Stung by a cost-of-living crisis, consumers in Germany are spending less on wine. Pixabay (Representational Image)
Germans are buying less wine and the reason is not that they do not like the liquor anymore.
Stung by a cost-of-living crisis, consumers in Germany are spending less on wine, says the German Wine Institute.
Let’s take a look at how wine sales have plunged in Germany and how the cost of living crisis has affected the country.
Drop in Germany’s wine sales
Households in Germany bought 10 per cent less wine in 2022, Deutsche Welle (DW) reported citing the institute.
Consumer research firm Nielsen IQ says this resulted in a 6.5 per cent drop in the sale of wine in the European country over the last year.
Households in Germany bought 10 per cent less wine in 2022. Reuters (Representational Image)
Notably, these figures did not incorporate wine consumed in restaurants or other premises.
“Due to the loss of purchasing power caused by the rise in the cost-of-living, household purchases have concentrated on products that are absolutely necessary,” German Wine Institute director Monika Reule told DW.
Surge in average wine prices
As per the DW report, the average retail price of wine increased to EUR4.18 ($4.47) per liter last year.
The higher costs of glass, packaging, logistics and personnel accounted for the rise in the average price of the alcoholic drink.
The market share of German wine and Italian wines fell by one per cent, standing at 44 per cent and 12 per cent, respectively.
Spanish wines saw a rise in market share by 2 per cent, ending at 14 per cent.
The market share of French wines remained the same at 11 per cent, reported DW.
While white wine continued to be the most preferred among Germans with its share of 47 per cent, red wine’s market share reduced to 40 per cent last year.
Germany’s cost-of-living crisis
Germany is reeling from a cost-of-living crisis triggered by the COVID-19 pandemic and worsened by Russia’s war in Ukraine.
Due to the conflict, energy, as well as food prices, have heightened in the country, which heavily relies on Russian gas.
Moscow first reduced and then eventually cut off its gas supplies to Germany in 2022, stoking the energy crisis in the Western European nation.
According to Trading Economics, Germany recorded an annual inflation rate of 8.7 per cent in February 2023.
Inflation had touched a record high in Europe’s biggest economy as it climbed to 11.6 per cent last October.
In February this year, energy costs were 19.1 per cent higher as compared to the same period in 2022, while food prices were 21.8 per cent more, as per DW.
Energy as well as food prices have heightened- in Germany since Russia’s war in Ukraine. AFP (Representational Image)
A member of the German Council of Economic Experts, a body that advises the German government on economic matters, has said that it may take till 2024 before inflation comes under control.
“Inflation will also be an issue in 2024, and only thereafter will we maybe see it returning to 2 per cent,” Schnitzer told the Rheinischer Post newspaper last December.
High energy and food prices continue to keep inflation rate soaring, despite the German government’s measures to lessen the burden of skyrocketing power costs on consumers.
The 43.5 per cent annual rise in energy prices has hit Germans hard, who have been cutting back on their spending, Reuters had reported last December.
Ulrike Malmendier, an economics professor at the University of California, Berkeley, has warned that inflated energy prices can have long-term effects on consumer spending.
As per research group Prognos’ forecast, wholesale energy prices in Germany could double their pre-Ukraine war levels by the end of 2023.
A report published last October found that the high cost-of-living was a source of anxiety for most Germans, followed by a lack of affordable housing and a weakening economy.
“Germany is experiencing its highest inflation in almost 50 years. Around half of this is due to the sharp rise in energy and food prices,” the report conducted by insurance giant R+V Versicherung had said, as per DW.
“Accordingly, the fears of an explosion in the cost of living are correspondingly high.”
Joerg Angel?, senior economist at asset manager Bantleon, told Reuters last December that Germans will likely continue to avoid purchasing non-essential items.
“You can’t save on power or gas, and those are going to be more expensive” in 2023, Angel? said. “I fear that housing rents are going to increase more over the next years, and you cannot save on groceries.”
However, the prospect may improve this year, with inflation expected to decline to 6 per cent this year. The German government has predicted the situation would ease for Europe’s largest economy which will be able to escape recession.
With inputs from agencies
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