Evolving Consumption Patterns and Free Trade Agreements: Impacts on Global Wine Markets by 2020

Over the past decade Asia has become far more important in global wine consumption, while in traditional wine-producing countries consumption has continued to fall and consumers are moving to higher-quality wines. Bilateral trade patterns are being affected also by changes in real exchange rates and the signing of new free trade agreements (FTAs). This paper examines empirically the impacts of these recent developments, and also of prospective FTAs, in key markets. We draw on our model of global wine markets to project all key markets over the next five years under various assumptions that reflect current views on prospective macroeconomic developments. We conclude that (1) China looks set to continue to dominate growth in global wine consumption and imports over the remainder of this decade and thus to become a far more dominant player in Asian wine markets, and (2) recent changes in real exchange rates and (to a lesser extent) the signing of new free trade agreements will change current bilateral trade patterns, particularly for New World wine-exporting countries.