The wine industry heads to the first ProWein fair in three years experiencing – like every other industry – inflationary costs, a global supply chain crisis, and a shortage of dry goods. It is undoubtedly a difficult environment in which to do business, and fairs like ProWein can provide an important opportunity to gain clearer visibility of market pitfalls and thrash out workarounds in person – even before one takes into account the fact that, for two years, having such meetings has been very difficult due to the pandemic. See our ProWein Preview this month for more details.
The OIV’s latest ‘State of the World Vine & Wine Sector’, published in April, gave a preliminary global wine production figure for 2021 of 260 million hectolitres, in line with 2020 and slightly down from the ten-year average, with good-sized Southern Hemisphere crops offsetting the impact of spring frost in Europe. Global consumption, meanwhile, was estimated at 236 million hectolitres, up 0.7% from 2020, turning around a three-year downward trend but from a low base as consumption in 2020 was greatly affected by COVID-19’s arrival. In short, global production has remained adequate to cover consumption. This fact, plus the general consumption shift in some markets towards white wines – as well as the fall in Chinese demand since 2018 and the country’s imposition of import tariffs on Australian wines since 2020 – explains the generally slow market for red wines versus that for whites. Argentina, France, Australia, and Spain all possess big volumes of uncontracted bulk reds, at stable or softening pricing.
What about production this year? Chile’s 2022 crop is expected to be down approximately 10% from last year – but last year’s was bumper. Argentina is expected to have a below-average crop – but will have over 600 million litres of carryover at vintage switchover. South Africa’s crop looks in line with the ten-year average. Australia’s is potentially smaller, as some red grapes were left unpicked. New Zealand should report a crop size bouncing back from 2021’s shortness. In the Northern Hemisphere, meanwhile, a wet spring in Spain has allayed drought fears and brought confidence of a good-sized crop; April frost visited France but is currently expected to have had limited impact on overall crop potential; conditions have been good in Italy; ongoing dryness could limit California’s crop potential. In short, we’ve not seen anything – yet – to suggest any drastic changes to availability patterns.
This year’s consumption, however, is altogether harder to grasp. In broad terms, consumer patterns spent the second half of 2021 trending back towards their pre-COVID normal, with pantry-stocking moving into the past and the on-trade concertedly open again in the major consumption markets. By the Northern Hemisphere springtime, high inflation rates meant the “cost of living crisis” had replaced COVID-19 as the headline news topic. We are thus in an intermediate stage where an unleashing of pent-up consumer demand after two years of lockdowns is meeting rising awareness of inflationary pressure, a confluence of forces that is leading to churn. Consequently, there is some buyer hesitancy while they wait for the churn to pass and for the settled, long-term trends of our postpandemic world – at least into 2023 and 2024 – to crystallise. Ciatti can draw on its decades of experience to help you navigate the market, whatever it brings. Why not pop in to see us at ProWein? We’ll be in Hall 12, on Stand G24. It’ll be great to see you! In the meantime, read on for detailed updates from each market, and stay safe.