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Report: Global wine production is down despite rising export demand

Global wine production is forecast to hit near-record lows this year, according to the International Organisation of Vine and Wine (OIV). Production is 7% lower than the industry’s 20-year average and only slightly above the historically low production volume produced in 2017.

At the same time that the quantity of wine being produced globally is decreasing, demand from consumers is recovering from the pandemic and has well surpassed last year’s figures. Wine exports by volume increased 9% in the first 6 months of 2021, compared to 2020.

These findings mark 2021 as the third consecutive year in which wine production has been below-average. However, not all wine-producing regions were affected equally. Overall, it was the Northern Hemisphere where production suffered most dramatically. Italy, Spain and France, the world’s largest wine producers, all experienced sharp drops — 9%, 14% and 27% reductions in volume respectively — with France weathering the largest decline in production. These regions all experienced harsh weather, including late frosts, hail and mildew which shrunk each country’s production by a double-digit average.

Conversely, the Southern Hemisphere is forecast to be at the highest-ever production volume, according to OIV. Chilean wine volumes rose 30%, Australia increased 30%, Brazil was up 60%, Argentina climbed 16% and South Africa increased 7%. New Zealand was the only southern region where wine volumes retracted 19% due to extreme frost in the spring.

Outside of these two major hemisphere categorizations, the OIV projected U.S. wine production to rise 6%, and the body said that in China, “wine production is likely to continue the contraction that started in 2016.” The OIV did not report numbers for China due to a lack of data.

Despite an overall decrease in the amount of wine that will be available to consumers, demand has not slowed down.

“We still expect the global consumption to increase compared to 2020,” Pau Roca, the OIV’s director general said in a press conference reported by Reuters. The organization pointed to trade data for the first half of the year that showed volumes above pre-pandemic levels.

Part of this jump in demand is thanks to ecommerce; during the pandemic, Roca noted that the wine industry was able to execute a large-scale shift to online sales. “Globally, wine has 14% share of the beverage market, but has a 40% share of sales online, according to IWSR,” Roca said in the online press conference. Exports are up 4% in volume terms and 6% in value compared to 2019.

Even with these promising numbers, Reuters reported that the OIV is anticipating a decline in Chinese demand for wine, which could limit the rise in global consumption to 2%, compared with the 3% drop the industry saw in 2020.