According to IWSR Drinks Market Analysis data recently released, global alcohol consumption grew slightly in 2017—by 8.3 million gallons over 2016, or 0.01%. A small increase indeed, but it comes on the heels of a 1.25% decline in 2016.
Cider led the pack, jumping 2.5% in consumption between 2016-2017. Cider’s major momentum was in Africa and the Middle East.
Spirits declined but only marginally, and only because of declining vodka consumption in the Commonwealth of Independent States (CIS).
Between 2016-2017 spirits took the lead in the Asia-Pacific region and in the Americas. Clear grain spirits (baijiu in China) contributed greatly to volume growth in the Asia-Pacific. Whisky added 6.4 million gallons in both the Asia-Pacific and the Americas. Agave-based spirits were up by 3.3 million gallons in the Americas—the U.S. was the largest-growth market for agave and whisky.
While the volume of beer consumed globally exceeds any other alcohol consumption, beer’s global consumption continued to decline overall.
In the end, more than 66 billion gallons of alcohol were consumed globally in 2017. This is the consumption by category, in millions of cases:
Despite the CIS vodka decline, Russia joined the United States as the top growth markets for still wine. France saw a decline in wine consumption, as did the United Kingdom; IWSR attributes the decline to a generational shift in the U.K., from still wine to cider and sparkling wine, and from wine to beer in France.
Still, global wine consumption was up in 2017 by 0.6%. What might that mean for U.S. wine exports in 2018?
According to California’s Wine Institute (WI) the piece of the overall alcohol consumption pie that belongs to the California wine industry equalled almost 41 million cases (just under one billion gallons) in 2017, representing the first decline in wine exports since 2010.
WI claims the drop is in part the fault of a strong dollar overseas, heavily subsidized overseas wine producers and competitors making free trade agreements in key markets. Doesn't that sound familiar.
The biggest drop in 2017 U.S. wine exports took place in European Union countries—down 19% in cash value and 10% in wine volume. As the U.K. exits the EU its currency strengthened, which normally would interpret into a promising future for U.S. wine exports. But as President Donald Trump all but trashed the G7 meeting in Canada last week, this is not a normal time for global trade with the U.S.
According to WI, the European Union’s 28-member countries remain the biggest market for U.S. wine exports, accounting for $553 million in retail sales, followed by Canada at $444 million; Hong Kong, Japan, China, South Korea, Mexico, the Philippines and the Dominican Republic are at $367 million.
Maybe it’s a good thing for wine exports that Singapore is where President Trump traveled to after abruptly leaving the G7 in Canada. At a small $17 million value, Singapore managed to rack up the largest per-country rise in U.S. imported wine (22% in value and 1.6% in volume).
In a press release concerning exports, WI pointed out, “securing effective trade agreements would be ‘essential’ to growing US wine exports, especially free trade agreements.”
WI also pointed out that Canadian wine consumers have historically had confidence in California wine. At almost $1.1 billion in retail sales in 2017, U.S. wines led the table wine category in Canada.
How the present trade temperament of the U.S. administration will affect that confidence remains to be seen. Canada’s imports are somewhat flattened and the currency exchange rate has been a problem. More important, however, Canada was on the receiving end of the president’s and a couple of his advisors’ latest barbs. In its second largest export market, California wine may turn out to be a wonderful target for a new round of tariffs, and if EU countries lay on additional wine tariffs, the immediate future for California wine exports certainly won’t be good.
After all, Singapore can drink only so much wine, and North Korea, well...
By Thomas Pellechia
June 11, 2018
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