The World Of Wine: Visualizing An Industry Ripe For Disruption

Winemaking is often thought of as a symbol of transformation.

While the fermented drink dates back 9,000 years, Visual Capitalist's Katie Jones points out that 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 each year—generating almost $50 billion in revenue.

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.

Why are rhodium prices on a roll?

When anna scott left her Honda Jazz in a commuters’ car park outside Oxford on January 10th, she had little reason to think that criminals would take an interest in the 12-year-old car. Yet the next afternoon a group of shifty characters were spotted sawing off its catalytic converter. Such incidents have become more frequent across Britain as prices for palladium and rhodium, metals contained in the devices, have rocketed. The price of rhodium has risen by 63% in the first three weeks of January alone, to $9,850 per ounce, around six times that of gold. There is no telling when it will fall back to earth.

Demand from carmakers is surging. More than four-fifths of global demand for rhodium comes from the automotive industry. The metal, together with platinum and palladium, helps convert toxic gases in a vehicle’s exhaust system (such as carbon monoxide) into less harmful substances before they leave the tailpipe. Facing stricter emissions regulations around the world, carmakers are taking even more of a shine to these metals. Although the price of palladium has reached a record high, that of platinum has stayed relatively stable. The contrast reflects a shift in production towards petrol and hybrid cars, which tend to use greater quantities of palladium in their converters, and away from diesel engines, which use more platinum.

Rhodium is used in both petrol and diesel cars. That is because it is especially good at cleaning up nitrogen oxides, says Roger Breuer, an analyst at Arlington Group Asset Management, an investment firm. Another reason its price is sky-high is the tightness of its supply. More than four out of every five ounces of rhodium are mined in South Africa, extracted in minuscule quantities alongside more abundant metals such as platinum, palladium and gold. According to an analysis by Stantec, a consulting firm, a mine in the Waterberg region of South Africa due to begin development this year will produce 63% palladium, 29% platinum, 6.5% gold and just 1.5% rhodium.

The small size of the rhodium market (just 792,000 ounces last year, about 1% of that of gold) makes it prone to huge price swings. In 2008, after mining in South Africa was interrupted by blackouts, the price climbed above $10,000 an ounce. This time, a lack of capital investment has squeezed supply, according to Impala Platinum, the world’s second-biggest platinum miner.

Rhodium is expected to remain in high demand this year. basf, a German chemicals giant, reckons that Chinese carmakers’ demand for the metal will increase by 40% in 2020. But because electric vehicles do not use catalytic converters, demand in the longer term is far from assured. Rhodium could quickly lose its sheen

Oil Is The Only Way Back Up For Venezuela

There’s only one path to rebuilding Venezuela, and it’s paved with oil. For the time being, that path leads nowhere.

The key to controlling everything now lies with the National Assembly, the only body with the power to hand out oil licenses—and Maduro’s recent scheme to retake control of the country’s oil may just have been foiled by more Trump sanctions. 

Venezuela is the 12th largest oil producer in the world and home to the world’s largest oil reserves--all of which is irrelevant as long as it remains in the throes of a deep economic and humanitarian crisis amid runaway corruption, a devalued currency and crippling sanctions by the U.S. and the EU.

Maduro’s attempt to cling to power is relentless, but in his quest this past week to take control of the oil industry, Washington was paying close attention. And now, the rogue president and his government have suffered another major blow, with the US imposing fresh sanctions on seven Maduro acolytes. 

Legislative Crisis

Last week, Venezuela plunged into a major legislative crisis after soldiers and pro-Maduro supporters barred U.S.-backed opposition leader Juan Guaidó and his deputies from entry into congress before quickly naming Luis Parra, a former opposition lawmaker who recently defected to the Maduro camp, as head of a pro-government assembly.

Maduro loyalists and Guaidó’s opposition legislators engaged in a showdown of claims and counterclaims that left neither side with clear control of the assembly.

Diplomats and energy consultants see the latest drama as a move by Maduro to continue to cling to power by gaining control of congress and legitimizing investments by Russian, Chinese and other deep-pocketed investors in a bid to revive the country’s collapsing oil industry. 

Russia, China, India and Turkey have been demanding legal security from Caracas even as they look to tap the country’s cheap energy and mining assets.

Venezuela’s national assembly is the last independent government institution with the sole mandate to legally approve oil-licensing deals, thanks to a law crafted by Maduro’s leftist predecessor, the late Hugo Chávez, which gave state oil monopoly PDVSA (Petróleos de Venezuela) majority financial stakes and mandatory operational control. 

Had the congress takeover been successful, Maduro’s supporters would have been in a position to draft a new law that would confer legal powers to foreign companies to run day-to-day operations for oil projects in the country.

It would have been similar to Mexico’s massive energy reforms (now being undone) that opened up the country to foreign investors and destroyed a state-run monopoly. Under any other circumstances, the West would have been rather excited at this prospect—but not where it concerns Venezuela. 

“This whole operation reflects the extreme necessity of the regime to try and give legitimacy to contracts, especially in the oil sector,” Luis Stefanelli, a former opposition lawmaker who went into exile to escape state persecution, told the WSJ.

Venezuela’s Crude oil production has plunged from 3.2 million barrels/day before President Obama imposed the first sanctions on the country in 2015 to just 700,000 barrels/day currently due to the international sanctions even as the government lacks funds to maintain derelict oil infrastructure.

Meanwhile, the country’s economy has contracted 60%, clearly underlining the importance of oil to the country’s coffers.

Moscow to the Rescue?

Caracas will no doubt be counting on Moscow to come to its rescue-- as it has done several times in the past.

Russia has repeatedly expressed unflinching support for Maduro, going as far as providing military support even after Washington prohibited its allies from doing any business with the nation. Washington has in the past accused Moscow of providing assistance to Caracas in the movement of gold and oil, helping to finance, market and ship the commodities in ways that circumvent U.S. sanctions.

Make no mistake about whose side Russia is on in the latest saga: The nation was one of the few nations to brazenly applaud Maduro’s latest antics. But that’s because it wants a return on its investment, in the least.

Maduro remains the de facto head of state thanks to the backing of the armed forces, in addition to the backing of heavyweights like Russia, China and India who salivate at the prospects of exploiting the nation’s vast mineral riches. 

Guaidó, on the other hand, is the legitimate leader of Venezuela’s Congress and also enjoys the backing of the United States; however, his support could be weakening as evidenced by dwindling volumes of followers at his rallies.

And certainly, Maduro and his cohorts are already devising a new workaround to thwart Washington’s efforts.

Jay Park, the CEO of oil and gas explorer Recon Africa, is a Latin America expert who helped Mexico’s Pemex seal its first-ever joint venture deal. He knows the region better than most, and he is an expert at navigating the oil-political nexus. 

In the case of Venezuela, Park told Oilprice.com that it’s difficult to see Maduro leaving anytime soon. 

“He’s survived U.S. sanctions and local opposition, and no one seems willing to take the military step to show him the door,” Park said.

“Even if they did, it would take a number of years for Venezuela’s oil industry to come back.”

Bitcoin Is Quantitatively Tightening

On May 2020, bitcoin (BTC) will see its next halving: the reduction of the reward for successfully mining a block. The Nakamoto white paper specifies that every 210,000 blocks, the reward for successfully mining a block is cut by half. But while these halvings occur roughly every four years (with the estimated reward dropping to one Satoshi on or around the year 2140), the Bitcoin Halvening of 2020 is particularly momentous. 

At present, the reward for mining a block is 12.5 BTC; in May, the reward for successfully adding a block to the blockchain will drop to 6.25 BTC per block. The current annualized rate of “inflation” (some disambiguation regarding this later) is between 3.7 percent and 3.8 percent: an average of 144 blocks mined per day at 12.5 BTC each, yielding approximately 1,800 new BTC each day. 

(A quick point of disambiguation: To describe the expansion in size of bitcoin’s outstanding number of coins as inflation — what might be called the “float” in equities or the “money stock” in more conventional currencies — is consistent with an older definition; in the same sense, new gold being mined is, with respect to the existing, above-ground gold stock, “inflationary.” But today, the term inflation is used to describe, and assumed to mean, an increase in general price levels within an economy. In fact, from the perspective that with increasing value one bitcoin buys more over time, it is indisputably deflationary.)

What’s noteworthy about this point is that, upon this particular halving, bitcoin “inflating” at a roughly 1.8 percent rate annually will nominally — and by then, quite possibly in real terms — be “inflating” at a rate lower than both the Federal Reserve target of 2 percent per year and current, CPI-based estimates of real U.S. inflation of 1.9 percent annually.

Testing on Human Beings; No Institutional Review Board Required

In light of the broader field of monetary policy worldwide, the upcoming Halvening will come at a particularly auspicious juncture. Despite considerable efforts over more than a decade, the Federal Reserve (and other central banks) has attempted and failed to engineer a rate of inflation (in the case of the Federal Reserve, of 2 percent) even after vastly expanding the size of the Federal Reserve’s balance sheet and undertaking numerous other expansionary programs.

Even casual observers of global central banking practice will note that the apparent inability of the Federal Reserve, the European Central Bank, the Bank of Japan, and other such institutions to manufacture inflation has not led to some newfound respect (let alone humility) in light of their demonstrated lack of understanding of so powerful a force. Even a cursory review of history reveals that inflation is second only to war where forces laying waste to civilizations are considered.

To the contrary: Legions of economists within these (usually) quasi-public entities have redoubled their efforts, embracing unconventional policy implementations, the most recent and well-known of which are sequential phases of quantitative easing. Whether Federal Reserve economists have forgotten or don’t care that billions of real human beings toil beneath their policy machinations is an exercise for the reader to consider. 

Indeed, despite scores of warnings about the alleged dangers of low inflation, the drumbeat of statistics and other reports citing the deteriorating character of U.S. household finances leads one to question exactly what impact the Federal Reserve thinks that raising prices by several percentage points would have on tens of millions of families.

Contrarily, bitcoin’s limited supply has always been a draw for investors and spenders cognizant of the effects of inflation on purchasing power. With the rate of production of bitcoin via mining taking place at a rate less than the Federal Reserve’s stated target rate (and possibly less than the real rate of inflation), in May 2020, bitcoin may have economically incontestable reasons to become a legitimately competitive store of value versus most of the other world currencies. Part of that, of course, hinges critically upon price volatility.

Quantitative Easing versus Tightening

One may argue — I certainly am — that by algorithmically limiting the ultimate number of bitcoin that will ever exist, and further by making their origination (via mining) adhere to a predictable, transparent, and decrementing character, bitcoin (and more specifically the Hashcash proof-of-work protocol) closely approximates a monetary policy implementation known as qualitative tightening. That is to say, economically speaking, it is the diametric opposite of the qualitative-easing campaign that central banks are continuing to tinker with, at our peril.

This will undoubtedly add to its attractiveness and, barring the outbreak of extreme volatility, will likely increase its store-of-value characteristics. Many people believe that the Halvening of 2020 will spark a new uptrend in price, but that is far from certain. 

Although the market for bitcoin (and cryptocurrencies, more generally) is more liquid and transparent now than it was at the last halving, much, if not all, of the effect may already be priced in. Sentiment surrounding bitcoin has cooled in the last 18 to 24 months, and the entire crypto complex has traded differently since BTC futures contracts were introduced on the Chicago Board Options Exchange and subsequently cancelled (although they continue to trade on the Chicago Mercantile Exchange). 

The Bitcoin Halvening of 2020: Compelling Prospects 

There are plenty of reasons for which the arrival of bitcoin (and cryptocurrencies broadly) as an asset class a bit over a decade ago has been a most fortuitous development, not least of which is the increasingly experimental bent of central banks around the world. Alongside that are political candidates endorsing central planning and, to accomplish them, stooping to embrace outlandish monetary theories. 

Add to those reasons not only an algorithmically scheduled, predictable rate of inflation (again, in the antiquarian sense), but rates that are lower than both nominal and real rates of inflation, and bitcoin’s use case begins to look increasingly less speculative.

All The World's Wealth In One Visualization

The financial concept of wealth is broad, and it can take many forms.

While your wealth is most likely driven by the dollars in your bank account and the value of your stock portfolio and house, Visual Capitalist's Jeff Desjardins notes that wealth also includes a number of smaller things as well, such as the old furniture in your garage or a painting on the wall.

From the macro perspective of a country, wealth is even more all-encompassing — it’s not just about the assets held by private households or businesses, but also those owned by the public. What is the value of a new toll bridge, or an aging nuclear power plant?

Today’s visualization comes to us from HowMuch.net, and it shows all of the world’s wealth in one place, sorted by country.

Total Wealth by Region

In 2019, total world wealth grew by $9.1 trillion to $360.6 trillion, which amounts to a 2.6% increase over the previous year.

Here’s how that divvies up between major global regions:

Last year, growth in global wealth exceeded that of the population, incrementally increasing wealth per adult to $70,850, a 1.2% bump and an all-time high.

That said, it’s worth mentioning that Credit Suisse, the authors of the Global Wealth Report 2019 and the source of all this data, notes that the 1.2% increase has not been adjusted for inflation.

Ranking Countries by Total Wealth

Which countries are the richest?

Let’s take a look at the 15 countries that hold the most wealth, according to Credit Suisse:

The 15 wealthiest nations combine for 84.3% of global wealth.

Leading the pack is the United States, which holds $106.0 trillion of the world’s wealth — equal to a 29.4% share of the global total. Interestingly, the United States economy makes up 23.9% of the size of the world economy in comparison.

Behind the U.S. is China, the only other country with a double-digit share of global wealth, equal to 17.7% of wealth or $63.8 trillion. As the country continues to build out its middle class, one estimate sees Chinese private wealth increasing by 119.5% over the next decade.

Impressively, the combined wealth of the U.S. and China is more than the next 13 countries in aggregate — and almost equal to half of the global wealth total.