rafael del rey - viniportugal.pt · through the sale of all wines (and wine products), through...

Rafael del ReySpanish Observatory of Wine

Markets

Market & economic information for a better development of the

wine sector

ViniPortugalCuria, November 29th 2017

El VINO solo se DISFRUTA

con MODERACIÓN

Contents: Observatory of Wine Markets

1. Why the “information”

2. Why an “observatory”

3. Why “markets”

4. Some key factors

2OEMV - ViniPortugal - Nov 29 2017

1. Credibility

2. Speed / agility

3. Focus / orientation

4. Contents / type of information

5. Distribution

6. Costs

Examples1) Trends in world

wine trade

2) Portugal

➢Direct effects

➢ “side” effects

From “information” to

“knowledge” / from data to -useful- analysis

Usefulness

Independence

Why the “information”

Need to know the environment to choose

the best particular action

Knowing the trends

Mixing “what I am” with “what happens

around” to make the best possible choice


Why an “observatory”

Good information is expensive

Con be obtained in a collaborative way

To be useful for all

For the smallest, it may be the only information

obtained

For the biggest, it may come in addition to

private brand information

The importance of the “table”4OEMV - ViniPortugal - Nov 29 2017

Many, sharing the same

information, may arrive to same objectives

Argument for public assistance

Why “markets”

Many “observatories” are focused on grape

and wine prices

Some (more academic) look at the structure

of the wine sector

Very few (!!) look at the consumer and

market trends

… although the whole structure depends on

the wine which is sold… and payed.5OEMV - ViniPortugal - Nov 29 2017

Set the consumer and

the market in the center of everyone’s interest

Example: information given by OeMv


An in-depth analysis and follow-up of

international markets, together with the continuous analysis of the domestic market

and the structure of the sector gives a very

broad view to assist the stakeholders

Effects

Direct effects

More and better information for all players to take their decisions

Better information also for institutions strategy

Better information for the pubic publicity

“side” effects

The whole sector focused on satisfying the consumer

Increase cohesion / soften debates

Easier agreements


SHARE the information

SHARE the objectives

among all tiers of the chain

SALESVALUE

OEMV - Agrónomos - Abr 17

Part of the “mission” of the OeMv

8


Part of the mission of the OeMv

9

“side effect”: towards greater cohesion

From the rather tense relations

between tiers of the wine chain…




between tiers of the wine chain …

…to a closer more cohesive

relation, focussed towards a shared

objective: creation of value

through the sale of all wines (and

wine products), through time.

OEMV - Agrónomos - Abr 17 11



between tiers of the wine chain …

…to a closer more cohesive

relation, focussed towards a

shared objective: creation of value

through the sale of all wines (and

wine products), through time.OEMV - Agrónomos - Abr 17

12

Some key factors


1. Credibility

2. Speed / agility



5. Distribution

6. Costs

Whatever we do has to be:

✓ sincere,

✓ transparent,

✓ based on reliable data,

✓ analyzed with objectivity and independence (there is no hidden purpose, but

the development of the wine sector as a whole)

Great importance of the

people need to be trustworthy

Some key factors


1. Credibility

2. Speed / agility



5. Distribution

6. Costs

✓ It has to be quickly.

✓ Decisions cannot wait.

✓ Information given with a 3-month (or weeks)

delay are obsolete

Some key factors


1. Credibility

2. Speed / agility



5. Distribution

6. Costs

✓ If sales, market and

consumer are the priorities…

✓ … the main Focus has to

be final sales.

Marketing approach.

Probably criticized by

growers but not impossible to shared.

Usefulness

Independence

The argument being that

information has to be useful

Convincing about the

independence, objectivity of all analysis.

Some key factors


1. Credibility

2. Speed / agility



5. Distribution

6. Costs

✓ At the end, it is the

market and the consumer that matters

✓ Prices are important,

subsidies too, size and structure of the chain and their links are important…

✓ But nothing evolves without the consumer

✓ And probably our greater

lack is market / consumer information…

✓ … identifying trends,

niches, opportunities.

✓ Getting to know the consumer better.

With scarce resources, priorities have to be selected.

Some, to content all stakeholders. Most, to be

practical and useful

The case of the Spanish I.V.E

DATA is not enough: From

“information” to “knowledge” / from data to -useful- analysis

Some key factors


1. Credibility

2. Speed / agility



5. Distribution

6. Costs

✓ And all this has to be

done at the least possible cost.

✓ Asking – always – for

public subsidies

✓ But ready to be maintained by the sector

Never forget: pubic

subsidies also have serious drawbacks

Example 1: Trends in international wine trade


Wine keeps on growing, particularly in value terms

2,27 2,302,12 2,19 2,13 2,15 2,17 2,20 2,27

2,082,23 2,32

2,52 2,61 2,542,75

2,85 2,89

13 756 14 15915 023 15 278 15 767

16 40417 789

20 001 20 192

18 065

20 945

23 348

25 420 25 957 25 937

28 482 29 01130 051

6 057 6 1487 077 6 964 7 399 7 640 8 214

9 084 8 895 8 6869 388

10 077 10 097 9 937 10 207 10 364 10 182 10 400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017TAM Jun

World wine exports in Euros and LitresSource: Data from GTA / OeMv

€/l

Mill €

Mill l.

1.7%

2.7%

4.5%

OEMV - ViniPortugal - Nov 29 2017 19

Towards equilibrium / scarcity?

Towards bi-polarization

Towards new consumers

Trends in international wine trade



We learn to limit fluctuations in production

And such stability is essential to create value

The world depends heavily on stability in Spain

In Spain:

Where PDOs are strong, fluctuations are smaller

And many producers manage complex portfolios, with

different products and regions included, to satisfy

different market opportunities and segments.

Profitability

Image

And seem to enter relative scarcity




Towards bipolarization


In still wines

In sparkling



Towards bi-polarization In still wines

In sparkling

Product Mix - VOLUME

2 034,6 33,6% 3 825,4 37,6%

3 641,4 60,1% 5 494,8 54,0%

313,1 5,2% 791,2 7,8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mill Ltrs 2000 Ltrs 2000 Mill Ltrs 2016 Ltrs 2016

Sparkling

Bottled

Bulk & > 2l

Must

Greaterbipolarization



Towards bipolarization In still wines

In sparkling

64,2%

67,0%68,9%

65,0% 64,1%65,7%

63,2%61,6% 61,8% 61,3% 61,0%

59,1% 60,0% 59,5% 59,4% 58,4% 59,0%

35,8%

33,0%31,1%

35,0% 35,9%34,3%

36,8%38,4% 38,2% 38,7% 39,0%

40,9% 40,0% 40,5% 40,6% 41,6% 41,0%

30%

35%

40%

45%

50%

55%

60%

65%

70%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Bottled

Bulk & > 2l

Among still wines:

✓ A great part is shipped in bulk (not only Spain)

✓ Bulk basic wine for elaboration and DISTRIBUTION

✓ More expensive bulk for distribution to final clients at destination

✓ Bottled wines (including premium) are a smaller portion of total

✓ But extremely important in terms of value




In sparkling

Among sparkling:

✓ Average prices tend to become more “popular”

✓ At a time when we appreciate two different types of sparkling wines developing in different ways

4,50

5,00

5,50

6,00

6,50

7,00

7,50

8,00

8,50

9,00

9,50

0

50

100

150

200

250

300

350

400

2 000 2 001 2 002 2 003 2 004 2 005 2 006 2 007 2 008 2 009 2 010 2 011 2 012 2 013 2 014 2 015 2 016

Mill

on

es

de

litr

os

€/l world Italy

France Spain

Linear (€/l world)




In sparkling

Then…

✓ Need to know better the markets and how they evolve

✓ Requirements in each market

✓ Size of each market and market segment

✓ Need to know and understand the consumer

✓ Who is he/she?

✓ Where is he/she?

✓ What does he/she want? (fresh wines, enjoyable,… special, rare,

classic…)

✓ Chose the league in which you want to play…

✓ Or how do we play in different leaguesManagement of

DIVERSIFIED PORTFOLIOS

Many million people want

easy, enjoyable wines,

probably sweeter, and, if

possible, at a good price.

By the way, cheaper does not always

mean higher sales




Towards bi-polarization


From the Old Europe and

producing countries…

… towards North America and

Asia



Towards new clients

Norte America6,834 mill €

24.2% of totalChg. 15-16:

2.4%

EU12,025 mill €42.5% of total

Chg. 15-16:-3.5%

Otra Europa2.293 mill €8.1% of totalChg. 15-16:

4.0%

Asia5.876 mill €

20.8% of total

Chg. 15-16:8.3%

Latino América

478 mill €1.7% of totalChg. 15-16:

-0.8%

Africa128 mill €

0.5% of total

Chg. 15-16:10.1%

Pacifico634 mill €

2.2% of total

Chg. 15-16: 1.9%

Who imports?

Wine consumption is changing in the world, moving from ole Europe to North America and Asia.



USA 4,6%; 5.016,4

UK 1,5%; 3.499,3

Ger 1,5%; 2.455,1

China30,4%;2.142,9

Can 6,0%;

1.604,1

Jap2,8%;

1.360,3

HK 21,2%; 1.404,9

Swt 2,5%; 966,8

Bel 1,3%; 885,4

Nth 3,1%; 942,5

Fra 2,9%; 742,5

Rus7,2%;660,3

Swd5,4%;640,9

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

22%

24%

26%

28%

30%

32%

-2% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22%

Ch

gra

te in

val

ue

Chg rate in volume

CAGR 2000-16(size shows total imports in Euros)

Lowerprice

During the last 17 years Asia and North America have taken the lead, together

with the ever-changing Russia → the greatest portion of world production remains

in Europe, at the time that consumption moves away → new consumers → new

ways of selling.

Higher price



MARKET SHARE IN VALUE:

In 17 years world imports of

wine (consumption?) are clearly

moving away from Europe.

The market si less

concentrated, with 11 top

importers accounting for 79%

off total, while it was 85% in

2000, and…

• China, Hong Kong and, to a

lesser extend, Canada,

Russia, Sweden and USA

increase their market share.

• While other Europeans

together with Japan reduce

it.21,0%

2,3%

2,3%

2,6%

3,3%

3,1%

3,4%

5,0%

4,8%

5,7%

7,6%

8,7%

12,4%

17,7%

5,8

0,2

0,8

-0,8

-0,9

-2,1

-1,3

4,5

-1,6

1,1

7,4

-5,4

-7,7

0,1%

Others

Sweden

Russia

France

Netherlands

Belgium

Switzerland

HK

Japan

Canadá

China

Germany

UK

USA

Share 16

PP 00-16

Towards new clients



59,0%

42,5%31,3%

45,0%

9,7%12,5%

0%

10%

20%

30%

40%

50%

60%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Market share of totalimports VALOR

EU

NA+As

Others


In big groups, considering their total imports (also within the group) wine going to Asia and North America

together si already a higher portion that the wine imported by EU countries in euros…



Towards a change of clients

Thus, in any case, in general,…

✓ If we want to keep on producing ourselves…

✓ … but consumption moves to new places, new consumers, with a

different approach to wine…

✓ ... We need to know them better

✓ And ship them the wine DISTRIBUTION

✓ And make then know it and love it IMAGE / PROMOTION

Trade professionals

Travel

Subsidies?

By the way, for this new type of

consumption the same or even much

more importance than the liquid

(wine) comes form what it implies.


We used to mention that “bulk” included at

least three different types of wine:

Bag in box (BiB)

Bulk wine among producers

Bulk wine to final destinations for local

distribution


Segments of “bulk” wine - BiB

With estimated different trends:

Probably increasing

Cheap and potentially to

decrease in the future

Probably growing

Now, we have better data to identify and follow each type of trade

BiB accounts for 18.6% of category value and

10.6% of volume (only 6,4% and 2,4% for Spain)

(jan-jun 2017).

New – greater detail


1 218,6

1 737,1

279,1

206,4

1 365,11 497,7

1 919,2 1 943,5

Mill € 2016 Mill € 2017 Mill Ltrs 2016 Mill Ltrs 2017

Jan-Jun

> 2l

2 - 10l

> 10l

At an average price of 1.35 €/l as

compared to 0.70 €/l for real bulk

Segments of “bulk” wine - BiB

Top EXporters of BiB - VALUE

OEMV - ViniPortugal - Nov 29 2017 348,0

0,5

0,7

1,3

1,8

5,9

4,3

0,0

7,6

0,8

7,0

0,0

13,1

36,1

10,9

23,6

20,2

4,8

21,3

45,9

16,5

30,9

17,8

10,6%

13,6%

15,2%

27,6%

30,0%

88,8%

54,8%

0,0%

55,3%

5,3%

40,1%

0,0%

56,1%

84,4%

24,5%

26,5%

20,1%

4,1%

15,6%

30,6%

9,9%

14,9%

6,4%

0 10 20 30 40 50 60 70

Other

Belgium

Austria

Sweden

Slovaquia

Finland

Hetherlands

Ukraine

Denmark

Canadá

Hungary

Argentina

Portugal

Germany

Unite Kingdom

South África

USA

New Zealand

Australia

France

Chile

Italy

Spain

Export BiB Jan-jun 2017

Mill €

% BiB / total > 2l

Segments of “bulk” wine - BiBRanked by importance of global > 2l

category:

• For the top 3 world exporters of wine in

containers > 2l (Spain, Italy and Chile) BiB

accounts for only 6.4% in the case of

Spain and close to 15% and 10% for Italy

and Chile

• Top world sellers of BiB are France and

Germany with 45.9 and 36.1 million € in 6

months

• Finland, Germany, Portugal and

Netherlands are world exporters for which

BiB accounts for the larger percentage of >

2l category.

• Argentina and Ukraine do not report and

BiB sales


Top importers

11,70,20,10,60,9

0,03,03,2

0,07,3

0,11,11,1

0,010,2

5,034,5

0,910,7

7,16,56,8

0,13,5

43,13,0

29,26,7

15,8

17,6%

3,7%

1,3%

9,5%

11,2%

0,0%

31,1%

28,7%

0,1%

36,9%

0,2%

4,2%

4,0%

0,0%

30,3%

13,7%

86,8%

2,1%

24,4%

16,0%

14,3%

14,6%

0,3%

5,7%

49,9%

2,2%

17,6%

2,9%

6,2%

0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0

Other

Spain

Lithuania

Poland

Rumania

Ivory Coast

Slovaquia

Austria

Bielorussia

Finland

Australia

Netehrlands

Tchek Republic

Argentina

Japan

Portugal

Norway

Russia

Belgium

Denmark

Switzerland

Canadá

Italy

China

Sweden

France

USA

united Kingdom

Germany

IMport BiB Jan-jun 2017

Mill €

% BiB / total > 2l

Segments of “bulk” wine - BiBAs regards to IMporters - VALUE

• Not surprisingly, Sweden and Norway

are the largest world importers of BiB

with 43.1 and 34.5 million € respectively

in 6 months

• Actually, BiB imports account for 96.8%

of total purchase in containers > 2l for

Norway and almost 50% of total category

for Sweden

• USA, Germany and Japan follow in the

ranking

• Whereas top importers of > 2l, Germany

and UK, show a small portion of BiB

(6.2% and 2.9% respectively) local

bottling.

(> 10l) (Jan-Jun 2017), we estimate that 21.5%

of bulk in Euros and 36,1% of its volume is

cheap bulk wine traded among producers

Within bulk


1 218,6

1 737,1

261,8

626,3

956,8

1 110,8

279,1 279,1

206,4 206,4

1 497,7 1 497,7

1 943,5 1 943,5

Mill € 2017 Mill € 2017 Mill Ltrs 2017 Mill Ltrs 2017

> 2l

2 - 10l

A cliente final > 0,50 €/l

Entre productores < 0,50 €/l

> 10l

At an average price of 0.42 €/l as

opposed to 0.86 €/l for bulk to final

consumers

Segments of “bulk” wine

Example 2: Portugal


We follow Portuguese wine & must

exports quarterly (and you know it well)…

and the analysis could be better

done.

Example 2: Portugal


Exports this year keep on growing,

at a similar pace in euros and litres

And may profit from a better comparative vintage

2,69

3,02

2,41

1,70 1,672,04

1,84 1,682,00

2,28 2,302,13 2,09

2,372,56 2,63 2,62 2,65

507484

509532 533 537

556

624610

582614

657

704721 726 736 727

760

189161

211

313 319

263

303

371

305

255 267

308336

304284 280 277 287

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017TAM Jun

Exports of Portuguese wine & mustin Euros and Litres

Source: Data from GTA / OeMv

€/l

Mill €

Mill l.

4.2%

0.8%

5.1%

Example 2: Portugal


Nevertheless, the comparison with world total exports is still challenging:

▪ Portugal represents a small portion of total value (2.5%), decreasing from 3.7% in 2000

▪ A larger but still small portion of total volume (2.8%) also decreasing

▪ Although at average prices very close to global average

118,2%

131,0%

113,4%

77,4% 78,5%

95,1%

84,9%

76,5%

88,1%

109,7%

103,3%

92,1%

83,1%

90,8%

100,8%95,7%

92,0% 91,6%

3,7%

3,4% 3,4%3,5%

3,4%

3,3%

3,1% 3,1%

3,0%

3,2%

2,9%

2,8% 2,8% 2,8% 2,8%

2,6% 2,5% 2,5%

3,1%

2,6% 3,0%

4,5%4,3%

3,4%

3,7%

4,1%

3,4%

2,9%2,8%

3,1%

3,3%

3,1%

2,8% 2,7% 2,7% 2,8%

65%

85%

105%

125%

145%

165%

185%

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

4,0%

4,5%

5,0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017TAM Jun

Exports of Portuguese wine & mustin Euros and Litres

Source: Data from GTA / OeMv

€/l

Mill €

Mill l.

Example 2: Portugal


• Exports are overwhelmingly bottled wine,

• with “bulk” being important, specially in volume

• But, with an relatively high portion of BiB

Example 2: Portugal


Although moving in different ways:

• Porto is still almost half total annual sales

• But IGP wines grow 1.8 points to 16.3% of total

• Red & rose PDO by 1.4 points

65 68 73

91 90 104

99 101116

88 7275

333 326330

685 666707

YoY Aug 2015 YoY Aug 2016 YoY Aug 2017

Mill

ón

Eu

ros

Portuguese exports of bottled wines TOTAL

No UE

Generosos

Sin IG env

Varietales

IGP

DOP T&R

DOP blanco

Vinos deaguja

9,40% 10,20% 10,30%

13,30% 13,50% 14,70%

14,50% 15,10% 16,30%

12,90% 10,90%10,60%

48,70% 49,00% 46,70%

YoY Aug 2015 YoY Aug 2016 YoY Aug 2017

As % / total category

• White PDO by almost 1 point to

10.3% of total

• With varietals, and semi-sparkling

with very little sales

Conclusions


➢ Information is useful➢ But it very much depends on what type of information and

how it is managed➢ Prices, structure, supply… are all important…➢ … but the consumer and the market are the shared

common objectives➢ Sharing information also gives coherence to the sector➢ Information is not only data, but analysis from the

perspective of the professional and the firm (“from

information to knowledge”)➢ There is much than can be done with available data…➢ … and much more than can be done with ad hoc research➢ Although, all this is expensive.

➢ How can it be done EFFICIENTLY and CHEAP?

Can we collaborate?

Rafael del ReySpanish Observatory of Wine Markets

Market & economic information for a better development of the

wine sector

ViniPortugalCuria, November 29th 2017

Muito obrigado

And much more

information at:

El VINO solo se DISFRUTA

con MODERACIÓN

http://www.oemv.es/

rafael del rey - viniportugal.pt · through the sale of all wines (and wine products), through...

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