part, to political and economic instability.

The most attractive markets over the next few years would be China, South Korea and Poland, the report said, followed by Russia, Hong Kong, Japan and Australia. These top seven were followed closely by the two important North American markets – USA and Canada – where wine consumption continues to rise.

“The USA and Canada represented an important growth impetus for the international wine sector next to Asia.” Handling geographically and culturally distant markets in Asia would be a major challenge for European wine producers over the coming years, the report said.

The United Kingdom represented the weakest link with the lowest expectations for the future. Factors included constantly rising alcohol taxes, the amount of shelf space lost to wine because of competition between established retailers and discount stores, and the economic and legal uncertainties associated with Brexit. The traditional wine markets of France and Italy were also expected to less attractive.

Four out of five producers interviewed for the report plan to expand export activities to new markets over the next three years. This is understandable given the fact the domestic markets of the biggest wine producers – Spain, Italy and France – are saturated.. New markets were seen as the only way to compensate for losses and generate growth.

This also means the international wine trade will continue to gain in volume and importance. Singapore, the Czech Republic and Taiwan were seen as representing the highest potential for new markets over the coming five years. But fewer exporters saw possibilities in Vietnam, India, Thailand, Malaysia, the Philippines and Indonesia – regarding them as difficult to penetrate. The proportion of their population who could afford wine was smaller in these markets than in other developing countries. High taxes on wine imports were seen as a major barrier.

Among emerging export markets India was the first choice for wine producers from the New World – Australia, the USA and South Africa. Cultural links via the Commonwealth and a common language would make it easier for these countries to work in India. Yet one in four of producers polled for the report did not see a potential market in any of these emerging markets over the coming five years.

Perhaps surprisingly, the United Arab Emirates (UAE) was ranked fourth among the emerging wine markets. This position illustrates the rising importance of wine for tourists and expatriates in this gateway to the Arab Peninsula. This ranking was in line with other indicators such as the number of participants in WSET courses from the UAE.

Wine retailers are looking for wines from new origins. Almost half of wine retailers who visit ProWein plan to expand their range with wines from new origins. Portugal, South Africa and Argentina were most favoured as additions to existing portfolios.

Online sales were seen as important. The share of producers and wine retailers who run their own online shops was high at 38 per cent and 40 per cent, respectively. But the share of sales generated by these sites varied widely. On average specialist retailers sold more than a fourth of their products online (28 per cent). But producers sold only 5 per cent of their stock online.

But all market players expect online trade to grow. “Asia has leapfrogged several steps in this development and holds markedly higher online shares [partly] because wine consumers are predominantly young.” The majority of specialist wine retailers believe that running an online shop involves a lot of work.

The ability to compare prices on the web keeps profits low: “Over the next years it will be of decisive importance to the industry to find solutions for the in part cut-throat price competition caused by the high market transparency on the Web.”

The wine industry is generally optimistic about the future. Large wineries are the most optimistic. “Wine-growing estates see the situation as stable while co-operatives expect the economic situation to deteriorate markedly. Importers and exporters expect the economic situation to improve in 2019 after a deterioration between 2017 and 2018.” Specialist wine retailers rated the situation as stable.

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