The global bulk wine market continued to be slow through March into early April, as the ongoing economic uncertainty around the world compounds a longer-term structural weakness specific to the wine industry – namely, the multi-year slide in wine sales in key markets: according to International Wine & Spirits Research, Brazil is currently the only country in the top 20 wine markets that is drinking more wine now than it did in 2017.
How the industry goes about arresting this consumption drift is a well-worn topic. It is a tough ask: younger demographics can choose from a far larger spectrum of alcoholic beverages than their parents, while alcohol abstention – or at least a preference for lower alcohol options – is far higher among these cohorts. Hence the new ‘World of Zero’ area at ProWein, and we have seen an uptick in enquiries into lower-alcohol wines – both in recognition of this consumer trend and because taxes on such wines can be lower, a useful advantage amid the great margin squeeze the world is living through.
A common theme this month is the noticeable slowdown in European demand for bulk wine. Food prices have overtaken energy as the main driver of inflation in many markets, with food price inflation running in excess of 13% in the UK, France, Germany, the Netherlands, Sweden, Italy, and Spain. Discount supermarkets are outperforming the retail sector and the “cost of living crisis” remains the day-to-day reality for many. Loading and shipping of contracted wines is often significantly lagging, indicative of a slowdown in turnover on the retail shelf. One visible consequence of this lag is buyers skipping a vintage – willing, even, to pay more for the newest vintage when there is lower-priced carryover available, as the extended selling time is taken into account.
The Southern Hemisphere harvests have had a challenging end: February heatwaves firmed-up the shortfall in Argentina, which will this year produce its shortest crop on record; Chile’s is forecast to be 15-25% shorter than the average due to drought; significant late-season rainfall in South Africa complicated picking and added rot concern to an already shorter harvest; coolness has inhibited ripening at the end of an Australian crop coming in shorter than already revised-down estimates; Cyclone Gabrielle destroyed 140 hectares of vines in New Zealand’s Hawke’s Bay growing region, though the country’s final haul is still expected to be good-sized.
None of these developments has caused a great stir on the bulk market, where red wine supply is long and white wine supply – though tighter than red – feels longer than it was 12 months ago. There are pockets of hotter demand: the new 2023 varietal whites in Chile; 2022 good-quality rosé and generic white in Spain; Prosecco DOC, Pinot Grigio DOC, generic white and Valpolicella reds in Italy; Napa Valley Cabernet in California.
Examples such as these are outnumbered by the incremental movement around the world on the bread-and-butter varietal and generic bulk. Ciatti can draw on its many decades of expertise to help buyers and sellers the find opportunities – challenging times like these are when our reputation for superior service is earned. Don’t hesitate to get in touch. In the meantime, read on for detailed updates on each market.