The Northern Hemisphere harvests are now complete and, while official numbers remain some way off, it appears Europe’s harvests were average sized while California has had its lightest crop since 2011. OIV is forecasting 2020’s total global crop at between 254 and 262 million hectolitres: coming in at the lower end of that range would make 2020 the joint second-lowest yielding year since the turn of the millennium (above 2017’s 248 mhl and in line with 2002’s 252 mhl).
As per usual for this time of year, however, the Northern Hemisphere’s bulk markets and buyers are quiet while crop results are assessed, wine made, and OND sales analysed. The unprecedented event that 2020 will always be synonymous with – the COVID-19 pandemic – has injected understandable caution into the marketplace: much activity is proceeding in small increments. This caution will be exacerbated by the so-called ‘second wave’ of the virus in Europe, which has led to the reimposition of national and regional lockdowns.
The Southern Hemisphere markets have been active: Argentina’s aggressively priced offer has attracted international interest and prices there are now firming up, Chile’s domestic buyers have been cornering 2021 grapes and wines off the back of a strong bulk/bottled export performance (offsetting China’s quietness this year) so that prices are firming there too, while Australia’s wine exports in the 12 months ending 30 September actually reached their highest value (AUD2.9 billion) for 13 years. Meanwhile, South Africa – with its less active market, currently – has been identified by astute observers as the likeliest competitor to Spain in the months ahead, able to offer very competitive, negotiable pricing on big volumes of high-quality varietal wines, generics and rosés.
All in all, globally speaking, 2020 could be considered a robust year for bulk wine sales – in terms of volume – when one considers the global pandemic and the big decline in Chinese demand. And at least one of those drags on sales seems to be easing: China intends to accelerate the re-opening of its economy after largely bringing COVID-19 under control, and will be the only major economy to grow in 2020. Wine sales value, on the other hand, will continue to be squeezed while the on-trade – specifically the HoReCa sector – gets messed around by governments anxious to be seen doing something. (In September the UK’s Public Health England found that 3% of COVID-19 infections were caused by bars and restaurants versus, for example, 42% caused by education settings.)
While off-trade wine sales have been strong in many markets since COVID-19 went global in March, to the special benefit of the big brands with national/ international distribution at supermarkets, it remains to be seen if this will be sustained, especially as the economic consequences of COVID-19 measures could start to be felt more keenly by consumers in 2021. Hopefully if wine sales in supermarkets fall back again it will be for a positive reason – the rolling out of an effective vaccine, permitting consumer habits to gradually return to normal. Don’t hesitate to get in touch with any enquiries, and stay safe.