High inflation levels and rising interest rates in many markets around the world have engendered pessimism as to the retail sales outlook. Food inflation has generally been lagging overall inflation’s levelling-off trajectory, encouraging consumers to cut back on supermarket spending. In this context, global bulk wine activity has proceeded cautiously through the final quarter of 2022 while sales are carefully analysed; no one wants to find themselves overstocked, or having paid too high a price.
Next year’s ProWein, the first since 2019 held in the month of March – when winter’s chill is still blowing in off the Rhine – could be so timed as to be the collective market wake or awakening, depending on the optimism levels of whomever one talks to. Such broad brushstrokes, of course, ignore the day-to-day business still taking place on the market: opportunities are arising and being harnessed. The truth is nearly always to be found somewhere between those two headline-grabbing imposters, Triumph and Disaster.
In scepticism there is opportunity: as some buyers scale back their needs, soughtafter Sauvignon Blancs and Chardonnays have re-arisen intermittently on Chile and South Africa’s bulk markets. And there has been some brisk activity on specific Northern Hemisphere whites short on 2021 carryover: Sauvignon Blanc, Chardonnay and Vin de France white in southern France, most whites and sparkling bases in Italy, and Sauvignon Blanc, Chardonnay, Pinot Grigio and sparkling bases in California’s Central Valley.
One opportunity now affecting the bulk market is Australia’s ultra-competitive red wine export pricing, in response to the slump in Chinese demand. As Australia can potentially include whites in package deals with these reds, this impacts not only rival suppliers of reds such as Spain, Chile and Argentina, but also of whites such as Chile (again) and South Africa. Softening prices in an inflationary environment is never easy, and input costs may have to cool considerably before suppliers entertain the idea. In the meantime, Australia will take some market share from its rivals.
The contrasting fortunes of bulk red versus bulk white, evident for a few years, grew more acute in 2022. It is now clear that rising Chinese demand for imported reds through the 2010s concealed a decline in demand from mature markets; some suppliers unwittingly came to over-rely on China – and not just in Australia. Bordeaux, too, is in red wine surplus, its growers marching the region’s capital in December demanding government-subsidised distillation and uprooting plans. There are ample bulk opportunities to be had on high-quality, attractively-priced Bordeaux reds.
The logical grower response to this dynamic is to graft red grapevines over to white, as is now occurring in Australia. But how much is the comparatively healthy demand whites enjoy versus reds down to a long-term consumer switch to white wines and sparkling, and how much is simply down to short white harvests in 2021 upping demand for the 2022 vintage? While “adapting production for the next 10-20 years” is a must, as this report’s Italy page sets out, “in the longer term, there needs to be a better understanding of the evolution of consumer behaviour” in order to increase wine’s popularity among younger consumers and, in so doing, grow overall demand. This means thinking open-mindedly about sourcing, marketing, innovation. Ciatti can draw on its decades of experience to help clients do this, harnessing the opportunities 2023 will bring: don’t hesitate to get in touch. In the meantime, we wish you and yours a Merry Christmas and a Happy New Year.