In July, Pernod Ricard announced it had agreed the sale of its international wine brands to the Australian-based owner of Accolade Wines. The transaction included seven wineries that produce more than 10 million cases each year, including global titans such as Jacob’s Creek, Campo Viejo and Brancott Estate. The news of the sale came in the same week that the France-based multinational established a new global subsidiary for its North American whiskey portfolio. A signal as clear as any that the company sees its future in distilled beverages.
The underlying numbers paint a picture of Pernod Ricard not fleeing a sinking ship, but maybe quitting while it’s ahead. According to IWSR market data, between 2022 and 2023 still wine volumes declined by 4%, and that drop was relatively consistent between regions. Africa & Middle East (-3%), Europe (-4%), Americas (-6%) and Asia Pacific (-8%) all experienced single-digit declines between 2022 and 2023 with only Duty Free (9%) and CIS (2%) reporting growth.
That’s very much the forecast pattern too, steady generalised declines but nothing too dramatic – the IWSR puts global CAGR volume at -1% from 2023 – 2028.
Pernod Ricard could perhaps be looking a little further ahead. According to IWSR analysts: “Mature wine markets are increasingly reliant on older drinkers, especially countries where populations are ageing rapidly, such as eastern Asia and Europe. In 2023, Boomers represented around half of the regular wine drinking population in Japan, France, Germany and the UK.
“Legal drinking aged Gen Z usually accounts for less than 10% of regular wine drinkers. Younger LDA wine drinkers are typically lighter alcohol users, but also more likely to explore across alcohol categories than older people, to enjoy the greater diversity of drinks that are available, including craft beer, cocktails, RTDs and low/no options.”
Today in the US, less than a quarter of regular wine drinkers are under the age of 34 and more than 40% are over the age of 55. Without fairly wholesale demographic shifts, wine’s future isn’t looking convincing.
But the industry faces a greater threat. According to a report that reviewed more than 200 studies into the impact of climate change on grape production, published in the Nature Reviews Earth & Environment journal earlier this year, a 2°C increase in the earth’s temperature could make up to 70% of existing winemaking regions unsuitable for grape growing. The study also found that about “90% of traditional wine regions in coastal and lowland regions of Spain, Italy, Greece and southern California could be at risk of disappearing by the end of the century because of excessive drought and more frequent heatwaves with climate change”.
The hard truth is that still wine faces an uncertain future. What’s also clear is that Pernod isn’t too interested in being a part of it.
