The Future of the Asset-Light Business Model in Wine

In Rabobank’s Global Wine Quarterly for Q1 2017, we look at asset-light sourcing models and examine some of the mergers and acquisition (M&A) deals by companies in the wine space over the past quarter, which point to an interesting evolution in company strategies and help shed light on how the market is evolving.

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Report summary

Declining global wine inventories raise questions for some asset-light sourcing models

By Rabobank estimates, global wine inventories have been trending downward in recent years. Some view this as a move towards shortage, but we believe this marks a continued move towards balance. It will, however, have implications for asset-light wineries in some regions.

M&A activity reflects changes in the market

M&A activity in the wine industry remains robust. Wineries are exiting less profitable segments, and seeking exposure to more profitable appellations and products (including spirits).

Imports continue to gain traction in the US

US wine imports continue to grow and increasingly reflect the broader ‘premiumisation’ trend in the market. Imports from higher-value regions (France, New Zealand, Italy) are showing strong growth, while value-priced imports are generally declining.

Growing uncertainty around FX and trade

The UK’s Brexit vote and the recent US elections, among other factors, are creating significant shifts in FX rates, and notable shifts in the competitiveness of suppliers and the attractiveness of different markets.

Where to go from here