Despite the poor performance of the economy, the wine industry yielded a positive volume growth relative to the previous year. The growth in production may be attributed to farmers investing in improved irrigation systems as certain parts of the country have experienced drought for the past three years. The implementation of water quotas caused by the drought led to a spike in the costs of production, possibly hampering further production of wine.
The on-consumption and off-consumption channels both saw a decline in volume. The on-consumption channel experienced the largest drop, and a similar trend can be seen across other alcoholic beverages. Lower disposable income due to the weak economy may be one of the contributing factors to the reduced demand for wine in the on-consumption channel, as consumers may be going out less often than previously.
October 19, 2018