IWSR: Wine’s Structural Decline Linked to Changes in Consumption Patterns

Wine consumption has been in decline in its traditional continental European markets for decades, ISWR notes, and for many years that volume decline was offset by growth in markets such as UK, USA, northern Europe, and APAC markets such as Japan, China and Australia.

However, over the past 10 years, these former growth markets have started to see volume declines.

In the UK’s case, per capita consumption of wine peaked in 2009 and has been in decline ever since, except for a small temporary boost during Covid. On a per-adult basis, the UK now drinks about 14% less wine than it did in 2000.

In markets such as the US, per-capita consumption peaked in 2017 and has seen some sharp declines since, though it still remains above per-capita consumption levels observed by IWSR in 2000.

For Australia, the peak was in 2012, and its per-capita consumption trajectory has mirrored that of the UK, though unlike the UK it didn’t see a Covid-era boost. Its per-capita consumption is now 11% lower than it was in 2000.

What’s going on?

These market dynamics of falling demand don’t necessarily coincide with a decline in the global wine drinking population. The number of wine drinkers has grown in major markets such as the US, the UK, Japan and South Korea. However, falling demand is largely correlated with changes in consumption patterns, such as frequency and intensity of consumption.

There are four main drivers for the structural volume decline in wine:

1. Lifestyle changes/ moderation

Consumers are increasingly interested in moderation as a health and wellness lifestyle choice, and there is also a greater tendency to socialize without alcohol.

In 2023, one in two wine drinkers (across select markets) said they were actively moderating their alcohol consumption

A third of wine drinkers who are actively moderating their alcohol consumption do so by not drinking any alcohol at all on certain occasions. About 20% opt for no/low drinks alternatives.

This shift in attitude has partly been fueled by social media, which has highlighted the sober-curious movement, making it socially acceptable to shift consumption patterns beyond “dry January” or “sober October” towards rethinking alcohol consumption in general.

Consumers are also aware that their images/videos can very easily be posted online, so want to stay in control, and moderation strategies help this.

The moderation trend is cross-generational, but on average (across select markets), LDA Gen Z tends to be the biggest driver: 67% of wine drinkers aged LDA−27 say they have been moderating their alcohol consumption. This proportion gradually decreases with age, to 61% of Millennials, 49% of Gen X and 43% of Boomers.

2. More competition from other categories

IWSR Bevtrac consumer data shows that in many markets, Millennials – and, increasingly, LDA Gen Z consumers too – are showing less affinity with particular drinks categories, and instead are open to experimentation and moving across a variety of different products.

“This trend shouldn’t come as a surprise,” comments Richard Halstead, COO Consumer Research, IWSR. He explains: “Given the huge changes in the beverage alcohol market in the past decade and a half, including the increased availability of speciality drinks; the growing fashion for cocktails; and the widespread uptake of smartphones, giving consumers the ability to find information quickly, and to carry out transactions; wine has faced lots of competition from an increasingly adventurous alcohol consumer.”

3. Younger LDA non-participation in wine

Younger adult wine consumers are generally participating in wine less often: IWSR long-run data shows that frequency of consumption is on a downward trend in many markets. For example in Australia, monthly+ wine consumption amongst LDA-24s has halved between 2010 and 2023.

This is driven by a number of lifestyle shifts, such as a move away from the daily wine meal occasion.

4. Desire to upgrade drinking experience

Many consumers are choosing to seek out more aspirational brands and categories. This is partly a result of opting to moderate as a lifestyle choice, as well as a squeeze on disposable income, leading to consumers drinking less often, but opting for more premium experiences when they do. In wine, this can be seen in an up trade to premium rosé, organic wines, or sparkling wines as a replacement for still wine.

There is an evident split between price segments: lower-end wines are losing volumes while wines priced from super-premium upwards demonstrate growth, although the growth rate is slowing.

What does this mean for the global wine industry?

The wine industry’s problems are most pronounced among the lower price tiers, and for still wine.

Emerging wine markets in places like India and SE Asia are seeing growth, but typically from a small base. Their relatively small volumes are not material enough to offset the declines in other markets, but do offer opportunity for growth.

Premium rosé is countering the decline in wine, with the US, UK and Australia key markets for premium rosé brands. They often offer fresh, easy drinking styles and packaging that tends to be more fun and aligned with “newer” social occasions such as bottomless brunch and summer outdoor socialising. Critically, it is aspirational and recognisable brands that are leading the segment. Rosé and white wines are generally performing better than red wines as they cater to an increasing demand for lighter and fresher flavour profiles. Climate change has been pushing up ABVs, often leading to heavier profiles for red wines.

While there are clear growth opportunities for brand owners to target, these gains will not be sufficient to offset declines among lower-priced wine products in the mass market – meaning that wine’s long-term overall volume declines are likely to continue for the foreseeable future.