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📉 Wine demand is down

📉 Wine demand is down

In this week’s DECORKED digest, you will read all about volcanic wines, Rioja's challenges, the global wine surplus, and more. Keep reading!

September 17, 2023

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Happy Sunday! Hope you’ve had a wonderful week! This time we took a closer look at some of the challenges of the wine industry, but also explored some new regions and trends. Keep reading!

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INTERESTING THIS WEEK

🔥 Italian & Spanish wine harvests 2023: Crops to plunge to six-year lows READ HERE

🔝 France overtakes Italy as the world’s largest wine producer READ HERE

📈 Strong wine sales buck the on-trade drinks trend READ HERE

🇿🇦 South African wine has never been better READ HERE

💻 Can ChatGPT help the wine industry? READ HERE

📝 Is Chinese wine really so New World? READ HERE

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We curate, filter, and select only the most exciting and important news for you.

THEORIES OF THE GLOBAL WINE GLUT

The global wine industry is facing a massive surplus of wine, with unique measures taken to address it, such as Australia measuring it in Olympic-sized swimming pools and France allocating 200 million euros for crisis distillation. While wine surpluses are not uncommon due to market cycles and government policies, what's unique now is the global scale, and the primary cause is insufficient demand, not oversupply. There are lots of special theories that, in a way, try to explain individual circumstances. Bridging the Generation Gap in wine consumption is challenging, as generic marketing programs are often costly and ineffective. On the other hand, the ‘Life Cycle Hypothesis’ suggests that generations share more similarities than differences in wine consumption, with demand remaining latent until specific life stages. This theory challenges the idea that generational differences are the main cause of the current global wine surplus.

TRENDS: VOLCANIC WINES

Research on the impact of volcanic soils on wine has primarily focused on Italy, particularly regions like Campania's Vesuvius and Sicily's Etna. The Volcanic Wines project, initiated in 2009 by Aldo Lorenzoni and Giovanni Ponchia of Soave Consorzio, expanded to include various Italian wine regions with volcanic soils. However, recent academic and commercial interest in volcanic wines has shifted towards the United States.

Volcanic soils in the U.S. differ from those in Italy, with higher lava-driven soils being rich in magnesium and iron, while southern valley soils on certain ranches are more silica-based due to decomposed volcanic ash. These volcanic soils contribute to a heightened palate intensity in wines, reminiscent of the way cayenne enhances a dish. This effect may be attributed to the presence of magnetite in the soils, similar to the aromatic qualities found in many Etna Rosso wines, and is best achieved through cultivating lower-yielding vines.

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SUCCESS IN THE WINE INDUSTRY: WINNING YOUNGER CONSUMERS

The wine industry is encountering difficulties in appealing to a younger audience, but there are significant opportunities to engage with this demographic. To tap into this potential, the focus should be on gaining insights from data and establishing connections with these consumers. It's widely acknowledged that the wine industry is not effectively reaching younger consumers, particularly those aged 25 to 40. By conducting further research within a specific US market, we can uncover the precise details of their purchasing habits and preferences.

The findings indicate that young consumers prefer cabernet, red blends, pinot noir, and chardonnay more than any other types of wine. Additionally, they exhibit a greater affinity for Rose and Sauvignon Blanc compared to older consumers. Research also demonstrates that the younger generation is willing to spend more on average for wine. Given this data, it is clear that establishing stronger and more direct relationships with today's core wine consumers of tomorrow is crucial. Regardless of their size, all wine brands must comprehend, target, and embrace young consumers to ensure long-term and sustainable growth.

WHAT YOU NEED TO KNOW ABOUT BRAZILIAN WINE

Brazil's wine industry, with nearly 500 years of history, is evolving to establish its unique identity among South American wine producers. While overshadowed by Chile and Argentina on the global stage, Brazil is exploring different wine styles, grape varieties, and viticultural methods. Brazil's wine diversity arises from a lack of native grape varieties, resulting in an array of options like Chardonnay, Merlot, Cabernet Sauvignon, Italian grapes such as Teroldego and Barbera, and Portuguese varieties like Tinta Roriz and Touriga Nacional.

With approximately 1,100 producers, Brazil is increasingly focusing on producing high-quality wines. In 2022, wine production reached 3.2 million hectoliters, a 9% increase from the previous year, with over $2.3 million worth of wine exported to the United States. Brazil's wine regions are divided into six areas, known for their wines with bright acidity, underlying fruitiness, and varying oak influences. These Brazilian wines often exhibit European-style fruitiness and herbaceous notes, distinguishing them from the styles of Argentina and Chile.

UNDERSTANDING ALTERNATIVE WINE PACKAGING

The increasing popularity of alternative wine packaging has led to a need for beverage professionals to better understand their utility, production considerations, and optimal consumption periods. Historically, packaging wine in materials other than traditional glass bottles presented challenges due to wine's unique characteristics, such as its higher alcohol content and elevated levels of sulfur dioxide (SO2) compared to other beverages. However, over time, progress has been made in addressing these challenges.

Today, there's a wide range of excellent wine packaging alternatives available, dispelling the perception that wines in non-traditional packaging are of lower quality. Alternative packaging benefits both wine producers and consumers. Producers find these formats logistically advantageous, offering benefits in storage, transportation, and environmental impact reduction. For consumers, alternative packaging is convenient, eco-friendly, adaptable to different occasions, and suitable for impulse purchases. It also allows for wine consumption without committing to a full bottle. Promising options for the future include bag-in-box, TetraPak, and canned wine.

RIOJA’S ‘CIVIL WAR’

A new political controversy has emerged in Rioja, casting doubt on the governance and direction of Spain's renowned wine region. The issue revolves around a group of producers known as Bodegas Familiares de Rioja (BFR), representing over half of Rioja's accredited wine producers, who have disassociated themselves from Rioja's wine board and sectorial committee. The underlying cause of this rift is a growing dissatisfaction among smaller producers, exacerbated by declining grape prices that have sometimes fallen below the cost of production. These smaller producers feel that larger companies are obstructing the establishment of a hierarchical system in Rioja based on terroir and quality criteria.

Many believe that Rioja's development has led to standardized viticulture practices, including the replacement of old vines with more productive clones and the adoption of vertical shoot positioning viticulture, even in areas where it may not be suitable. As a result, some producers are either leaving the governance of Rioja or considering leaving the appellation entirely. This controversy highlights the challenges facing Rioja's wine boards, including their sometimes authoritarian approach to dissenting voices and the perception among smaller producers that reform efforts are insufficient. Ultimately, the region's handling of this situation could have unintended consequences for the future of Rioja's wine industry.

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KYLIE MINOGUE IS LOOKING FOR A WINE EXPERT

Kylie Minogue, entrepreneur and musician, is seeking a wine expert for a £55,000 job as she expands her successful Kylie Minogue Wines brand. The brand, launched in 2020, has achieved significant success with French rosé and is valued at £18.9 million in 2022. It experienced a remarkable 314.9% growth in volumes last year. Minogue's wine portfolio includes wines from various regions. She is looking for a sommelier who will travel with her, including to Melbourne, the UK, and the US. Minogue is known for her hands-on involvement in her wine brand, even appearing at events like ProWein 2023 to showcase her wines.

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WINE REGION OF THE WEEK: RIOJA, SPAIN

Rioja in Northern Spain is best known for berry-scented, barrel-aged red wines made from Tempranillo and Garnacha. It is arguably Spain's top wine region, and certainly the most famous, rivaled only by Jerez. The Rioja wine region is contained mostly within the La Rioja administrative region, through which the Rio Oja River flows. However, its northernmost vineyards are sited in neighboring Navarra and Pais Vasco (Basque Country). The Cantabrian Mountains, which flank Rioja to the north and west, provide shelter from the cold, wet influences of the Atlantic Ocean.

This is a significant factor in the local climate, which is significantly warmer and drier than that just to the north. The region's soils vary from place to place, with the finest containing high levels of limestone. The region's top white-wine grape was once Malvasia, which was used to create flavorful, high-alcohol wines, often with significant oak influence. Today, the emphasis has shifted to Viura (aka Macabeo), and the ubiquitous Chardonnay, to give a slightly lighter, fresher and more international white-wine style. Rioja's traditional classification system for aging (with quality implied) has influenced other Spanish regions. This emphasis on aging can be explained by the lack of vineyard holdings on the part of early Rioja wineries.

GRAPE OF THE WEEK: TEMPRANILLO

The backbone of some of the best Spanish wines, Tempranillo is a red grape variety grown throughout Spain and Portugal. Generally speaking, Tempranillo produces red wines with red fruit and leather aromas, high tannins, moderate to low acidity, and moderate alcohol. In 2020, Tempranillo was the third most-planted grape variety in the world. In Rioja, Tempranillo is, more often than not, the major component of a Rioja blend (alongside varying proportions of Garnacha, Mazuelo (Carignan), and Graciano.

In Ribera del Duero, the variety is known as "Tinto Fino" and, if not blended with the likes of Cabernet Sauvignon, wines here are often made as a 100-percent Tempranillo. It is a relatively thick-skinned red grape with a high anthocyanin count that makes for deep-colored red wines with moderate tannins and, where rosé is produced from the variety, generally quite deeply-hued, pink colors. Tempranillo wines can produce a wide range of aromas, ranging from strawberries, blackcurrants, and cherries to prunes, chocolate, leather, and tobacco depending on vineyard age and mesoclimate.

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