In 2023, Pernod Ricard made headlines by selling its wine business to Australian Wine Holdco Limited (AWL), a move that included the well-known entry-level brand Jacob’s Creek. This strategic decision allowed Pernod Ricard to double down on its focus on premium products, particularly in the realms of spirits and champagne. The transaction includes the sale of a wide portfolio of strongly established international wine brands owned and produced by Pernod Ricard Winemakers, with over 10 million 9Lcs cases annually from three origins including Jacob’s Creek, Orlando and St Hugo from Australia, Stoneleigh, Brancott Estate and Church Road from New Zealand and Campo Viejo, Ysios, Tarsus and Azpilicueta from Spain.
Now, following suit, Treasury Wine Estates, the largest wine producer in Australia, is making a similar pivot. They are shedding their entry-level brands, including Wolf Blass, to concentrate on their premium offerings, with Penfolds leading the charge.
Why is this happening? The answer lies in the numbers — and the challenges. While entry-level wines have long been a volume game, the margins are razor-thin. Meanwhile, global wine consumption is on the decline, hitting its lowest point in 27 years. The Chinese market, once a burgeoning haven for wine, has pulled back significantly. The young generation’s attention and tastes are divided. At the same time, production costs are soaring, squeezing margins even further.
And it is not just demand that is changing; the supply side is shifting too. Global wine production is now trending downward. This is due to economic recalibrations following periods of overproduction but also to the increasingly unpredictable climate. In France, the situation has become so pressing that the focus has shifted towards uprooting some vines.
This combination of factors is driving the industry to recalibrate, with major players pushing towards the premium end of the market, where higher margins can be sustained — assuming, of course, the brand strength is there to support it.
But as the giants consolidate their positions, what does this mean for the small producers making fantastic wines? In this increasingly challenging environment, one can only hope that those crafting exceptional wines, without the backing of a global brand, can continue to find their place.
Wine is more than a product; it is a cultural cornerstone. It remains a vital thread woven into the intricate tapestry of social interactions. It has always bridged cultures, generations, and hearts. As the industry evolves, we must ensure that wine remains valued, shared, and accessible to all.
Ludovic Tendron’s Biography
Starting my career as a lawyer with Hewlett Packard in 1998, I quickly realised my passion lay in the dynamic worlds of hospitality and luxury. I joined the Accor group in 2000. I dedicated 14 years to honing my expertise in hotel development, asset management, legal matters, and forging valuable brand partnerships. This journey has given me a profound understanding of the hospitality industry.
In 2014, I founded my consultancy firm (Ludovic), providing strategic advice on business development in the hospitality, luxury, and lifestyle sectors globally. My work encompasses, among other things, the negotiation of pivotal hotel contracts, crafting of valuable partnerships, sourcing of projects, distributors and investors, M&A, and hospitality events.
Recognising the power of memorable gastronomic experiences, I launched Vitisasia in Singapore in 2011. Through exclusive dinners featuring celebrity chefs, top wine producers, luxury brands, and media, I have refined my attention to detail and the ability to anticipate needs. These events not only enhance the guest experience but also contribute to a robust network and a holistic understanding of the hospitality and luxury business beyond contractual terms.
Negotiation is at the heart of my activities, a skill I have mastered over the years, culminating in the publication of my book, “The Master Key: Unlock Your Influence & Succeed in Negotiation,” and the launch of my podcast, “CEO Insights.” I offer bespoke negotiation training and groundbreaking speaking engagements to clients and their executives, empowering them with the tools to succeed at negotiating.
Inspired by historical figures who utilised wine and gastronomy as an influential tool, I have seamlessly integrated culinary experiences into my negotiation tactics, leveraging them to achieve remarkable results.
I am passionate about gastronomy, love to entertain and create memorable experiences. I am also a wine lover and collector. From 2011 to 2018, I set up and managed a wine fund named Wine Legends, focusing on the acquisition and investment in fine wines. This experience deepened my understanding of the wine industry and its potential as an asset class.
For more on the latest in business and opinion reads, click here.
