With the 2020 harvest imminent, growing conditions in Europe have been proceeding without any climate extremes. May’s fungus pressure in the Languedoc and Castilla-La Mancha was subsequently brought under control and there are no reports of anything looking short. This, combined with COVID-induced retail sales uncertainty, means bulk wine activity in Europe, as in many markets across the world, has been hesitant and conservative, even for what is a traditionally quiet period of the year.
The respective Emergency Distillation Plans in France, Spain and Italy are still being ironed out and, until they are, will be a further drag on activity – especially in France and Spain where oversupply on some wines in some regions is a serious headache with harvest just days away. Italy, meanwhile, has been having a better time of it in terms of sales: Pinot Grigio bottlings were in fact up 15% in June on the same month of 2019, while exports to the US have benefited from being tariff-free unlike their French competitors (which have faced a 25% rate since October), and the continued sales surge in the US off-trade. Suppliers in all three European countries, however, are bracing themselves for a slump in inward tourism this summer due to COVID-19, as well as an expansion of the US tariff programme on EU wines: see this month’s ‘US Tariff Update’.
While Europe enjoys the summer sun, Argentina and Chile have been experiencing their first ‘normal’ winters for many years: serious snowpack is being laid down in the Andes (rather unhelpfully for cross-border trucking); Chile experienced its rainiest June for many years, with deluges almost erasing the year’s rainfall deficits in many areas in a matter of days. Both markets remain in-line with last month in terms of pricing and activity: Argentina – offering the world’s most competitive bulk pricing on many wine types – is receiving steady interest, and for its grape juice concentrate too; Chile is seeing some limited activity.
The Western Cape, meanwhile, is competitively-priced with Chile and all countries except Argentina, aided by good supply, a weak Rand, and negligible domestic demand due to the nationwide ban on alcohol sales (lifted on 1 June but reimposed on 12 July). Ongoing (although now reducing) delays at Cape Town port have perhaps got in the way of some more international interest, and certainly Italy claims to be benefitting from logistical issues seemingly disproportionately affecting New World suppliers.
Recent increases in COVID-19 cases – and bleak economic and unemployment forecasts – in many countries reminds us that the world is still living through unprecedented times. It is no surprise that much of the bulk wine market is hesitant: visibility beyond the short-term is negligible. Ciatti is drawing on all its decades of experience to keep you as well-informed as possible – get in touch, and also check out our Webinar in August. Details on the front page.