The Financial Times confirms the wine crisis: "Big groups leaving the sector? A wise choice, consumption is declining"

Selling the wine portfolio? "A wise move," asserts the Financial Times in an editorial by Nathalie Thomas, commenting on Pernod Ricard's decision to sell its wine brands in Australia, New Zealand, and Spain, including Jacob’s Creek and Campo Viejo, to a group of investors led by Bain Capital. The French multinational's decision confirms the unfavorable moment for the global wine sector.

Global production exceeds consumption by 7%

The British economic newspaper doesn't mince words: "Global wine consumption has been in decline since it peaked at around 25 billion liters in 2007. Younger drinkers prefer cocktails or spirits, and others are more health-conscious." The article cites IWSR forecasts: "Volume is expected to decrease by an average of 1% per year until 2028, and no growth is expected even from price increases." Last year's figures leave no doubt: global wine production was 7% higher than consumption.

Changing tastes in the United States

Looking at the United States, it becomes clear how much things have changed. In Italy, the Unione italiana vini (Italian Wine Union) raised the alarm, highlighting how wine sales in the US, the largest consumption market, fell by 8% in the first five months of the year (-6% in Italy). More importantly, as noted by Gambero Rosso, the direction of the market is unclear: premium wines, reds, whites, and even Champagne are no longer in demand. The key to accessing the US market seems to be Prosecco or similar products: in reality, low-cost sparkling wines are even outpacing the DOC wines from the Triveneto region. For Italy, this might be the only slim chance to overcome the current situation.

Large beverage groups abandoning wine

So, is leaving the sector the only option? Obviously not, especially for those not in it just for business. But tough times are ahead globally, and the days when multinationals competed to enter the sector are long gone. In the specific case of Pernod Ricard, as the Financial Times notes, leaving the wine sector was already on the cards: "Exiting low-margin wine has probably always been a matter of when, not if, for Pernod," the article reads, "whose main activities revolve around spirits like Chivas Regal whisky and Absolut vodka." The final push came from China's trade war with Australia, which imposed prohibitive tariffs on Aussie wines in the last three years. However, it is notable that within ten days, not only Pernod Ricard but also the American giant Constellation Brands distanced themselves from wine (announcing their readiness to divest wine brands after seeing recent financial results buoyed by beer). In 2015, Diageo, Pernod Ricard's main competitor, also withdrew, selling its wine division to the Australian giant Treasury Wine Estates. In other words, wine is no longer a safe investment, at least not for the big beverage groups.