Report: Wine industry facing five unique challenges

A recently published report from Rabobank Research has outlined some of the challenges that the wine industry is currently facing worldwide.

The report notes that there are five factors that are causing issues for the global wine industry. The first is difficulty in accessing cheap freight for shipping, which the industry has historically relied on as a mainstay in keeping costs down.

The rising cost of fuel is also a concern for the wine industry, especially with regards to the cost of producing glass bottles, which is a fuel-intensive process. Increasing labour costs have also impacted some parts of the industry, though this is a regional variation.

The report further argues that geopolitics are also having widespread effects, with China’s tariff alterations on Australian wines causing a 97% drop in sales of those products in the region, and the US having applied tariffs on French wine. Similarly the Russia–Ukraine conflict will inevitably cause impacts, both direct and indirect.

Finally, many producing regions currently have tighter inventories due to weather variance or natural disasters, which is causing stress for wine producers.

The report says that the effects of these challenges are unevenly experienced depending on a range of factors such as the size of wineries and whether or not they primarily sell domestically. Individual regions are being impacted variably too, with Europe seeing disruptions in wine-growing and Australia having its largest export country, China, reduced to a minor market.

Strategically responding to these problems such as through the adoption of reusable bottles or the diversification of markets to avoid potent geopolitical issues may be necessary for wine producers to overcome the challenges.

The report, ‘Is Wine Facing a Tectonic Shift in Supply Chain Assumptions?’, is available online for Rabobank clients.

Image credit: ©stock.adobe.com/au/Szasz-Fabian Jozsef