Euro Monitor International - Global Wine Trends

1

TRENDS AND OPPORTUNITIES SHAPING

THE GLOBAL WINE INDUSTRY

MERWIN GROOTBOOM

© Euromonitor International

31ST MAY 2011 – SAWIS INFORMATION CENTRE OPEN DAY

MERWIN GROOTBOOMREGIONAL BUSINESS DEVELOPER: SUB-SAHARA AFRICA

2

•MACRO VIEW

•STATE OF THE GLOBAL WINE MARKET

•GROWTH OPPORTUNITIES


•GROWTH OPPORTUNITIES

•GLOBAL TRENDS AND PROSPECTS

3


Macro View

4A FRAGILE RECOVERY IS UNDERWAYMACRO VIEW

4

6

8

10

% g

row

th

Real GDP Growth by Region: 2009-2011

2009: 892010: 17


-8

-6

-4

-2

0

2

% g

row

th

2009 2010 2011

2010: 17

Number of

countries which

saw negative real

GDP growth in

2009 & 2010

5UNEMPLOYMENT SEEN AS THIRD WAVE OF CRISIS

8

10

12

14

16

20

25

30

% c

ha

ng

e

Un

em

plo

ym

en

t ra

te -

% E

AP

Unemployment Rate in World’s Worst Affected Countries 2010

MACRO VIEW

14Number of countries

with an unemployment

rate above 10% in

2007


-4

-2

0

2

4

6

8

0

5

10

15

% c

ha

ng

e

Un

em

plo

ym

en

t ra

te

Unemployment rate 2010 Change since 2007

2007

25Number of countries

with an unemployment

rate above 10% in

2010

6HOW WILL THE ECONOMY PERFORM?

� Near term outlook remains uncertain

� Growth to be driven by emerging markets – especially in Asia

� Unemployment to remain high

� Consumer spending still under pressure

MACRO VIEW


� Government debt to remain a key area of concern

� Shift in global power to emerging markets will continue

7

State of the Global Wine Market


8� State of the global wine market

3 9 litre cases of

wine sold in 2010

BILLION

1.3

PERCENT


1.3 CAGR volume growth

for wine globally between

2005 and 2010

4of wine is

consumed per cap globally

LITRES

PERCENT

9GLOBAL WINE PER CAPITA CONSUMPTION IN 2010STATE OF THE GLOBAL WINE MARKET


Portugal Highest Per Cap

Consumption Globally

10AFTER THE SLUMP...STATE OF THE GLOBAL WINE MARKET

3

4

5

2

2.5

3

3.5

% G

row

th

Bil

lio

n 9L

Cases

Global Wine Sales 2005-2010


0

1

2

3

0

0.5

1

1.5

2005 2006 2007 2008 2009 2010

% G

row

th

Bil

lio

n 9L

Cases

Wine volumes in billion 9L Cases % Total volume growth % Total value growth US$ fixed

11BEER TAKES SHARE FROM WINE AND SPIRITSSTATE OF THE GLOBAL WINE MARKET

78.0%

78.4%

8.3%

8.1%

11.4%

11.2%

2010

2015

Alcoholic Drinks by Category – Total Volume


75.1%

76.8%

10.0%

8.6%

13.1%

12.2%

0% 20% 40% 60% 80% 100%

2000

2005

Beer Cider/Perry RTDs/High-Strength Premixes Spirits Wine

12

© Euromonitor International Growth opportunities

13ASIA PACIFIC WILL CONTINUE TO DRIVE WINE SALES GROWTH OPPORTUNITIES

Asia Pacific

Eastern EuropeMiddle East and Africa

6

8

10

12

% T

ota

l V

olu

me

CA

GR

20

10

-15

Wine Sales by Region 2010-2015


�Global wine volumes are expected to grow by 3% CAGR between 2010-15

�Still light grape wine will remain the largest category

Australasia

Eastern Europe

Latin America

and Africa

North America

Western Europe

-2

0

2

4

-4 -2 0 2 4 6 8 10 12% T

ota

l V

olu

me

CA

GR

20

10

% Total Value CAGR 2010-15

14

USA12%

Italy12%

Others31%

Largest Still Grape Wine Markets Globally in Volume 2010

China15%

USA

Others30%

Largest Still Grape Wine Markets Globally in Volume 2015

US IS LARGEST CONSUMER BUT CHINA WILL BE BY 2015GROWTH OPPORTUNITIES


12%

France10%

Germany8%

China7%

United Kingdom

6%Argentina

5%

Spain4%

Russia3%

Portugal2%

USA11%

Italy10%

France8%

Germany7%United

Kingdom6%

Argentina4%

Spain4%

Russia3%

Brazil2%

15WESTERNATION, PREMIUMISATION AND HEALTH DRIVE WINE

15

20

25

1500

2000

2500

3000

%To

tal

vo

lum

e C

AG

R

Mil

lio

n l

itre

s

China: Wine by Type Performance 2010-2015

GROWTH OPPORTUNITIES

40

50

60

70

80

Mil

lio

n l

itre

s

Chinese Wine Imports By Origin 2005-2010


0

5

10

0

500

1000

1500

%To

tal

vo

lum

e C

AG

R

Mil

lio

n

2010 2015 2010-15 % CAGR

0

10

20

30

40

Mil

lio

n

2005 2010

16FAVOURABLE DEMOGRAPHICS AID WINE SALES IN BRAZIL

�Still light grape wine 2 L/cap 2010

� 6% total volume CAGR 2010-2015

�More women in the labour force

GROWTH OPPORTUNITIES


�2009: 50% of the population reached the middle class

�Northeast region growing

�Urbanisation key

17

© Euromonitor International Global Trends and Prospects

18WINE KEY DRIVERS AND TRENDS GLOBAL TRENDS AND PROSPECTS

Cocooning

ConvenienceInternet /

Technology


Polarisation

Healthier Options

Simplified Offerings

Eco-Credentials

Value for Money

19ON-TRADE SUFFERS AS COCOONING ACCELERATES GLOBAL TRENDS AND PROSPECTS

2

3

4

5

1.5

2

2.5

3

% v

olu

me g

row

th

Bil

lio

n 9

L c

ases

Global Wine On- vs. Off-Trade Performance 2005-2015


-1

0

1

2

0

0.5

1

1.5

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

% v

olu

me g

row

th

Bil

lio

n 9

L c

ases

Wine - Off-trade Volume Wine - On-trade VolumeWine - Off-trade Volume Wine - On-trade Volume

20QUALITY WINE IN BAG-IN-BOX SUITED TO HOME CONSUMPTIONGLOBAL TRENDS AND PROSPECTS

6

8

10

12

14

16

100

120

140

160

180

% V

olu

me

CA

GR

20

05

-20

10

Mil

lio

n u

nit

s

Leading Off-trade Markets for Bag-in-Box 2010


-6

-4

-2

0

2

4

0

20

40

60

80

% V

olu

me

CA

GR

20

05

Off

-tra

de

–M

illi

on

un

its

21VALUE FOR MONEY EVIDENT IN OFF-TRADEGLOBAL TRENDS AND PROSPECTS

Small Grocery Retailers

Food/drink/tobacco specialists

Wine Off-trade Channel Performance 2005-2010


-4 -2 0 2 4 6 8 10 12 14 16

Supermarkets/Hypermarkets

Internet Retailing

Discounters

2005-2010 % Volume CAGR

22WINE: PREMIUMISATION, POLARISATION AND AFFORDABILITYGLOBAL TRENDS AND PROSPECTS

Red wine:

Greece2005 2010

Under EUR3.5 2.7% 3%

EUR3.51 to EUR5.5 6% 7.5%

EUR5.51 to EUR6.5 7% 9%

Red wine:

China

2005 2010

Under RMB19.99 30% 21%

RMB20 to RMB29.99 30% 30%

RMB30 to RMB49.99 29% 30%


EUR6.51 to EUR8 20.3% 21%

EUR8.01 to EUR9.4 22.2% 22%

EUR9.41 to EUR11 23.8% 21%

EUR11.01 and above 18% 16.5%

Total 100% 100%

RMB49.99 29% 30%

RMB50 to RMB59.99 8.5% 13.5%

RMB60 to RMB89.99 1.5% 3%

RMB90 and above 1% 2.5%

Total 100% 100%

23UN-TRADITIONAL SIZES MORE DYNAMICGLOBAL TRENDS AND PROSPECTS

4567

15

20

25

% C

AG

R 2

010-2

014

Bil

lio

n U

nit

s


-101234

0

5

10

15

% C

AG

R 2

010

To

tal V

olu

me -

Bil

lio

n U

nit

s

Total volume 2010

% CAGR 2010-2014

24CONVENIENCE PRODUCT EXAMPLES GLOBAL TRENDS AND PROSPECTS


25CANS – THE NEXT BIG THING?GLOBAL TRENDS AND PROSPECTS

5

10

15

20

30

40

50

60

trad

e v

olu

me C

AG

R

–m

illi

on

un

its

Leading Off-trade Markets for Cans in 2010


-10

-5

0

5

0

10

20

30

% O

ff-t

rad

e v

olu

me C

AG

R

Off

-tra

de v

olu

me –

Off-trade volume 2010

% CAGR 2010-2014

26PET BOTTLES – SLOW TO CATCH ON

�‘Smaller’ on shelf profile – “Is that a half bottle?”

�Associated with soft drinks

�Shorter shelf life

�Taste perceptions – “I don’t want my wine to taste plasticky”

Challenges

�Changing consumption culture –buy to drink now

�Lighter/safer to transport

�Single serve sizes – most of the weight is wine, not package

�Green perceptions – if the consumer

Opportunities

GLOBAL TRENDS AND PROSPECTS


wine to taste plasticky” �Green perceptions – if the consumer can be educated

27ECO-CREDENTIALS PRODUCT EXAMPLESGLOBAL TRENDS AND PROSPECTS


28MILLENNIALS ARE TECH SAVVY AND WORD OF MOUTHERS

Civic-minded/socially conscious

Tolerant

Technology adopters

GLOBAL TRENDS AND PROSPECTS

Technology adopters

Online community

Egocentric

Hedonistic spenders

Fashion influencers

Media mistrusters/spin detectors


Online community

Media mistrusters/spin detectors

Mass-advertising rejecters

Word of mouthers

Civic-minded/socially conscious

Mass-advertising rejecters

Word of mouthers

Debt incurrers

Work/life balancers

Obedient, but not subservient

Tolerant

Apathetic and sometimes frivolous

29INTERNET CONTINUES TO RESHAPE THE WORLDGLOBAL TRENDS AND PROSPECTS

20

30

40

50

% o

f w

orl

d p

op

ula

tio

n

More than 40% of the world’s population will be on the

Internet in 2020

70%

80%

90%

100%

% o

f w

orl

d’s

In

tern

et

use

rs

Half of all Internet users will be in Asia

Asia Rest of world


0

10

20

2000 2010 2020

% o

f w

orl

d p

op

ula

tio

n

0%

10%

20%

30%

40%

50%

60%

70%

2000 2010 2020

% o

f w

orl

d’s

In

tern

et

use

rs711 millionChinese Internet users in 2020

281 millionUS Internet users in 2020

30INTERNET / TECHNOLOGY EXAMPLESGLOBAL TRENDS AND PROSPECTS


31TO SUM UPGLOBAL TRENDS AND PROSPECTS

• Wine offerings will have to justify their prices to increasingly price-savvy audiences in a new era of thrift.

Value for Money

• Countries like China and Brazil are key as future opportunity markets but lets not forget about the developed markets.

Emerging Markets Key

• Centuries of traditional glass bottle use have resulted in one of the most consolidated categories for packaging, this pack type will remain key for premium wines.

Glass keeps the top spot


wines.

• Reducing distribution and breakage costs, while answering environmental concerns, will force manufacturers to go the extra mile in terms of packaging innovation.

Green packaging formats

• Appealing to the new wine consumer, standing out on a shelf full of glass bottles, the shaped liquid carton, metal can and small size PET bottles are all taking share.

Differentiation via innovativepackaging

• Social networking, online retail, consumer reviews “word of mouse” etc. will continue to play a huge role in shaping consumer trends.

Internet/ Technology

32

THANK YOU FOR LISTENING

Merwin Grootboom

Regional Business Developer: Sub-Sahara Africa

[email protected]


[email protected]

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