Navigating the Troubled Wine Industry in 2023: A Dive into Shrinking Global Production and Consumption

In 2023, the world wine production declined by 10% to reach 237.3 million hectolitres. Most major wine countries experienced a very difficult year. France regained its position as the world’s biggest wine producer. Wine consumption worldwide also declined. It reached 221 million hectolitres in 2023, which is a decrease compared to 2022 with 2.6%. Equally, the world’s vineyard surface area shrunk in 2023, but only modestly, with 0.5% to 7.2 million hectares. Thanks to the decline in both production and consumption, the market is still in balance but has suffered significant inflationary pressure.

John Barker, director general of The International Organisation of Vine and Wine (OIV), presented today the estimates for the wine industry in 2024. (All numbers given here are preliminary estimates by the OIV.)

The world’s total wine production declined dramatically in 2023, shrinking by 10% from 2022 to reach 237.3 million hectolitres (Mhl). This is a two-decade-long trend. In 2004, the world’s wine production reached around 295 Mhl. Today, it is around 20% lower.

The volume in 2023 is the lowest wine production since 1961. The picture varies from country to country, but most big wine producers saw a decline. Some countries experienced very dramatic declines.

France regained its position as the world’s biggest wine producer and actually increased the volume by 4%. However, both Italy and Spain, the number two and three, saw very significant reductions in wine production, minus 23% and 21% respectively.

The decline is mainly due to the extreme climate conditions that several countries experienced, including rains, floods, fires, etc., and the ensuing problems with vineyard diseases.

World wine production 2023

Among the leading ten nations in wine production, only France, the USA, and Portugal saw a rise in their output.

Significant to note is that these shifts have allowed the USA to considerably lessen the gap with “the big three” (France, Italy, and Spain). The upcoming year (2024) will reveal whether this development is a stable one or just a fleeting phase. Trailing behind these, are the customary “gang of four” of the southern hemisphere, namely Chile, Australia, South Africa, and Argentina, are closely competing in terms of wine volume, however, Germany is steadily gaining on them.

The globe’s three largest wine producers, France, Italy, and Spain, combined, are just a whisker away from creating half of the global wine supply.

The leading ten nations with the highest wine production are:

World wine production, top countries, 2023

The world’s total vineyard area saw a slight decrease of 0.5%, bringing it down to 7.2 million hectares. While this may not seem like much, it signifies a continued pattern that has persisted for over two decades, since its height in 2003. At that time, the size of global vineyards was just over 7.8 million hectares, meaning almost 8% has since been lost.

The country with the largest vineyard area continues to be Spain, with just under a million hectares. The second largest is France, followed by China in third place and Italy in fourth.

The ten countries with the most substantial vineyard areas in the world are:

The EU countries hold 45% of the world’s total vineyard area, with five out of the top ten countries. The six largest countries contribute 56% to the total.

Bearing in mind, these statistics capture all vineyards, including those that grow grapes for purposes other than wine-making, such as producing raisins and fruit juice.

World vineyard surface area 2023

The global wine consumption also mirrors the same downward trend: global wine consumption saw a decrease in 2023.

The world’s wine consumption reached 221 million hectolitres (Mhl) in 2023, which is a decrease of 2.6% compared to 2022. This is also a long-term trend. Consumption reached a peak in 2007 when it reached around 250 Mhl. It is now down around 12% from that level.

OIV estimates that the decline in consumption is due to the covid effect and inflation, leading to higher consumer prices.

World wine consumption 2023

Most countries have only seen moderate changes in consumption. The exceptions are China, where wine consumption dropped by a quarter, and Romania, where it increased by one-fifth.

The USA remains the world’s biggest wine-consuming country. It is followed by the big European wine-producing countries France, Italy and Germany. Then we have the UK, Spain and Russia.

World wine consumption, major countries, 2023

But this is not the end of the bad news for the global wine industry.

Wine exports saw a decline in both volume (-6.3%) and in value (-4.7%) in 2023 compared to 2022.

The OIV tracks an interesting number known as “the market internationalisation index”. This number denotes how much wine is being consumed in countries other than its place of production. Essentially, it is a measure of domestic consumption versus exports, giving a picture of the globalisation of wine. This index sends a clear message to wine producers stating “export markets are increasingly important”.

The “market internationalisation index” has been growing rapidly, indicating that an increasing amount of wine is being consumed outside its home market. Twenty-four years ago, in the year 2000, this index hovered around 27%. At this point in time, more than two-thirds of all wine was consumed in its home market. Fast forward twenty-one years to 2021, and the index had jumped to 48% – nearly half of all wine consumption was taking place outside of its country of production.

However, the “market internationalisation index” has seen a slight dip in its progression in the years 2022 and 2023, with the index in 2023 registering at 45%.

No clear explanation has been provided for this trend. Factors such as small harvests or inflationary pressures would, logically, affect both domestic and international markets. As such, the solution probably does not lie here. The OIV has suggested “destocking”, specifically in the North American market, as a possible reason. It is conjectured that US importers may have over-purchased wine in the initial years of covid (2020 and 2021), and are now selling this stock, reducing their need to import more wine from overseas. This scenario is a possibility and the progress of this trend will be watched carefully over the subsequent years.

The world wine industry looks grim in 2023 when analyzing the statistics. Yet, there are causes for optimism as well.

In 2023, there was a significant decrease in total production, leading to concerns about a possible shortage. But these fears were put to rest as consumption also fell in parallel. There was still a balance between production and consumption, with production outstripping consumption by 5-10%. This excess production was required to meet the demand for other purposes like making vinegar and distilling.

From the perspective of producers, the price trends have been favorable. The mean export price for wine hit a new high of 3.62 euros per liter, a rise of 2% compared to 2022. Certain nations have done especially well. Both France and the USA have nearly doubled their average export price across the last decade. For France, the prices have climbed to 9.4 euro/l, while for the USA it stands at 5.5 euro/l. Most other major exporters have witnessed similar trends over the past decade, except for Canada.

However, this undoubtedly demonstrates the inflationary pressures bearing down on the wine industry, which may not bode well for customers.

—Per Karlsson

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About the Author: Chris Lehoux

Meet Chris Lehoux, an experienced wine connoisseur and dedicated blogger with a deep passion for all things wine-related. With years of expertise in the industry, Chris shares insightful wine reviews, valuable wine tasting tips, expert pairing advice, and captivating tales of vineyard visits. Join Chris on a journey through the world of wine, where every sip is an adventure waiting to be savored!