GLOBAL: World wine sector in good health - Vinexpo CEO

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The organisers of the world's largest wine exhibition, Vinexpo, have refuted suggestions that the global wine sector is facing a crisis of confidence as big companies look to dispose of assets.

Vinexpo's chief executive, Robert Beynat, used projected sales growth in both volume and value to argue that the world wine sector remains in good health. 

The figures, released today (12 January), come amid a series of asset sales in the wine world. Constellation Brands has agreed to offload its UK and Australian divison for a mere AUD290m (US$290m), while Brown-Forman, Foster's Group and Remy Cointreau are all considering sell-offs in 2011. Pernod Ricard spent 2010 pruning its own portfolio as many producers continued to battle overproduction, volatile exchange rates and poor margins.

Vinexpo's chairman, Xavier de Eizaguirre, denied that some of the world's top drinks companies are losing confidence in wine. "Some of these big companies are looking for very quick returns," he told just-drinks in an interview. "Some of them also operate in spirits, where they are used to double-digit growth every year. In the wine business, it's a different story," he said.  

Vinexpo figures show that consumers are expected to continue trading up to higher priced wines over the next four years. Consumption is set to increase by 3% up to 2014 in volume terms, with the strongest growth expected in wine sold for more than US$5 per bottle, according to the figures, which were compiled by IWSR.

As for the world's wine surplus, this is set to fall from 8% in 2009 to 6% in 2014.

Some of the strongest value sales growth will take place in the US, where wine sales are set to increase by 9% to $23.8bn by 2014. This will make the US wine sector almost $10bn more valuable than its nearest competitor, the UK, and underlines why Constellation Brands is so keen to refocus its business on premium wine in North America.

In terms of volume, the UK is predicted to remain the world's top wine importer. Volume sales in the UK should increase by 2% up to 2014, but de Eizaguirre said that retailer consolidation will continue to squeeze returns for producers. "Retailers are the only ones making money in this country," he said.

Emerging markets in Asia and Eastern Europe will also continue to prosper over the next four years, but these are not expected to match the top western markets in value and volume terms during this period. China's wine market is forecast to rise in value by 31% to $6bn by 2014.

De Eizaguirre, who is also MD of Baron Philippe de Rothschild, said that most major wine groups and chateaux will seek to invest in China at some stage. Concerning his own wine group's ambitions in China, he said: "It's certainly an area that will be investigated. The question is how we do it and with who." 

Vinexpo will take place this year in Bordeaux between 19 and 23 June.

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