Last week’s Wine Economist probed two influential theories of the emerging global wine surplus that are based in different ways on demographic trends. I call them the “Generation Gap” hypothesis and the “Life Cycle” hypothesis. This week I present a tentative sketch of an economic theory that might also help explain global wine consumption rises and falls. I am calling it the “Economic Transition” hypothesis for now, although I am not sure that’s the best description.
The Economic Transition hypothesis seeks to explain long-term trends in global wine consumption in terms of two interrelated forces: the changing economic function of wine and changing patterns of and expectations for economic growth.
Changing Economic Role of Wine
Wine is never just one thing, so it is not a surprise that its economic function may differ over time and space. If we zoom back 100 years and look at Old World countries, which are now and were then the largest wine consumers, the bulk of wine sold had a different purpose than most wines do today. Wine was a cheap source of calories for workers who could not afford a better diet.
Wine = cheap calories? There really isn’t a better explanation of the very high per capita levels of wine consumption reported by Kym Anderson and his colleagues in their Global Database of Wine Markets, 1885-2019 (Reference: Kym Anderson and Vicente Pinilla
This Article was originally published on The Wine Economist