Today in the splendid surroundings of the Vinitaly trade fair, UniCredit organised a workshop to show market operators its Industry Book 2018 - the bank's annual study on trends, competitive dynamics and the growth outlook in the sector.
Starting from "macro" data on global changes in the consumption and production of wine, the report sets out facts and figures on national and regional trends, before looking ahead at crucial indicators such as export performance.
Production volumes: The International Organisation of Vine and Wine (OIV) estimates global wine production in 2017 to be 247 million hectolitres (mhl) - down 8% year-on-year. Italy ended 2017 with production of around 46 mhl.
Consumption: Global wine consumption has grown from 228 to 242 mhl over the past 15 years and in 2016 it increased 6.1% y/y, driven also by the emerging South American and Asian markets. Consumption in China has more than doubled, while the United States is now the world's largest wine market with over 30 mhl consumed (24% of the total). Italy is the third-largest consumer with over 21 mhl. Definitive figures on global demand for 2017 are not currently available, but the OIV estimates between 240.5 and 245.8 mhl.
International trade: Over the last five years, international trade volumes have consistently exceeded 100 mhl (67 mhl in 2001). Imports reached 102 mhl in 2017 (+4.8% compared to 2016). The increase in value is even more striking: export values have more than doubled, from €15 billion in the early years of the new millennium to €31 billion in 2017 (+6.6% compared to 2016). Italy accounts for 20% of global export values, with sales of 21 mhl (+3.7% y/y), corresponding to nearly €6 billion in value (+6.4% y/y). The analysis shows how quality and price play a key role in global competition. Looking at average prices in the last two five-year periods, Italy is in the middle at €2.6 per litre, between the more premium French producers (€5.7/l) and lower-priced Spanish wine (€1.1/l). This positioning has given Italian wine greater scope for growth.
Outlook: Wine industry revenue in 2017 is estimated to be around €11.3 billion, up 2.7% despite the fall in volumes due to increasing prices between August and December (+21% y/y on average). The sector is forecast to grow again in 2018, with value of production up 1.8%.
Italian wine exports are expected to end 2018 with further growth of 3.4%. Sparkling wines are the key driver of the growth, mainly due to the strong performance of Prosecco. The segment saw double-digit export growth in 2017 (+11.6%), which is expected to continue in 2018 with further growth of 10%.
The entire sector has a high export potential that remains to be exploited. In 2016, Sace (Italy's export credit agency) estimated that the wine sector could increase its exports by nearly 30% over three years by refocusing sales on foreign markets with higher potential growth in demand. At the end of 2017, though, Sace's target was still 20% above current export volumes.
According to a UniCredit elaboration of NOMISMA WINE MONITOR figures, the most attractive markets for Italian wine exports in 2020 will be:
- for still wines: China, where sales are expected to grow 25.5%, Canada (+12.5%) and the USA (+9.1%)
- for sparkling wines: Switzerland, which is expected to see growth of 33.9%, United Kingdom (+31.8%) and Canada (+31.1%)
DOP and IGP wines: Italy is the European leader for certified wines, accounting for 543 of the 1,586 total, followed by France (435), Greece (147), Spain (131) and Portugal (40). In 2017, DOP and IGP wines made up two-thirds of total output, with a value of production of €6.8 billion.
Business and financial performance: UniCredit's analysis of a sample of 689 wine producers that have filed financial statements in the last 5 years confirms strong performance in the sector during the period 2012-2016, with average annual revenue growth of 3.9%. Looking at the companies by revenue band shows that medium-large companies performed better than the industry average, proving that scale helps to gain a better position in the market, especially in terms of sales network.
Industry margins over the last five years have increased at an average rate of 6.2%, reflecting the companies' gradual shift to better quality products.
Verona, April 17, 2018
UniCredit Media Relations