AWA releases wine labelling report

AWA Alexander Watson Associates has published a review of the global and regional wine label markets emphasising the growth in pressure-sensitive labels in the segment. Below is an executive summary

The global market for wine labels in 2009 is estimated at 575 million square meters, with an annual growth rate to 2013 forecast as between 3% to 4%, depending upon production and consumption patterns.

The market share of the global market enjoyed by the pressure-sensitive label formats continues to increase from the 55% share recorded in 2009.

Glue applied label formats have lost their dominance in the market, and continue to lose share from the 45% level reported for 2009.

Global Wine Label Formats – 2009Source: AWA

The volumes of wine labels by region are shown in the following chart:

Regional Use of Wine Label Materials – 2009Source: AWA

The regional shares in the global wine label market are directly influenced by the relative proportions of regional wine production and are shown in the following exhibit:

Regional Wine Production – 2009

Growth rate of ‘clear-on-clear’ pressure-sensitive films based on PP face stock and PET release liners have stabilized as ‘no-label look’ applications peak.

Materials Used for Wine Labeling - 2009 Source:  AWA

A major driver in packaging and decoration technologies is the consumer’s demand for convenience. This applies equally to wine as to other consumer goods and services. This demand for convenience has been recognized by wineries as the basis for future growth, and has stimulated development of innovative, convenient packaging for high quality wines in competition with the labeled glass bottle.

 Market Share, % Volume Wine Sales – Bag-in-box

A wide variety of factors impact the future use and growth in wine labels. These include:

Global wine production in 2009 totaled 268 million hectoliters – essentially a static situation on 2008 and comparable to levels in 2003 (264 million hectoliters)

The production levels of wines in 2009 by ‘Old World’ countries are estimated at ~182 million hectoliters, the balance being produced in ‘New World’ regions and countries

Regional Wine Production – 2009Source:  OIV, AWA

Country Shares of Global Wine Production – 2009

The potential global growth of wine, and – directly – the growth and regional use of wine labels, was adversely affected by the changing patterns of consumption in key western European markets – Italy, France, Portugal, and Spain – and by the slowdown in demand in the USA. Much of the slowdown can be attributed to the economic crisis of 2008/2009, but there are also indications of lifestyle changes in traditional wine drinking countries within Europe.

World wine markets supply/demand equilibrium has continued to produce excess wine volumes. While significant quantities of over production are necessary for the production of distilled spirits and fortified wines, there remains a significant volumes of wine held in storage annually that impact average market prices.

World Wine Market Supply/Demand EquilibriumSource: OIV

As a result of the economic crisis there has been a re-alignment of consumer price perceptions with an increase in demand for lower/medium priced wines away from premium priced products.

The combined impact of excess production over consumption and of consumer price perceptions leads to a lower, average unit price for bottled wines and, in consequence, on the price expectations of packaging materials – including labels.

Consolidation has been a growing trend in the fragmented wine industry in recent years. More and more regional and national players have repositioned themselves as global wine producers to capitalize on demand for wine in developed and emerging markets. Again, this consolidation at the end user will bring cost and price pressures to bear on label producers.

November 2010