An unseasonably damp summer in many growing areas of Chile (a rainy January followed by nearly three weeks of mist/fog in February) and Argentina (10 weeks or so of lingering rainfall) has raised concern about their respective 2021 vintages, pushing up prices on the 2020 wines and further reducing already limited availability. Consequently, Spain and South Africa are receiving increased buyer interest.
Spain – with a wine stock recently estimated at 75.33 million hectolitres – is globally competitive on all bulk wines and, for European buyers, particularly so on generics. South Africa can offer good availability on 2020 wines at an excellent price/quality ratio, while its vintage 2021 is running smoothly following excellent growing conditions without weather extremes. Looking ahead to Spain’s harvest this year, a snowy January – 50% more precipitation than in a normal year – bodes well for groundwater reserves.
California, meanwhile, has been experiencing a drier than average winter with Sierra Nevada Snowpack at only 60% of normal by March. What is apparent, then, is a weather pattern symptomatic of the ongoing La Niña phenomenon in the Pacific, in which, roughly speaking, the Northern Hemisphere is drier than normal and the South Hemisphere wetter. It follows, then, that Australia received heavy rainfall in some growing areas in late January and early February, raising fears of burst grapes. This is so outlined because it feels like international buyers are paying closer attention to prospective yields than ever before. With the price-sensitive off-premise channels currently accounting for most demand, and so much difficulty in divining sales projections and economic permutations for the next 6-12 months as the world – it is hoped – starts to emerge from the pandemic, international buyers are proceeding cautiously on price and volume.
Some antidote to this international caution is the re-emergence in recent months of Chinese demand in Chile, France, Spain and Italy, following China’s import tariff hike on Australian imports. And the announcement on 5th March of a fourmonth suspension of US tariffs on French, Spanish and German wine imports (and the likelihood it will become permanent) is another fillip, particularly for French suppliers.
The domestic market picture remains mixed: demand in Argentina, Australia, California and Italy has been healthy, although there is scepticism that it will last in Argentina as inflation and gasoline/energy prices continue to rise. Ditto in South Africa, where an end to the alcohol sales prohibition on 1st February did not lead to a demand uptick. Spain needs inward tourism this summer to help reduce its inventory, and discussions around a so-called “green corridor” that would allow vaccinated UK citizens to holiday in Spain are underway. Of the major economies, the UK (30%+ of its population) and the US (20%+) are leading the way on first doses but it is hoped that by the start of Q3 2021 the rollouts are advanced enough to have enabled a significant – and irreversible – easing of restrictions, including those on the HoReCa sector and large gatherings, in most countries. In the meantime, stay safe, and don’t hesitate to get in touch with your bulk wine and grape needs.