Navigation and Content

Dear User,

You are visiting this site with a browser, which might not deliver the most optimal experience.

You are still able to proceed, but in order to best experience this page, we recommend using Edge, Firefox and Chrome.

You are in  Global
or Select a different location

GORI WINE & SPIRITS LOGISTICS NEWS AND INSIGHTS

Welcome to the second edition of Gori Wine & Spirits Logistics Newsletter! In this edition you will find the latest industry insights and updates for 2018.

Best Regards,

Gori Wine & Spirits Logistics Team


Updates from Gori Office

  • Gori Global Flexi-Max is the ultimate flexible solution to maximize your payload and profit. Suitable for bulk liquid transportation in 40’ Reefer, 40’ general purpose container and 53’ dry van. By using Gori Flexi-Max, you eliminate the constraints of finding suitable 20’ containers and increase your loading capacity.

  • CBMA (Craft Beverage Modernization Act) was implemented to allow US Producers of wine, spirits and beer to claim lower tax rates or tax credits.  From there it was extended to also include imported wine.  As a result, your US Importer is eligible to pay a lower tax rate or receive a tax refund on the wine that they imported/will import into the US in years 2018 and 2019. These tax provisions expire at the end of 2019 unless the US Congress extends them or make them permanent.

    Importers seeking to claim lower tax rates are required to obtain the following from their foreign producers:

    • Assignment Certification Letter on Company Letterhead
    • Controlled Group Spreadsheet

    The Gori US team is here to assist you with the entire process.

Wine & Spirits Market Updates

  • Wine

    Wine

    The Global wine market is expected to grow with a CAGR of 3.5% over the forecast period of 2018-2024. With Europe being the world’s most important wine market in terms of production and consumption.

    In 2018, Global wine consumption rose 0.5% last year to 2.4 billion nine-liter cases, with consumers leaning more towards the Premium-and-Above category which grew 3.5% to 295.9 million cases, according to the IWSR’s Global Trends 2018 report. The migration towards “Premium” goods has been reshaping the alcoholic beverages industry lately, which lead many wine companies to "Premiumize" their portfolios.

    The largest growth in volume originates from the Italian market which is receiving a boost from millennials who are believed to be consuming more wine than the previous generations. Meanwhile, in the United Kingdom, overall volumes dropped as consumers are switching to other alcoholic beverages such as Gin. However, the value of the market still performed well due to the trend of drinking less quantities with better quality and the prices inflation.

    China is the fastest growing market for high quality wine. According to a recent study, China is believed to become the world’s second most valuable wine market after the US. Premium-and-above French, Australian and New Zealand wines dominated growth at the higher end of the export market largely driven by increased consumption in China.

    Rosé wines have helped in gaining new consumers in markets such as Spain, South Africa and Peru.

    Despite the growth in China and Asia, Europe still leads in per capita consumption, and China will only average at 1.53 liters by 2020, compared with France’s 43.63 liters.

    Spirits

    Spirits

    The Global spirits market is estimated to grow at a CAGR of 3.36% over the forecast period of 2018- 2026.

    There are several factors that are contributing to the growth of the spirits market in recent years such as; “Premiumization” which is considered to be the main growth driver for the spirits market. The global beverages industry is switching more towards premium products. Due to the turnaround of the global economy, the disposable income of the consumers has increased which resulted in an increase in the consumer demand for premium products and market players are coming up with new premium products to fulfill the market needs. Other factors are also contributing to the marker growth, such as: new product launches, increasing marketing and advertising campaigns by the market players. Growing mergers and acquisitions and strategic partnerships between various players in the market are also boosting the market growth, the major players are acquiring small players to increase their presence and their market share.

    Asia Pacific clearly dominated the global alcoholic spirits market in 2017 due to the presence of the key players and a trend of modernization in the region. Even though Western spirits struggle to enter the Chinese market, domestic drinks and cocktails have shown tremendous growth in the first half of 2018 and Spirits sales in China are expected to double in the next five years, with specialty spirits such as baijiu and soju continuing to dominate the market.

    Japan and India are the potential markets for alcoholic spirits. Being the most populated countries in the region, they promise a greater target group of consumers to the global and domestic manufacturers and suppliers of the alcoholic spirits market.

    Europe & North America are mature regional markets for Alcoholic Spirits, Latin America’s alcoholic spirits market is expected to grow over the coming years. Local players are capturing a significant share of the market by focusing on the famous local spirits such as: Brazil’s cachaça, Colombia’s aguardiente, & tequila in Mexico. 

    Beers

    Beers

    Beer is considered the leading alcoholic beverage globally, the global beer market is expected to reach USD 758 billion by 2023, registering a CAGR of about 6.2% during 2018-2023 which accounts for over 74.58% of the global alcoholic drinks market share.

    The global beer market is currently enjoying astounding growth rate due to the rising global population, increased harvests, and improved logistics and supply chain across the globe. The market has grown significantly due to increase in demand from countries, such as India and China. Asia Pacific is the largest and the fastest-growing market for beer consumption, which accounts for about 36.8% of the global market share.

    The regional beer market growth can be attributed to the growing youth population, increasing number of middle class and their rising disposable income, cultural changes and the adoption of western culture which have influenced perception of consumers toward alcoholic beverages, especially beer.

    The beer industry is also leaning towards experimenting with locally produced premium and international beer, as most brewers now recognize that the premium brews industry would remain the most dominant segment. Also, the super-premium beers have witnessed a rapid growth and are expected to reach the highest growth rate during the forecast period.

  • The legalization of cannabis is starting to take place around the world, in 2017, Uruguay became the first country to legalize cannabis for recreational use. Followed by Canada, having passed the Cannabis Act in June 2018. An amendment to the nation’s Controlled Drugs and Substances Act to legalize consumption, and regulate its production, distribution and sale went into effect on 17 October,2018.

    US states are also leaning towards decriminalizing cannabis for recreational use, nine states including California and Washington DC have already altered their laws and the sales of cannabis for recreational use came into effect on January 1.

    Today, many are concerned about how the new market could affect the wine, beer and spirits markets. Will the consumption of alcoholic beverages decrease due to cannabis legalization?

    The alcoholic beverage market is expected to reach $1.5 trillion by 2022, while the marijuana industry is expected to reach $146.4 billion by 2024. Regardless of the huge difference in numbers, the regulations in marijuana and alcohol play a role in the growth of their respective markets.

    A recent study in the US shed light on the issue of whether alcohol and cannabis are substitutes or complements based on evidence from medical cannabis laws. They found that cannabis and alcohol are strong substitutes. In states where cannabis is legal, monthly alcohol sales dropped 15 percent, consumers and patients are using cannabis as a substitute for alcohol.

    How are affected markets reacting to cannabis legalization?

    Tobacco companies were expected to be the most threatened by the legalization of cannabis and the most enthusiastic to join the rush. However, Alcohol companies were the first to recognize that cannabis legalization would have a huge impact on the alcohol industry and are studying opportunities to invest and understand the statistics.

    Cannabis infused beverage companies are appearing constantly in the US, mainly targeting recreationally-viable states such as Colorado, California and Nevada. Some brands are coming up with cannabis infused sodas, sparkling water, etc.

    In Canada, Alcohol sales still growing in the face of cannabis legalization, and has attracted broad interest from the drinks industry. Constellation Brands have finalized its US$4 billion (CA$5bn) investment in Canadian cannabis producer Canopy Growth Corporation. The US$4bn deal is the largest investment in the cannabis industry to date. The Canadian cannabis stocks has surged in response to the investment.

    Several other companies have started exploring the possibility of developing cannabis infused beverages, such as: Molson Coors Brewing Co. in Canada, Heineken's California-based craft brewery Lagunitas working on an India pale ale-inspired sparkling water infused with THC and rumors about Diageo considering a possible investment or alliance to make cannabis-infused beverages.

     

    The overall conclusion is that marijuana and alcohol share almost the same audience, and that may result in a negative effect on alcohol sales. This could either tie the two industries together or negatively affect one over the other.

     


Latest Industry News

High- Sulphur Fuel Ban to Start in 2020 - What Does That Mean?

The IMO – International Maritime Organization – has banned the carriage of high sulphur fuels on October 26. The carriage ban is part of the sulphur regulations concerning ship fuel which will come into effect on January 1, 2020.

The rule reduces permissible sulphur emissions from ships from 3.5% to 0.5% and makes it an offense for ships to carry fuel with sulphur content higher than 0.5 starting January, 2020.

  • The IMO – International Maritime Organization – has banned the carriage of high sulphur fuels on October 26. The carriage ban is part of the sulphur regulations concerning ship fuel which will come into effect on January 1, 2020.

    The rule reduces permissible sulphur emissions from ships from 3.5% to 0.5% and makes it an offense for ships to carry fuel with sulphur content higher than 0.5 starting January, 2020.

    The ban is a major step forward for health, environmental and fair competition interests. The objective of the new amendment is to reduce sulphur oxide (SOx) emissions from ships to improve air quality and protect the environment. A study on the human health impacts of SOx emissions from ships estimated that by not reducing the SOx limit for ships from 2020, the air pollution from ships would contribute to more than 570,000 additional premature deaths worldwide between 2020-2025. Moreover, sulphur emissions have been blamed for causing respiratory diseases and is a component of acid rain that damages vegetation and wildlife.

    There are three ways for carriers to comply to the new rule:

    • Using compliant fuel with max 0.5% Sulphur content
    • Ships will be banned from burning any marine fuel with sulphur content above 0.5% unless they are fitted with an approved “equivalent arrangement”, such as an exhaust gas cleaning system (scrubbers)
    • Running on liquified natural gas (LNG)

    Any vessels failing to comply will face fines or could face insurance validity issues or could be banned from sailing completely.

    Experts are expecting that the Sulphur cap will result in a hugely disruptive period between 2020 and 2022 for the shipping and refining industries. The price of low sulphur fuel is expected to reach around 680$ per ton in 2020, 30% more than current price of high sulphur bunkers.

    Hapag Lloyd announced that Oil industry experts estimate 0.5 percent Sulphur “Low Sulphur Fuel” will be 150 to 250 USD more expensive per ton than the current 3.5 percent Sulphur “Heavy Fuel Oil”. According to estimation this will increase global average prices per TEU by around 80 to 120 US Dollar, or about 10 percent. All alternative approaches to enable ships to burn cheaper fuels, require additional capital investment.

    While Maersk announced that based on expected differences in price between current 3.5% bunker fuel and compliant 0.5% fuel, external sources estimate the additional cost for the global container shipping industry to comply could be up to USD 15 billion. Maersk Line expects its extra fuel costs could exceed USD 2 billion.

    As well as, MSC which said it expects operating costs to rise in excess of $2 billion dollars per year as a result of the new rules.

    In October, CMA CGM said the global Sulphur cap is expected to cost customers an estimated $160 per TEU on average, which will be “taken into account through the application or adjustment of fuel surcharges on a trade-by-trade basis.”

    How will this affect the industry?

    Carriers will face higher costs for low- Sulphur fuel, which will require a complete change in their Go-To market strategies to avoid failing to pass the full cost increases along to customers. While some experts are predicting mergers of some of the biggest carriers. Shippers maybe facing a squeeze on margins but ultimately, it would result in extra costs for customers as well.


Delivering Your Precious Goods All Year Round!

Gori Wine & Spirits Logistics wishes you a happy festive season. We are looking forward to another successful year together!


Want to know more about our services? Contact us if you have any questions. Our teams are present all around the world, find your local office by visiting our website or email us.