The 2021 growing season in Europe has been one of the most challenging for many years, with severe frosts occurring post-budbreak followed by a very wet or drought-hit summer, depending on location. France, arguably the most affected, is officially forecast to see a crop down 25% in size on the five-year average, which – because of vine pull-outs over recent decades – would make it the smallest crop on record. However, in southern France, Chardonnay, Sauvignon Blanc and other white varietals are coming in below even this estimate, at closer to a 50% shortfall.
Italy’s total crop shortfall is expected to be significantly less dramatic, at 9% down from last year’s 49 million hectolitres, though some areas – such as EmiliaRomagna (-15%) and Abruzzo (-18%) – are expected to fare worse than that. Spain’s crop, too, is now expected to come in shorter than the long-term average, with tonnages in La Mancha on the first grapes to be picked – whites including Chardonnay and Sauvignon Blanc – down by roughly 25-30%.
Despite this news and the latest Comité Européen des Enterprises forecast – of a 23-million-hectolitre shortfall in European wine production this year – the bulk markets of Europe are not frenzied. As the Italy page reports this month: “All big operators are being extremely careful in price agreements and volume engagements. In addition, supermarkets are taking more time to close contracts because of the general, strong price increases in liquid and dry goods.” Similar can be seen in the US, where buyer hesitation is relatively high despite California being on course for a second-successive below-average crop.
Buyers are moving into the Northern Hemisphere autumn – when COVID-19 will doubtless make a return to the front pages – with a hazy picture of future sales at best. Should lockdowns fail to materialise and economies continue to emerge from the pandemic, costs will rise in the face of demand pressure across the whole supply chain. Some 40% of all wine consumed has to cross an international border to get to the consumer: haulage scarcity, container shortages at ports, delays to shipping and increased freight costs are complicating, and will continue to complicate, the national and international movement of wine and will render some bulk wine deals no longer feasible, margin-wise. Emerging from a pandemic brings its own challenges, just as being in one does.
Wine Australia has collated the production data currently available for 2021 and estimates global production will be at 25 billion litres – “the second lowest in the past 10 years”. However, drawing on OIV and IWSR statistics, it estimates global consumption at 23.7 billion litres, meaning a surplus of 1.3 billion litres. Markets which saw increased wine sales volumes at retail because of pantrystocking in the extraordinary year of 2020 are now seeing steady returns to normal consumer behaviour, and while it appears there is a global shortage of the crisp dry whites – Sauvignon Blanc (in particular), Chardonnay and Pinot Grigio – which the Northern Hemisphere harvests will not alleviate, reds remain in surplus or at least in balance. The next three months until Christmas will be important: the Northern Hemisphere harvests – and the response of the bulk markets – will be clear, the Southern Hemisphere markets will then take their cue, and we will discover if the vaccination programmes have made winter lockdowns a thing of the past. In the meantime, read on for detailed updates from each market, get in touch with us directly for more information, and stay safe.