Over the past decade, the wine industry has seen growth and diversification in a multitude of levels. From drastic production differences geographically throughout the world, to management of changing climates, to technology availability to consumers, the notion and realisation of mergers has become steadfast in an industry forged in uniqueness.
Times are changing in top wine producing countries.
Four years ago, the top wine producing countries may have been easily recognised. Spain, Italy and France were the top producers and accounted for more than 34 percent of the world’s wine production. However, new wine producers have emerged in rapid succession. Countries, including Germany, Romania, Bulgaria, Slovakia, and Armenia have increased wine production by over 20 percentyear-over-year. Oddly enough, the top wine countries have decreased production. Italy had a 4.3 percent decrease in production while Spain and France only saw minimal increases and not as big or high as Slovakia (at 80.2 percent).
The wine lifestyle is no longer confined in the top wine producers of the world. It is spreading like a wildfire all across the world. Wine productions is ramping up and new competitive countries and wineries are breeding market of mergers and acquisitions. As wine production has changed considerably so does wine logistics.
Climate and the Impact on Mergers and Acquisitions
Australia is currently producing 1.2 trillion litres of wine and today, is recognised as one of top 10 of wine producing countries in the world. But recent climate changes (some of which are devastating) have dramatically influenced potential mergers and acquisitions throughout Australia. For example, in one of the top grape production regions in Western Australia, wine makers are concerned about wine storage as extreme temperature spikes and drought conditions have detrimentally changed production and quality of wine in the region.
As climate shift and demand in production of precious wine change, mergers and acquisitions in the wine marketplace could also be rampant. Small-scale wineries without the diversification of neither geography nor production will be put to the razors edge of a merger discussion.
Mergers and the Impact on the Consumer
As the shrinking marketplace and threat of mergers or “Big Box” wineries emerges, it is critical to keep an eye on the consumer. Will there be only one wine selection at the supermarket in 10 years based on an ease of distribution and an apparent monopoly? This is where thealternative wine market has a hand in ensuring all pallets will remain satisfied into the coming decades. When hosting an evening party, a host wants to be able to reach into a cellar or wine fridge and grab a unique label that will swirl their guests in intrigue.
Tools and resources available to wine enthusiasts throughout the world, such as the wine butler service found via Singapore Wine Vault, become highly essential. In a wine butler service, the consumer hand picks a preferred selection of wines from various distributors at the click of a button, allowing for a diversified wine portfolio to choose from, without the threat of a “Big Box” merger.
Merger Updates in 2015
The wine industry saw a slight reduction in actual mergers listed from the transition of 2014 into 2015; however, one of the biggest news items came from a merger listed at approximately £100 Million. As reported by The Press Democrat, the merger came from the Kentwood Vineyards by the French wine industry giant, Pernod Ricard at F. Korbel & Brothers. Additionally, a multitude of small acquisitions, such as vineyard and acreage purchasing throughout Sonoma County, represent a model for targeted acquisitions moving into coming years.
The wine industry is no stranger to the world marketplace. Just as beer distributors and goliaths have paved a way for mergers, there are bound to be some wineries to follow. However, there is strong hope in the alternatives and niche markets as resources such as wine butlers become available to the consumer and the shadow of mergers no longer limits one from finding the perfect bottle for the perfect occasion.