Dealcoholized wine: a growing market

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Are you ready for the breakthrough of non-alcoholic wines?

Consumer demand is growing and the market has a lot of potential: this is why producing non-alcoholic wines sounds like good business.

We are returning to the subject of non-alcoholic wines for the third time because the topic is getting interesting.

Before turning up our noses, let us try to understand the facts, starting with a first irrefutable point: in the world, 50% of the adult population does not consume alcoholic beverages. Whether the reasons are religious, health or even taste, the result does not change: there is a whole target to reach that defining it as strategic would be reductive.

But who are these consumers? Surveys have identified very specific profiles of consumers of partially or fully non-alcoholic wine: certain age groups (e.g. many young people looking for alternatives to alcohol), women, who show a greater interest in these products, people over sixty (for health reasons) and people in specific situations (pregnant women, sportsmen, those with health problems such as diabetes or liver disease).

Although today the global market is dominated by beer, whose producers have been moving towards de-alcoholisation for years, the market for non-alcoholic wines shows great potential. In 2021, the de-alcoholisation market was worth €7.5 billion, including €322 million for partially or fully non-alcoholic wine (the main markets are: France with €166 million, Germany with €69.3 million, Italy with €30.6 million and Spain with €15 million). By 2025, the global de-alcoholisation market could account for a total value of USD 30 billion, 80% of which will be represented by non-alcoholic beer.

However, net of the overwhelming power of beer, the following graph, which takes into account partially and fully non-alcoholic wines, aromatised wines and unflavoured wines, shows that the growth prospects are impressive: between plus 7% and plus 10% annual growth, in all regions of the world. Over the same period, the prospects for annual growth in ‘classic’ wine consumption are estimated at 1%.

Photo credit: Giulia Romualdi – AgroNotizie®

If we consider non-alcoholic wines by category, the sales of partially or fully non-alcoholic still wines increased by 13% and the sales of partially or fully non-alcoholic sparkling wines by 5.6% over the period 2018-2023.

A second point is closely related to the fact that the annual consumption of alcoholic beverages per person in the countries that have traditionally been the largest consumers, has been declining for some years. In 2022, according to Wine Intelligence data, one third of consumers in the United States decided to decrease their alcohol consumption, 36% in Japan, 56% in Australia and 58% in Switzerland. As for Europe, according to the Wine Observatory of Unione Italiana Vini analyses based on the World Bank data, alcohol consumption for each person has undergone an average annual decrease of 3.2% in Italy, 1.8% in the United Kingdom, 1.4% in France and the Netherlands and 1% in Germany.

Therefore, can non-alcoholic wine take on – or take back – consumers who are not exactly alcohol addicts? This is where the forecasts of the Iwsr Drinks Market Analysis institute come in, according to which, in 10 key markets, the low and non-alcoholic wine category will show an average annual growth of 8% in terms of volume (2021-2025). In particular, still low and non-alcoholic wine is expected to grow by over 20% (2021-2025) and to double its volume by 2025. The key players in these new trends will be young people in their 20s and 30s, precisely the generation that the traditional wine world struggles to appeal to.

Another study carried out by Messe Düsseldorf, the organiser of ProWein, which surveyed wine retailers from 16 markets, mapped out the markets most interested in the trend: the United Kingdom leads the way (53%), followed by the Netherlands (43%), Finland (36%), Germany (34%) and Norway (33%). The fact that the UK is chosen as the key market is also influenced by a strictly economic reason: the British tax system applies very low or even no charges on low-alcohol products. And this could be a further strength for this type of product.

As regards wine types, white wines (73%) and sparkling wines (58%) lead the low and non-alcoholic wine category, followed by rosés (37%) and, lastly, red wines (27%). There is also a technical reason for this: dealing with white wines is easier than red wines, with which the manufacturer has to work mainly on excess tannins.

With regard to the legislative aspects, the possibility of producing non-alcoholic wines in Europe was introduced for the first time by the 2023-2027 CAP approved in October 2021, followed by the EU Regulation 2021/2117 dated 2 December 2021, which authorised and regulated the production and marketing of partially or fully non-alcoholic wine in the European Union, finding a compromise between ‘generic wines’ and wines with a protected designation of origin: the green light was granted for the de-alcoholisation of ‘generic wines’ (alcoholic strength below 0.5%) and partial de-alcoholisation for PDOs and PGIs (alcoholic strength above 0.5%).

The new CAP has therefore opened the way, but it was not enough for Italy because there was still a major barrier to this practice: the Testo Unico del Vino, which envisages heavy fines for those who store wine with an alcoholic strength below 8 degrees in their cellars.

An obstacle that has now been dealt with, and rather surprisingly after Minister Lollobrigida’s initial clear-cut closure, by the Ministry of Agriculture, Food Sovereignty and Forestry (Masaf) by sending the professional organisations a draft of a decree, concerning non-alcoholic and partially non-alcoholic wines, drawn up following various debates with the Customs and Monopolies Agency (Adm) and the Department of central inspectorate for fraud repression and quality protection of the agri-food products (Icqrf), which opens the way for their production in Italy: ‘It is possible to partially or almost fully reduce the alcohol content of wines,’ the text states, however only wines without a designation of origin and geographical indication can undergo the de-alcoholisation process’.

After months of tug-of-war, therefore, even the government realised that the ban would only lead to a competitive advantage for those who already produce this type of wine, namely all the Italy main competitors, Spain and Germany above all. However, compared to these same countries and to the CAP in general, Italy is holding its ground on PDOs and PGIs, restricting the possibility of de-alcoholisation and partial de-alcoholisation only to generic wines. The CAP, on the other hand, as mentioned above, had also given the go-ahead, but only in relation to low-alcohol wines.

Here are some points from the draft decree:

Art. 2

(Methods of execution)

  1. Only wines without designation of origin and geographical indication may be subjected to the de-alcoholisation process.
  2. At the end of the partial and/or full de-alcoholisation process, the oenological practices and treatments referred to in the applicable regulation may be carried out on the products obtained.
  3. The labelling of products obtained as a result of the full or partial de-alcoholisation process shall bear the words ‘de-alcoholised’ or ‘partially de-alcoholised’ following the relevant category and the other indications referred to in Article 40 of Regulation 2019/33. The category and the term ‘de-alcoholised’ or ‘partially de-alcoholised’ shall appear on the label in a homogeneous text with a font of equal graphic impact.
  4. The de-alcoholisation process may only take place in plants with a tax warehouse licence for the production of alcohol. Until a specific telematic feature is implemented, the individual processes must be communicated in advance, no later than the fifth day prior to their execution, via certified e-mail (PEC), to the relevant territorial offices of the ICQRF and the ADM, according to their jurisdiction.

Obviously, and it could not be otherwise, point 7 is the most controversial.

In other words, de-alcoholisation can only be carried out at distilleries and under the control of the Customs Agency. The wineries have the task of bottling the product. Moreover, the alcohol resulting from the de-alcoholisation process may only be used for industrial purposes.

A choice that did not please the wine producers, who have long been waiting for the green light to be able to undertake low and no-alcohol production in Italy as well (many have had to resort to their own factories outside the country to achieve this) and who would instead see themselves overtaken on the right by the spirits industry.

Will further indications/amendments arrive? We will have to wait and see, in the meantime a first necessary step forward has been taken.

Sources: Gambero Rosso – Wine News – AgroNotizie – Unione Italiana Vini