As we enter the second month of 2021 the global bulk wine market can be characterised by being uncharacterizable: each producer country is currently contesting with its own unique cocktail of domestic and internationally-derived factors so that any sweeping statement about the global supply-demand balance would be suspect to say the least.
Take the Southern Hemisphere: Argentina (+26.7% on 2019), Chile (-2%) and Australia (+0.5%) go into their 2021 harvests having experienced, given the pandemic, an impressive 2020 for their respective total wine export volumes. While this should mean tighter supply, in Argentina the supply tightness on varietals is mainly due to supplier speculation that prices will be higher later on (price increases that may be offset to the international buyer by the peso’s continuing devaluation); in Chile, unprecedented rainfall at the end of January has led to concern about 2021 vintage quality, so that many wineries are putting their sales on hold; in Australia, China’s imposition of 107%+ import tariffs on Australian wines has lowered red grape pricing by 20-25%. With slow exports in the past two years and periodic prohibitions on domestic alcohol sales over the past 12 months, stock levels in South Africa are high and pricing negotiable.
The Northern Hemisphere is similarly heterodox: hurting from newlyimposed US import tariffs on all French wines and slow sales – particularly on reds – more generally, prices in southern France are negotiable; Spain, with plenty of stock, is pricing aggressively in the hunt for buyers; following strong domestic and international sales over the past 12 months, Italy’s main appellations are rising in price. Export pricing in California remains stable but feeling some upward pressure after the state’s lighter than average 2020 crop and continued sales strength in the US off-trade.
Buyers must keep track of the ever-shifting opportunities while also making a judgement call as to where the world will be in three months, six months, a year. Early 2021 off-trade sales may continue their 2020 robustness but they may not; the on-trade reopens in one market, but closes in another; the vaccine rollout is underway, but there are new virus strains. Criss-crossing this fragmented picture are the tariffs wars in which wine is emotive collateral: the EU versus the US; the US versus China; China versus Australia. For every wine trader hurt by these there is another who can benefit: the Argentinian or Spanish supplier of bulk reds wins Chinese business from Australia; the Italian supplier wins US market share from his French counterpart.
Now more than ever, it is imperative that you get in touch with your Ciatti office to get the latest prices and market picture, so that we can help you position yourself to win in 2021 and beyond. The Italy page this month says: “The feeling (and the hope) is that the COVID-19 vaccine campaign will be successful and the recovery will be very strong, starting from the end of April/ May.” We have our fingers and toes crossed that every word of that proves true. In the meantime, don’t hesitate to get in touch, and stay safe.