1
TRENDS AND OPPORTUNITIES SHAPING
THE GLOBAL WINE INDUSTRY
MERWIN GROOTBOOM
REGIONAL BUSINESS DEVELOPER: SUB-SAHARA AFRICA
31ST
MAY 2011 – SAWIS INFORMATION CENTRE OPEN DAY
© Euromonitor International
2
•MACRO VIEW
•STATE OF THE GLOBAL WINE MARKET
•GROWTH OPPORTUNITIES
•GLOBAL TRENDS AND PROSPECTS
© Euromonitor International
3
Macro View
© Euromonitor International
MACRO VIEW
A FRAGILE RECOVERY IS UNDERWAY
4
Real GDP Growth by Region: 2009-2011
10
8
2009: 89
2010: 17
% growth
6
4
2
Number of
countries which
saw negative real
GDP growth in
2009 & 2010
0
-2
-4
-6
-8
2009
© Euromonitor International
2010
2011
MACRO VIEW
UNEMPLOYMENT SEEN AS THIRD WAVE OF CRISIS
Unemployment Rate in World’s Worst Affected Countries 2010
16
14
25
12
10
20
15
8
6
10
4
2
5
0
-2
0
-4
Unemployment rate 2010
© Euromonitor International
% change
Unemployment rate - % EAP
30
Change since 2007
5
14
Number of countries
with an unemployment
rate above 10% in
2007
25
Number of countries
with an unemployment
rate above 10% in
2010
MACRO VIEW
HOW 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
Government debt to remain a key area of concern
Shift in global power to emerging markets will continue
© Euromonitor International
6
7
State of the Global Wine Market
© Euromonitor International
3
BILLION
State of the global wine market
8
1.3
PERCENT
9 litre cases of
wine sold in 2010
4
© Euromonitor International
LITRES
CAGR volume growth
for wine globally between
2005 and 2010
of wine is
consumed per cap globally
STATE OF THE GLOBAL WINE MARKET
GLOBAL WINE PER CAPITA CONSUMPTION IN 2010
Portugal Highest
Per Cap
Consumption
Globally
© Euromonitor International
9
STATE OF THE GLOBAL WINE MARKET
AFTER THE SLUMP...
10
Global Wine Sales 2005-2010
3.5
Billion 9L Cases
2.5
4
2
3
1.5
2
1
% Growth
5
3
1
0.5
0
0
2005
2006
Wine volumes in billion 9L Cases
© Euromonitor International
2007
2008
% Total volume growth
2009
2010
% Total value growth US$ fixed
STATE OF THE GLOBAL WINE MARKET
BEER TAKES SHARE FROM WINE AND SPIRITS
11
Alcoholic Drinks by Category – Total Volume
2015
78.4%
8.1% 11.2%
2010
78.0%
8.3% 11.4%
2005
76.8%
8.6% 12.2%
2000
75.1%
0%
20%
Beer
Cider/Perry
© Euromonitor International
40%
10.0%
60%
RTDs/High-Strength Premixes
13.1%
80%
Spirits
100%
Wine
12
© Euromonitor International
Growth opportunities
GROWTH OPPORTUNITIES
ASIA PACIFIC WILL CONTINUE TO DRIVE WINE SALES
13
% Total Volume CAGR 2010
2010-15
Wine Sales by Region 2010-2015
12
Asia Pacific
10
8
6
4
Western
Europe
Middle East
Eastern Europe and Africa
0
-4
Latin America
North America
2
-2
-2 0
Australasia
2
4
6
8
10
% Total Value CAGR 2010-15
Global wine volumes are expected to grow by 3% CAGR between 2010-15
Still light grape wine will remain the largest category
© Euromonitor International
12
GROWTH OPPORTUNITIES
US IS LARGEST CONSUMER BUT CHINA WILL BE BY 2015
Largest Still Grape Wine Markets
Globally in Volume 2010
Largest Still Grape Wine Markets
Globally in Volume 2015
USA
12%
Others
31%
Italy
12%
Others
30%
China
15%
USA
11%
France
10%
Portugal
2%
Russia
3%
Spain
4%
Argentina
5%
© Euromonitor International
United
Kingdom
6%
14
Brazil
2%
Russia
3%
Spain
Germany
4%
8%
Argentina
China
4%
7%
Italy
10%
Germany
United
7%
Kingdom
6%
France
8%
GROWTH OPPORTUNITIES
WESTERNATION, PREMIUMISATION AND HEALTH DRIVE WINE 15
China: Wine by Type Performance
2010-2015
3000
80
25
Chinese Wine Imports By
Origin 2005-2010
20
2000
15
1500
10
1000
500
5
0
0
60
Million litres
Million litres
2500
%Total volume CAGR
70
50
40
30
20
10
0
2010
2015
© Euromonitor International
2010-15 % CAGR
2005
2010
GROWTH OPPORTUNITIES
FAVOURABLE 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
2009: 50% of the population reached
the middle class
Northeast region growing
Urbanisation key
© Euromonitor International
16
17
© Euromonitor International
Global Trends and Prospects
GLOBAL TRENDS AND PROSPECTS
WINE KEY DRIVERS AND TRENDS
18
Cocooning
Internet /
Technology
Convenience
Value for
Money
Polarisation
EcoCredentials
Healthier
Options
Simplified
Offerings
© Euromonitor International
GLOBAL TRENDS AND PROSPECTS
ON-TRADE SUFFERS AS COCOONING ACCELERATES
19
3
5
2.5
4
2
3
1.5
2
1
1
0.5
0
0
-1
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Wine - Off-trade Volume
Wine - Off-trade Volume
© Euromonitor International
Wine - On-trade Volume
Wine - On-trade Volume
% volume growth
Billion 9L cases
Global Wine On- vs. Off-Trade Performance 2005-2015
GLOBAL TRENDS AND PROSPECTS
QUALITY WINE IN BAG-IN-BOX SUITED TO HOME CONSUMPTION 20
Off-trade – Million units
180
160
140
120
100
80
60
40
20
0
© Euromonitor International
16
14
12
10
8
6
4
2
0
-2
-4
-6
% Volume CAGR 2005
2005-2010
Leading Off-trade Markets for Bag-in-Box 2010
GLOBAL TRENDS AND PROSPECTS
VALUE FOR MONEY EVIDENT IN OFF-TRADE
21
Wine Off-trade Channel Performance 2005-2010
Food/drink/tobacco specialists
Small Grocery Retailers
Discounters
Internet Retailing
Supermarkets/Hypermarkets
-4
-2
0
2
4
6
8
10
2005-2010 % Volume CAGR
© Euromonitor International
12
14
16
GLOBAL TRENDS AND PROSPECTS
WINE: PREMIUMISATION, POLARISATION AND AFFORDABILITY 22
Red wine:
Greece
Under
EUR3.5
2005
2010
Red wine:
China
2005
2010
2.7%
3%
Under
RMB19.99
30%
21%
EUR3.51 to
EUR5.5
6%
7.5%
EUR5.51 to
EUR6.5
RMB20 to
RMB29.99
30%
30%
7%
9%
RMB30 to
RMB49.99
29%
30%
RMB50 to
RMB59.99
8.5%
13.5%
RMB60 to
RMB89.99
1.5%
3%
1%
2.5%
100%
100%
EUR6.51 to
EUR8
EUR8.01 to
EUR9.4
EUR9.41 to
EUR11
EUR11.01
and above
Total
© Euromonitor International
20.3%
22.2%
23.8%
21%
22%
21%
18%
16.5%
100%
100%
RMB90 and
above
Total
GLOBAL TRENDS AND PROSPECTS
25
20
15
10
5
0
23
7
6
5
4
3
2
1
0
-1
2010
% CAGR 2010-2014
Total Volume - Billion Units
UN-TRADITIONAL SIZES MORE DYNAMIC
Total volume 2010
% CAGR 2010-2014
© Euromonitor International
GLOBAL TRENDS AND PROSPECTS
CONVENIENCE PRODUCT EXAMPLES
© Euromonitor International
24
GLOBAL TRENDS AND PROSPECTS
CANS – THE NEXT BIG THING?
25
60
20
50
15
40
10
30
5
20
0
10
-5
0
-10
% Off-trade
trade volume CAGR
Off-trade volume – million units
Leading Off-trade Markets for Cans in 2010
Off-trade volume 2010
% CAGR 2010-2014
© Euromonitor International
GLOBAL TRENDS AND PROSPECTS
PET BOTTLES – SLOW TO CATCH ON
26
Challenges
Opportunities
‘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”
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
can be educated
© Euromonitor International
GLOBAL TRENDS AND PROSPECTS
ECO-CREDENTIALS PRODUCT EXAMPLES
© Euromonitor International
27
GLOBAL TRENDS AND PROSPECTS
MILLENNIALS ARE TECH SAVVY AND WORD OF MOUTHERS
Technology adopters
Online community
Egocentric
Hedonistic spenders
Civic-minded/socially conscious
Tolerant
Fashion influencers
Media mistrusters/spin detectors
Civic-minded/socially conscious
Technology adopters
Online community
Mass-advertising rejecters
Word of mouthers
Debt incurrers
Media mistrusters/spin detectors
Mass-advertising rejecters
Work/life balancers
Obedient, but not subservient
Tolerant
Apathetic
and sometimes frivolous
© Euromonitor International
Word of mouthers
28
GLOBAL TRENDS AND PROSPECTS
INTERNET CONTINUES TO RESHAPE THE WORLD
Half of all Internet users will be
in Asia
Asia
50
Rest of world
100%
40
90%
30
20
10
0
2000
2010
2020
711 million
Chinese Internet users in 2020
281 million
US Internet users in 2020
© Euromonitor International
% of world’s Internet users
% of world population
More than 40% of the world’s
population will be on the
Internet in 2020
29
80%
70%
60%
50%
40%
30%
20%
10%
0%
2000
2010
2020
GLOBAL TRENDS AND PROSPECTS
INTERNET / TECHNOLOGY EXAMPLES
© Euromonitor International
30
GLOBAL TRENDS AND PROSPECTS
TO SUM UP
31
Value for Money
• Wine offerings will have to justify their prices to
increasingly price-savvy audiences in a new era of
thrift.
Emerging Markets Key
• Countries like China and Brazil are key as future
opportunity markets but lets not forget about the
developed markets.
Glass keeps
the top spot
Green
packaging
formats
Differentiation
via innovative
packaging
Internet/ Technology
© Euromonitor International
• 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.
• Reducing distribution and breakage costs, while
answering environmental concerns, will force
manufacturers to go the extra mile in terms of
packaging innovation.
• 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.
• Social networking, online retail, consumer reviews
“word of mouse” etc. will continue to play a huge role in
shaping consumer trends.
32
THANK YOU FOR LISTENING
Merwin Grootboom
Regional Business Developer: Sub-Sahara Africa
merwin.grootboom@euromonitor.com
© Euromonitor International