Connect with us

Markets

The World of Wine: Visualizing an Industry Ripe for Disruption

Published

on

View the full-size version of this infographic.

wine industry graphic

Visualizing an Industry Ripe for Disruption

View the full-size version of this infographic by clicking here.

Winemaking is often thought of as a symbol of transformation.

While the fermented drink dates back 9,000 years, the wine market is now experiencing its own transformation due to technological innovation, and the introduction of new business models. Generating $370 billion in revenue in 2019, the global industry is expected to grow considerably over the next decade—but not as we know it.

Today’s infographic from Raconteur explores wine consumption by region, and looks at how changing tastes are driving a new era of the millennia-old staple.

Will the industry continue to get better with age, or will it join the countless other industries that have fallen victim to disruption?

The Wine Leaders of the World

To start, let’s take a look at the countries around the world that have the biggest economic footprints linked to the trade and consumption of wine:

Exports: Spain is the largest exporter of wine globally, producing 21 million hectoliters of volume in 2018, followed by Italy with 19.7 million hectoliters.

Imports: Germany leads on imports with 14.5 million hectoliters of volume in 2018, while the UK is the second-largest importer with 13.2 million hectoliters.

Consumption: The U.S. currently leads on wine consumption, with Americans drinking an average of 3.7 liters per person—generating almost $50 billion in revenue.

RankCountryRevenue     
#1🇺🇸 United States$49.5B
#2🇫🇷 France$28B
#3🇨🇳 China$27B
#4🇮🇹 Italy$27B
#5🇬🇧 UK$24B
#6🇩🇪 Germany$17B
#7🇦🇷 Argentina$17B
#8🇨🇦 Canada$17B
#9🇮🇩 Indonesia$13B
#10🇷🇺 Russia$12B

Currently, 80% of all wine consumed within China is produced domestically, and with a growing middle class, there is a huge potential for the Chinese industry to gain ground in comparison to other leading wine markets.

Rapidly Changing Tastes

While older generations prefer wine to other alcoholic beverages, spirits are the drink of choice for those aged 18 to 27. In fact, only 27% of this age group prefers wine to spirits or beer, meaning wine companies will need to adapt to these younger audiences and their differing values.

Marketing could create an opportunity to connect with this audience in a more meaningful way, with packaging having the most potential to sway their decision making process by providing a number of unique benefits:

  • Sustainability
  • Smaller serving sizes
  • Portability

Interestingly, canned wine is already a $70 million industry in the United States — and by 2025, it could make up 10% of total sales.

New Threats to the Industry

Along with changing expectations for packaging, millennials also crave new experiences, with more alternative options appealing to this age group, such as cannabis-infused beverages, craft beer, and whiskey.

Dealcoholized cannabis-infused wine is a new product innovation that could also appeal to this audience and have direct implications for the industry—but while cannabis companies have shown an interest in the category, collaboration with the tech industry is proving to be the most transformative.

When Two Valleys Collide

Technology is squeezing every opportunity it can get out of the wine industry, impacting different parts of the supply chain.

Winemaking

Drones are making farms and vineyards across the globe more efficient, while new technologies used to improve harvesting, sorting, and filtration during the winemaking process are also cropping up and providing new solutions to antiquated problems.

Consumption

Traditionally, decanting wine has been a slow and delicate process. Smart wine decanters however, can expedite that process.

These decanters use air filtration systems to remove impurities and enhance the aroma in just a few minutes—streamlining the decanting process, which typically takes around three hours.

Impact on the Environment

Industry experts predict that packaging such as edible bottles made from sugar substitutes, and compostable, non-plastic glass will replace glass bottles.

Meanwhile, QR codes have the potential to replace paper labels on wine bottles entirely, and a growing number of wine brands are already using augmented reality to deliver more immersive experiences to end consumers.

For an industry steeped in history and tradition, the future holds exciting potential for new innovations that will transform the way we look at wine forever.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Comments

Green

New Waves: The ESG Megatrend Meets Green Bonds

With ESG investing outperforming benchmarks, could green bonds be next in line? We unpack the megatrend taking hold of the financial world.

Published

on

New Waves: The ESG Megatrend Meets Green Bonds

It’s clear that sustainable investing has been thrown into the limelight.

Increasingly, investors are seeing both the financial and social imperative for sustainable investing. In particular, the rapid growth of green bonds—a fixed income investment that is designed to raise funds for the climate or environment—is booming.

The above infographic from Raconteur navigates the growing green bond market against the backdrop of the broader ESG (environmental, social, and governance) investing shift.

Gathering Steam

By the end of 2020, $45 trillion in assets will adhere to sustainable practices, including ESG principles.

Despite the loss of confidence from COVID-19, investors flocked to sustainable-focused funds.In fact, global fund flows hit record levels for Q2 of 2020—surpassing $71 billion.

The fund flows are not without financial warrant. Between April 2015 and April 2019, average returns of socially responsible investments (SRI) outperformed their non-SRI peers. At the same time, 94% of sustainable indices realized stronger returns than their benchmarks between January and March 2020.

The accelerating demand for sustainable investments may seem like old news, but green bonds offer a new avenue.

What Are Green Bonds?

Green bonds raise money for climate and environmental projects, and are issued by governments, corporations, and financial institutions.

Multilateral development banks, which include the European Investment Bank and the World Bank, initially brought them to market in 2007, though they had a slow start. However, in 2019, new issues of green bonds topped $258 billion worldwide—jumping 51% in one year.

Across the green bond market there is a broad spectrum of different debt instruments. These include private placements, covered bonds, and green loans.

Green private placements occur when the sale of bonds are made to private investors, rather than through public offerings. Green covered bonds, on the other hand, are bonds that are backed by a group of assets that are sustainably-focused. Green loans are forms of loans that are meant to finance green projects.

Overall, green bonds can be diversified across a number of different sectors.

The Top Purposes for Green Bonds

What are the top sectors for green bond issuance?

Category20152019
Alternative energy$30.4B$143.8B
Green building$10.7B$63.5B
Sustainable transport$3.7B$58.7B
Energy efficiency$9.5B$47.6B
Sustainable water$3.1B$23.8B
Pollution prevention$1.4B$18.1B
Climate adaptation$1.8B$15.0B
Sustainable forestry/agriculture$1.1B$11.3B

Source: MSCI

Alternative energy, accounting for over $143 billion in green bonds, outpaces all other sectors by a wide margin. Within four years, renewable energy bond issuance has more than quadrupled.

Meanwhile, green building bonds are garnering attention. These instruments finance the construction of energy efficient buildings. Within the industry, a notable green building certification system is the LEED standard, also internationally recognized. Often, real estate investment trusts (REITs) are involved in issuing green building bonds.

Interestingly, Big Tech is also becoming more active within the green bond landscape. Google’s parent company, Alphabet, has issued a record $5.8 billion in corporate sustainability bonds to fund everything from energy efficiency projects to affordable housing.

The Top 10 Countries for Green Bonds

On a country-by-country level, green bonds are most common in the U.S., China, and France.

RankCountryGreen Bond Issuance2018-2019 Change (Amount)
1🇺🇸U.S.$50.6B44%
2🇨🇳China$30.1B1%
3🇫🇷France$29.5B113%
4🇩🇪Germany$18.7B144%
5🇳🇱Netherlands$15.1B105%
6🇸🇪Sweden$10.3B66%
7🇯🇵Japan$7.2B73%
8🇨🇦Canada$7B63%
9🇮🇹Italy$6.8B128%
10🇪🇸Spain$6.5B3%
Top 10 Total$181.8B49%

Source: Climate Bonds Initiative

Germany issued its first multi-billion dollar government green bonds in just 2019. One catalyst behind this was the European Central Bank’s announcement that the environment would become a “mission critical” priority going forward.

This may contribute to the fact that both Germany and France saw the biggest change between 2018 and 2019.

Opening the Floodgates

As sustainable investing becomes front and center on the global agenda, questions about its impact on returns have arisen.

During times of both extreme exuberance and market crisis, companies with higher sustainability ratings have outperformed their respective benchmark. However, there is still a long way to go. Even with the record issuance of green bonds in 2019, they make up just 3% of all global bonds issued.

As demand for sustainable investments quickly grows, could it spell a watershed decade ahead for green bonds?

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading

Markets

The 20 Most and Least Profitable Companies, Per Employee

The U.S. companies on the Fortune 500 boast $1.2 trillion in combined profit—but which bring in the best and worst profit per employee?

Published

on

The 20 Most and Least Profitable Companies, Per Employee

The Fortune 500 is an elite club of the biggest American businesses, which combined to generate profits of over $1.2 trillion in 2019.

But how much profit do these companies make on a per employee basis?

This visualization uncovers the answer by comparing the 20 companies with the most and least returns per employee, using calculations from Tipalti (based on the Fortune 500 list).

Top 20: Most Profit per Employee

Diving right in, the companies that make the most money per employee may surprise you.

Housing giants Fannie Mae and Freddie Mac take two of the top three spots, bringing in $1.9 million and $1.0 million per employee respectively in 2019.

The two U.S. government sponsored enterprises (GSEs) are major players in the secondary mortgage market, buying and repackaging nearly half the mortgages in the country. The duo was allowed to retain their profits as of October 2019, instead of returning them to the U.S. Treasury.

CompanySectorProfit per EmployeeProfits ($M)Employees
Fannie Mae
(Federal National Mortgage Association)
Financials$1,888,000$14,1607,500
KKRFinancials$1,448,699$2,0051,384
Freddie Mac
(Federal Home Loan Mortgage Corporation)
Financials$1,046,721$7,2146,892
NRG EnergyEnergy$969,631$4,4384,577
EOG ResourcesEnergy$943,103$2,7352,900
BiogenHealth Care$795,811$5,8897,400
Blackstone GroupFinancials$705,680$2,0502,905
ConocoPhillipsEnergy$691,250$7,18910,400
Enterprise Products PartnersEnergy$628,904$4,5917,300
VisaBusiness Services$619,487$12,08019,500
Simon Property GroupFinancials$560,533$2,1023,750
Gilead SciencesHealth Care$456,441$5,38611,800
OneokEnergy$443,789$1,2792,882
FM GlobalFinancials$443,391$2,4795,591
MastercardBusiness Services$436,452$8,11818,600
Cheniere EnergyEnergy$423,529$6481,530
FacebookTechnology$411,308$18,48544,942
AppleTechnology$403,328$55,256137,000
Cincinnati FinancialFinancials$384,038$1,9975,200
Massachusetts Mutual Life InsuranceFinancials$373,989$3,7019,896

Apple employs 137,000 people—the largest workforce by far among the 40 companies profiled—but still makes $403,328 per employee. Facebook is the only other tech giant to bring in more money per employee at $411,308.

Bottom 20: Least Profit per Employee

On the other end of the spectrum, Uber is one of the most well-known companies currently bleeding profits, losing $316K per employee. In fact, the ride-hailing service lost approximately $1.8 billion in the second quarter of 2020 alone.

CompanySectorProfit per EmployeeProfits ($M)Employees
ApacheEnergy-$1,123,301-$3,5533,163
EnLink MidstreamEnergy-$825,830-$1,1191,355
Brighthouse FinancialFinancials-$556,391-$7401,330
PG&EEnergy-$332,870-$7,65623,000
Frontier CommunicationsTelecommunications-$322,706-$5,91118,317
Uber TechnologiesTechnology-$316,208-$8,50626,900
HessEnergy-$229,859-$4081,775
CotyHousehold Products-$199,158-$3,78419,000
Devon EnergyEnergy-$197,222-$3551,800
Altria GroupFood, Beverages & Tobacco-$177,123-$1,2937,300
National Oilwell VarcoEnergy-$175,927-$6,09534,645
Equitable HoldingsFinancials-$171,584-$1,73310,100
Chesapeake EnergyEnergy-$133,913-$3082,300
CenturyLinkTelecommunications-$123,976-$5,26942,500
MosaicChemicals-$84,683-$1,06712,600
AlcoaMaterials-$81,522-$1,12513,800
Targa ResourcesEnergy-$77,985-$2092,680
Voya FinancialFinancials-$58,500-$3516,000
WayfairRetailing-$57,992-$98516,985
Occidental PetroleumEnergy-$46,319-$66714,400

COVID-19 has also had an intense effect on some of the companies at the bottom end of the profit per employee spectrum. Chesapeake Energy and Frontier Communications are just two examples that have filed for Chapter 11 bankruptcy in recent months—they each lost $134K and $322K per employee in 2019 respectively.

I’m pretty confident we will see more bankruptcies than in any business person’s lifetime.

James Hammond, CEO of BankruptcyData

Profit per Employee by Sector

When all the companies in the Fortune 500 are taken into account, sector-specific numbers reveal interesting trends.

Financials bring in the most profit per employee at $116K, while Food and Drug Stores see 17 times less profit at $6.7K per employee. In fact, eight out of the top 20 most profitable companies are found in the financial sector.

SectorProfits per EmployeeProfits ($M)Employees
Financials$116,228$378,4453,256,067
Technology$87,532$252,8362,888,490
Energy$85,547$75,410881,505
Media$57,947$21,634373,333
Health Care$54,679$145,1662,654,872
Telecommunications$50,636$38,251755,417
F&B incl. Tobacco$41,946$42,9241,023,317
Business Services$39,354$36,835936,000
Chemicals$27,977$11,328404,888
Apparel$26,154$7,776297,300
Industrials$25,827$27,0061,045,675
Aerospace & Defence$24,793$23,903964,100
Household Products$24,504$10,415425,038
Transportation$21,762$32,4541,491,358
Engineering & Construction$19,648$6,773344,716
Materials$13,408$6,024449,252
Retailing$10,373$67,3186,489,923
Hotels, Restaurants & Leisure$9,653$16,8801,748,714
Wholesalers$9,025$5,842647,312
Motor Vehicles & Parts$8,113$7,108876,123
Food & Drug Stores$6,746$8,3551,238,645

Interestingly, as a whole, the energy sector comes in third place in terms of profit per employee at $86K—that said, nine out of the bottom 20 least profitable companies are also found in this highly volatile industry.

Though the vast majority of businesses impacted by COVID-19 have been small to mid-sized companies, the above calculations also show that Fortune 500 companies are not safe, either.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading
Advert to view the Corvus Gold Company Spotlight

Subscribe

Join the 200,000+ subscribers who receive our daily email

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Popular