As pressures converge, wine is learning to move differently

There was a time when wine, particularly at the premium end, moved with certainty, built on habit, occasion and the gradual development of taste. That certainty is harder to find now. Globally, consumption fell again in 2024, down around 3 per cent according to the International Organisation of Vine and Wine, continuing a longer decline that has seen billions of litres fall out of the system. In Australia, the pattern is parallel, with per capita alcohol consumption falling to 9.8 litres in 2023–24, although the impact is not evenly felt across the category.From several directions, the wine market is evolving, all at once. Global consumption is edging down, younger drinkers are stepping back and the occasions that would traditionally belong to wine are being reallocated to craft beer, spirits and RTDs. Layer in sustained cost pressure and a trading environment recently shaped by tariffs and geopolitical conflict, and the effect becomes cumulative. None of this is new on its own, but together it is starting to change how wine moves from vineyard to shelf. The perfect stormThe base of the category is changing, and young consumers are not replacing older wine drinkers at the same rate, favouring moderation, alternative categories or plain abstention. In Australia, per capita alcohol consumption has been trending downward for more than a decade, while Wine Australia notes participation among younger cohorts is fragmented. Globally, the IOVW reports consumption is at its lowest level since 1961. Aside from abstention, there is competition, beer, spirits and ready-to-drink formats are now taking hold in moments that wine once occupied with ease. In Australia, wine still leads as the largest category overall, but its position is no longer as assured, with consumption easing back to levels last seen in the mid-2010s, according to the Australian Institute of Health and Welfare. Beer, by contrast, continues to hold its ground, particularly in more casual settings, while craft has expanded its presence over the past decade, accounting for about 13 per cent of the Australian market. Overlaying this is a more complex trading environment, where tariffs, geopolitical tensions and cost-of-living pressures are all feeding into weaker, less predictable demand. For wine titan Treasury Wine Estates, the strain is visible in numbers with the share price down more than 60 per cent in over two years. The loss of momentum in China following tariffs, alongside modest performance in the US as lower-priced wine lingers in inventory, proves a category under pressure across multiple fronts. At the same time, rising living costs and global uncertainty are weighing on discretionary spending. For Kyla Kirkpatrick, CEO of Emperor Champagne, that caution is already visible. “There is strength at the top of the market with vintage champagnes and top clients who are still spending on rarities however the middle of the market is softer,” she told Inside FMCG. “I have definitely seen a retraction in recent weeks with caution over the war and cost of living increases…”How the industry is adjustingIn response, the industry is adjusting across multiple fronts, from pricing and ranging to format and positioning. At Treasury Wine Estates, the focus has moved further toward premium and luxury segments, where margins remain stronger. In Victoria’s Yarra Valley, Zonzo Estate, owner Rod Micallef has spent the past few years moving beyond traditional wine formats, introducing spritzes such as their famous limoncello spritz in a bottle, Zoncello, as well as lighter expressions designed to better align with how consumers are drinking. Emperor Champagne, on the other hand, is sustaining demand through education, service and close customer relationships that reinforce the value behind each bottle, particularly when that bottle is a $500 Dom Pérignon. “We need to communicate the nuances of the wine, the history of the Maison and the uniqueness of the champagne,” Kirkpatrick said. “We can’t just expect these wines to jump off the shelf.”Wine has always traded on time, time in the vineyard, time in the cellar, time in the glass. What is becoming less certain is whether it still has time on its side as a category, as the perfect storm brews across consumption, competition and global markets all at once. Demand has not disappeared, but it is harder won, spread more thinly and less predictable than before. For retailers and producers alike, the challenge is to earn their place, again and again, in a market that may for the time being, no longer be willing to do it for them.