- October 01, 2006, by Corey M. Reardon AWA Alexander Watson Assoc.
In 2004-2005 global wine production totaled 291 million hectoliters — the highest level of production since 1992. In Europe as well as worldwide, supply actually has outstripped demand. And in the “Old World” countries of Europe, where the bulk of the volume is still produced, this is of great concern.
Additionally, consumers' current preference for higher quality vintages and “New World” wines has enabled wine imports into Europe to grow over the last decade at 10% per annum. In 2005 exports — 13 million hectoliters — only narrowly exceeded imports — 12 million hectoliters.
Europe's wine market genuinely is in a state of crisis due to overproduction. Today, about 300 million liters of unwanted French and Italian wine are being distilled to make ethanol or surgical spirit, at a high cost to the taxpayer.
According to the EC, by 2011 as much as 15% of Europe's wine production could be surplus to requirements. The EC's proposed action program calls for 10% of Europe's current vineyard acreage to be pulled down voluntarily by 2011, with financial compensation for growers, plus other changes to the way the industry operates and markets its products. This situation is compounded by an overall drop in wine consumption in Europe of 0.65% per annum.
There is as yet no agreement on the way forward, but whatever the future brings, this certainly is impacting the global packaging market.
The swing to New World wines is creating a growing market for wine labels in the Americas, Australia, and South Africa. Label converters in these geographies are, therefore, enjoying dynamic growth in their businesses.
With consumers choosing to pay for better wine, wineries can afford to be creative with their labeling, which is essential for on-shelf retail visibility.
Conversely, specialists in wine labels in the key European countries are facing a difficult and uncertain business environment in a contracting market niche.
While 72% of the world's total estimated current consumption of wine labeling materials is glue-applied, markets in the New World, in particular self-adhesive labeling, are gaining and now have a 28% global share.
Self-adhesive labels also are enjoying new business from smaller wineries, where preprinted generic labels can be overprinted digitally or via thermal/thermal transfer with details of the vintage/grape varietal.
Today's younger drinkers are extending their preference for convenient packaging formats to their wine purchases. Traditional glass bottles can be “labeled” with head-to-toe shrink sleeves or decoratively etched to give an elegant bottle a second life as a decanter.
Wines packed in PET bottles, bag-in-a-box, pouches, and even barrier-coated cartons also are successfully making their appearance.
This is true on both sides of the Atlantic, and it is a trend that is creating real opportunities for converters in the narrow- and medium-web sector.
And finally, legislation is a key factor in determining the size of a label. As more and more information on origins, health warnings, bar codes, and other data becomes compulsory on a label, the printed area increases.
In conclusion, companies specializing in wine packaging and labeling should, wherever they are located, keep on top of developments in their regional market and anticipate future trends.
In Europe, there is attrition already, but viniculture is an ancient and established art, and in the long term, a new, more focused industry will grow out of Europe's crisis.
AWA Alexander Watson Assoc. is a market research consultant company for the converting and packaging industries. Visit www.awa-bv.com.