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The Trade Numerologist: Party time for global booze

28 December 2017 John Miller

December and New Year's are peak periods for global alcohol trade, which is thriving as hundreds of millions in Asia, Africa and Latin America earn higher wages and adopt Western tastes in booze.

Almost all the major exporters of the big three - wine, beer and spirits - are gaining market shares and increasing shipments, according to an analysis of IHS Markit's Global Trade Atlas, creating opportunities for specialized logistics and shipping firms, and better drinks menus around the world. It's pretty easy these days to find Westmalle, Laphroaig, and the latest St. Emilion vintages in Pittsburgh, Cleveland and Chicago.

The global beverage trade is dominated by drinks that closely tied to the place where they were first made. Nobody ships Coca-Cola across an ocean. Commoditized drinks like that are brewed close to where they're sold and drunk. What gets packaged into containers and shipped around the world is beers brewed in Belgian monasteries, wine pressed in French chateaux, and whiskey distilled in Scottish castles.

To be sure, politicians and policymakers often make and break markets. Hiking import tariffs and other taxes on alcohol is one of the easiest things a government can do. For years, big drinks companies have fought to force India to reduce its high barriers to importing foreign alcohol.

It's no surprise that France still leads the world in exporting wine.

Top wine exporters, first 9 months of 2017

France$7.2 billion (+10.8%)US$1.1 billion (-11.2%)
Italy$4.7 billion (+6.5%)New Zealand$880.7 million (+9.8%)
Spain$2.3 billion (+6.7%)Germany$811.2 million (+5.3%)
Chile$1.5 billion (+7.4%)Portugal$599.7 million (+8.5%)
Australia$1.4 billion (+17.3%)Argentina$596.3 million (-1.5%)

Eight of the world's top ten wine exporters increased exports in the first three quarters of the year. The US was the biggest loser in the global wine trade in 2017, with sales falling 11.2% to $1.1 billion. And it wasn't just because of price or currency movements. In the first nine months of the year, US wine exports fell to 266 million liters from 287.6 million liters over the same time period in 2016.

When it comes to beer, Mexico, France and Belgium registered the strongest increases in the first nine months of 2017. Mexican brands like Tecate, Dos Equis and Modelo, made by behemoths like AB InBev and Heineken, have taken off in the US and Europe. And in Belgium, where AB InBev is based and makes beers like Leffe, Stella Artois and Hoegaarden, smaller craft brews have benefited from new research that gives them longer, more exportable, shelf lives.

Top beer exporters, first 9 months of 2017

Mexico$2.9 billion (+42.3%)US$598.8 million (+4%)
Netherlands$1.5 billion (+3.1%)France$556.9 million (+26.5%)
Belgium$1.2 billion (+12.7%)Denmark$310.5 million (+2.8%)
Germany$1 billion (-4.5%)Ireland$220.9 million (-2.3%)
UK$601.8 million (-0.5%)Czech Republic$213.7 million (-6.3%)

The UK, with its Scottish whiskey makers, still dominates global spirits trade, but France, thanks to cognac, is on its heels. Mexico, whose mescals are trendy, is also boosting its spirits exports.

Top exporters of spirits, first 9 months of 2017

UK$5.1 billion (+1.3%)Mexico$1.1 billion (+9.2%)
France$3.7 billion (+9.1%)Ireland$710 million (+13.5%)
US$1.5 billion (+7.6%)Netherlands$691.6 million (+13.6%)
Singapore$1.4 billion (-2.3%)Spain$613.6 million (+16.2%)
Germany$1.1 billion (+1.3%)China$495.8 million (-3.5%)

The fastest growing beverage import markets are China, and France, which is suddenly drinking way more beer. Imports from Belgium were up 26% to $363.4 million in the first nine months of the year. There's plenty of room for growth. Tariff-laden India, which has a population of 1.3 billion, imported only $529.5 million worth of beverages in the first nine months of 2017.

Top beverage importers, first 9 months of 2017

US$17.3 billion (+4.7%)France$3.3 billion (+8%)
Germany$5.7 billion (+4%)Netherlands$3.1 billion (+0.2%)
UK$5.5 billion (-1.7%)Japan$2.5 billion (+1.6%)
China$3.8 billion (+7%)Hong Kong$2.3 billion (-2.2%)
Canada$3.7 billion (+4.4%)Belgium$2.1 billion (-0.8%)

The US dominates global beverage demand so much it's worth taking a closer look.

Top sources of US drinks imports, first 9 months of 2017

Mexico$3.8 billion (+8%)Austria$633.3 million (+11.7%)
France$3.2 billion (+6.7%)Switzerland$606 million (-6.7%)
Italy$1.8 billion (+3.2%)Canada$574.7 million (+3%)
UK$1.4 billion (+0.9%)Ireland$568.7 million (+6.9%)
Netherlands$804.6 million (-2.8%)Brazil$483 million (+26.1%)

Americans get their beer from Mexico and Netherlands; wine from France and Italy, and bottled products like Red Bull from Austria. The US, whose movies, music and advertisements still set tastes around the world, is the market to track for future trends.

Hey bartender, one El Camino, please.

What topic would you like the Trade Numerologist to cover? Emailtradenumerologist@gmail.comwith comments and questions.

The Trade Numerologist is IHS Markit's unique weekly look at global trade by award-winning journalist John W. Miller, formerly of the Wall Street Journal, using proprietary numbers from IHS Markit's Global Trade Atlas database, the world's most complete and accurate set of trade numbers.

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