The global wine-making sector ended 2011 with an increase in production and consumption figures. Spain ended the year as one of the world’s major wine producers, a position it will continue to hold throughout 2012 if initial estimates are anything to go by.
Over the past year, Spain headed the league table for surface area planted to the crop (1,032 million hectares), was in second place for foreign sales of wine in terms of volume (2,232.8 million liters) and took third place for production (34.30 million hectoliters, 12.9% of the total) and sales in terms of value (€2,240.6 million).
An international wine-making scene in decline
OIV data for 2011, analyzed by the OeMv, show the world’s wine-growing area to cover 7.49 million hectares, a reduction of 94,000 hectares over the year before.
The European Union wine-growing area has not escaped this downward trend. The impact of various factors, some of the most important of which include the restructuring of cultivation regions, the impact of the wine crisis and the European program to help uproot vineyards, have led to the surface area planted to vines progressively falling to 3.53 million hectares (47.10% of the world total). However, this decline has been compensated by cultivation areas holding steady in the rest of the world, with downward developments in Argentina and Turkey, upswings in China and Australia and stability in the United States and South Africa.
Growing production and consumption
According to the OIV, global production stood at 265.8 million hectoliters (hl) –excluding juice and grape must - in 2011, with this figure representing an increase of 700,000 hl over 2010. France, at 49.6 million hl (18.7%), takes first place in this league table, being the leading producer of wines with protected designation of origin and protected geographical indication. France is followed by Italy (41.6 million hl, 15.6% of the world total, but undergoing significant contraction) and Spain (34.3 million hl, 12.9% of the world total). Spain leads the table in terms of varietal wines without PGI or PDO (1.8 million hectoliters). Meanwhile, Germany (up from 6.9 to 9.6 million hl) and Austria (2.8 million hl compared with 1.8 million the year before) have substantially increased their production volume in the time period studied.
Outside the European Union, which accounted for total production of 156.9 million hl in 2011, there was a slight increase to 108.9 million hl among the other countries overall, led by the United States (the biggest non-European wine producer, with 18.7 million hl), Argentina (15.5 million hl), Australia (11 million hl) and Chile (10.5 million hl).
Initial estimates for 2012 point to a considerable reduction in grape harvests, with significant contractions in France, Italy – where historic minimums could be seen – and Spain.
In terms of consumption, the OIV predicts a global volume of 241.9 million hectoliters were bought in 2011, a figure that represents a slight annual upswing (+1.7 million hl). This is largely based on the forecasts for countries outside the EU bloc, with China and the United States leading this rising trend. Consumption in the ‘Old Continent’, meanwhile, is set to decline (-864,000 hl), primarily in the main consumer countries, namely Italy, the United Kingdom and Spain.
Growing importance of foreign trade
Foreign trade activities continue to gain importance within the international wine sector. OIV estimates show that 103.5 million hectoliters were traded between countries over the past year, compared with the 72.2 million hl sold internationally in the 2001 to 2005 period. In terms of value, meanwhile, global wine and grape must exports added up to €23,264 million over the course of 2011, with this sum being a significant increase of 7.9% over the year before.
Over the past year, global wine exports accounted for 42.8% of world consumption, compared with 34.6% in 2006, suggesting a scenario in which falling consumption in ‘traditional production countries’ will be offset by rising imports in countries that cannot satisfy demand with their own local production.
In 2011, the five leading exporters in the EU region (Italy, France, Spain, Germany and Portugal) had a total market share of 65.5%, according to initial estimates. Meanwhile, the six countries in the ‘new exporters’ group (Argentina, Chile, South Africa, the United States, Australia and New Zealand) accounted for 25.2%, with this share likely to grow in 2012 as a direct result of the gradual decline in exports from ‘Old World’ markets, which are suffering at the hands of wine marketing progress by ‘New World’ players.
The OIV says the difference between production and consumption is between 15.7 and 32 million hectoliters, with an average of 23.9 million hl.
The Spanish situation
The Spanish wine sector, which is undergoing a significant restructuring process, continues to play a leading role of enormous importance within the country’s economic fabric.
Despite the decline reported by the Spanish Agricultural Guarantee Fund (FEGA), which placed the Spanish wine-production area at 970,000 hectares in 2011, Spain has the largest area (1.032 million hectares, according to the OIV) in the European Union (30% of the total) and in the world (13.80%).
Over recent years, Spanish wine production has held stable at around 40 million hectoliters. FEGA estimates that production stood at 40.9 million hl at the end of last November, with a year-on-year increase of 4.1%. However, the Ministry of Agriculture, Food and the Environment (MAGRAMA) is more pessimistic, predicting a contraction of 5.6% to 38.6 million hl.
The growing protagonism of exports contrasts starkly with internal consumption levels that, at around 20 liters per head per year, leave Spain bringing up the rear in Europe.
Good export performance
Wine is one of Spain’s star export products. At the end of the first half of 2012, figures from the Tax Agency’s Department of Customs and Special Taxes showed that foreign sales added up to 1,073.5 million liters (+3.4%), worth €1,143.6 million (+13.5% annual growth). In 2011, exports from the sector recorded rises of 26.3% in volume and 16.7% in value.
In the absence of figures from Italy, the GTA Consulting Wine Club says Spain led world wine exports over the first half of this year, selling 1,065 million liters, and took third position in terms of value (€1,124.6 million), with this area clearly dominated by France.
Recent years have been governed by significant developments in foreign sales, at very low prices, of wine sold in bulk and in bottles larger than two liters. Sales of such wines have grown much more in terms of volume than in value. However, in the first half of the year this trend was reversed, with export prices rising by an average of €1.06 per liter, a factor that has had a negative effect on the amounts sold, and which could lead to revenue levels being eroded over the long term.
Wines with designation of origin account for 40.4% of Spain’s exports, while bottled table wine sales have risen by 20.3% to a figure of around €200 million. Bulk wines without PDO have increased in value by 27% (€230.8 million), as a direct result of the 30% increase in their average value, although they suffered a fall in volume of 1.3% (555.3 million liters) over the first six months of the year. Sparkling wines likewise experienced a fall in volume of 4.7% and an increase of 7.3% in value.
The European Union, which accounts for almost two thirds of Spain’s foreign wine sales, is still the main destination for the country’s wines. Germany (+5.2%), the United Kingdom (+9%), the United States (+15.8%) and France (+31.2%) head the league table of importers in value terms. When broken down by volume, France is the biggest buyer (-0.5%), followed by Germany, Italy (+50% in comparison with the same period in 2011), the United Kingdom and Portugal.
You can find all the information from the study produced by the Spanish Wine Market Observatory for Wines from Spain-ICEX in our section ‘Wine in Figures’.