The Northern Hemisphere harvests are in their closing stages and all have experienced shortfalls to varying extents. France is the headline-maker, suffering a shortfall large enough to hand over its rank as the world’s secondlargest wine producer to Spain. The assumption is that the crop in southern France was down 40% versus the average and as much as 50-70% down on the white varietals.
The shortfalls elsewhere are not so stark: Italy expects a 9% drop from its 2020 figure, with some September rains helping late maturation in Veneto, Puglia and other regions; Sicily’s crop was in fact up versus the prior year. The La Mancha region of Spain, meanwhile, could see a drop from the multi–year average of approximately 20%. Bulk prices have risen significantly in France, enabling Spanish pricing to move up behind. Spain’s aggressive 2020 vintage pricing is now especially unsustainable for suppliers given recent big increases in dry-good prices and energy bills.
With spiralling freight prices globally in addition to the increased dry-good and other input costs, plus price hikes on the wines themselves, the shelf price of wine will feel upward pressure in 2022. It will be interesting to see what postpandemic consumers – suffering the same inflationary energy bills and everyday prices – will make of that. Yes, ‘post-pandemic’ – certainly many countries, exemplified by some of the major wine-producing ones, are back as close to normal as they have been since February 2020: Chile in recent days has lifted its 19-month state of emergency, South Africa has shifted down into its lowest of restrictions, ditto Spain. Foreign travel is plausible again.
The global recovery is spurring inflationary pressure across supply chains and compounding a shortage of shipping containers, shipping vessels, and efficient port operations. Buyers of wine now must first factor logistics into their calculations when first considering where to source: can the wine get shipped from country A to country B in time? Is the shipping cost prohibitive? Is there a trade agreement between the two countries that can help mitigate some of that cost? We urge buyers and sellers to stay in dialogue with each other, plus with ourselves and the freight-forwarders, in order to help mitigate and get ready for – as best as possible – the impact of any delays. We’re here to help.
The two-speed bulk market continues with, in general, white varietals in short supply and red varietal supply sufficient. Despite this year’s production falls, France and Spain will have good supplies of red wines of all kinds, Argentina and Australia too – the latter’s price softening as the collapse in Chinese demand continues to be felt. But vintage 2021 white varietal supply emanating from southern France will be negligible and Spain’s supply will rise in price and sell out quickly; ditto for organic varietal whites. New Zealand, Chile and South Africa are all sold out on one or more of their 2021 international white varietals. Thoughts are thus turning to the 2022 crops: dryness in Argentina and Chile continues, though some late winter rains have come to the latter, while there are hopes for average or average-plus crops in Australia and New Zealand after wet winters. There have been no frost alarms – as yet. In the meantime, read on for detailed updates of each market, get in touch with us directly for ore information, and stay safe.