As a new year begins, we at Ciatti wish all of our friends, clients and business associates a very happy and prosperous 12 months ahead. Many thanks for your continued support.
A new word was officially added to the UK’s Collins Dictionary in 2022: “Permacrisis”. Its definition is as follows: “An extended period of instability and insecurity, especially one resulting from a series of catastrophic events.” Although the word’s salience in British English at least partly reflects UK-specific woes (including, in 2022, three prime ministers in three months), “instability” continues to characterise a world still suffering the economic consequences of the COVID-19 pandemic and, since February, the Russia-Ukraine conflict.
The release of pent-up demand in the second half of 2021 into 2022 as the world reopened – China, the last holdout, doing so last month – ostensibly led to a return to normal for business, but normality was quickly offset by supply chain problems and overtaken by inflation that peaked in the US at 9.1% in June and 10.6% in the Eurozone in October. Because of inflation – exacerbated in Europe by the Russia-Ukraine conflict’s impact on energy resources and prices – and interest rate levels, the World Bank revised down its forecast for global economic growth in 2023 from 3% to 1.7%. This is versus 5.3% in 2021 and 2.5% in 2022, and the lowest growth since 1991 with the exception of the 2009 and 2020 recessions.
This is why the expression “quasi-recessionary” has appeared in the media recently: economies feel like they are in an indeterminate phase, no longer in the pandemic’s clutches but not “business as usual” either, with consumer patterns hard to discern. This applies to the bulk wine industry just as much as any other, and this month’s Global Report does its best to summarise the landscape that lies before it at the start of 2023. Here are some positives:
- Drewry’s World Container Index shows composite shipping costs as of 12th January are 78% below January 2022 and 79% below their September 2021 peak. Further small week-on-week reductions are expected.
- China has finally ended its zero-COVID policy and reopened to the world in January: this could lead to a boost in demand for bulk wine imports – especially welcome considering the slow market for reds globally – though it may also work against container price falls.
- Inflation trended downward in North America and the Eurozone towards the end of 2022 and there was a commensurate uptick in consumer confidence (admittedly from low levels).
In addition to the above glimmers of good news is our now monthly reiteration that – despite, and sometimes because of, what may be going on at the macro level economically – there continue to be excellent opportunities to be harnessed on the grape and bulk wine markets. Read on for more details, and don’t hesitate to get in touch: Ciatti can draw on decades of experience to help you navigate 2023 and beyond. Happy New Year!