The Northern Hemisphere’s 2020 harvests are underway and early indications are that France and Spain and will see good-sized crops, Italy is forecast to have a crop around 5% down in size on 2019’s, and California’s crop looks lighter than average. Distillation programmes have been rolled out across Europe to help reduce wine inventory ahead of the new vintage, but their success is questionable: the French plan has only served to pause the bulk market in France as the distillation price is above where the market was, while the Italian plan has the reverse problem – offering a distillation price that is unattractive to many sellers.
Inventory in France (especially of red wines) and Spain (especially of white wines) remains significant and will likely lead to a slow start on the 2021 vintage spot markets in those countries. Buyers are naturally cautious considering COVID-19, with only those supplying well-positioned supermarket brands in markets that continue to see an increase in off-trade wine sales (such as the US and UK) moving forward with purpose. The bulk wine markets in Argentina and Chile have been seeing good levels of activity, Italy’s Pinot Grigio and Prosecco bottlings continue to outperform last year’s, and Australia’s bulk wine exports for the year to 30 June were down only 1% in value on the prior year.
Prices in Spain, and in France on the reds, are expected to trend downward when the new campaign gets underway, while bulk prices in California are already lower than they have been for many years. As a consequence, Argentina – with its own significant inventory – has moved to be ultra-competitive on price to win international attention, and South Africa, too, is vying for international business. Both countries have been hurt by recent logistical issues: cross-border trucking in the Andes has been intermittently blocked by snowfall levels; Cape Town port has not been operating at 100% due to COVID-19, leading to a backlog.
However, both these problems are temporary and easing, and both countries can offer highly-competitive deals on a wide range of excellent-quality wines. Ciatti South Africa told us this month: “The sorry thing is [about the slow market], it’s been a beautiful crop, a very good harvest year – especially the white wines are really good quality, with good quality and quantity available on Chardonnay and Sauvignon Blanc.”
With the Northern Hemisphere harvesting and/or holidaying, August is always a relatively quiet month freighted with anticipation of things waking up in September. But this year the start of autumn has become imbued with added resonance: will rising COVID-19 case numbers in Europe and the US see restrictions widely re-imposed? What will economies and consumer confidence look like by Christmas? Visibility is highly limited but Ciatti is drawing on all its decades of experience to keep you as well-informed as possible – get in touch if you have any questions, and stay safe.