In 2023, inflation levels, and the interest rates increased to curb them, reined-in consumer discretionary spending in key markets. Many distributors and retailers were still working through wine inventories they had accumulated during the pandemic’s consumer demand spike, or supplies that had only recently arrived after 2021/22’s shipping delays. They also pushed back against wine suppliers seeking to increase prices in order to maintain margin. Consequently, bulk demand was slow and, when it did occur, transactions often took time, were price-sensitive, and only for limited volumes.
Pushbacks against price ultimately end up at the grape grower, and we saw vine pull-outs starting to occur in some producer countries as the industry begins to come to terms with the twenty-year decline in global wine consumption. This felt imminent during the similarly slow year of 2019, but was put on hold by the pandemic’s arrival. The second and third quarters of 2023 were especially slow: wine need simply was not there.
What can we expect from 2024?
The US, UK and Eurozone all come into 2024 with consumer confidence at higher levels than for some time, as annual inflation steadily declines and interest rates are expected to slowly fall through the year. On bulk wine as on many other products, the ‘just-in-time’ business approach, in which inventory-holding and speculative buying is kept to a minimum, has grown more common during the higher-cost environment of recent years, and this approach is more likely to increase than reduce in 2024.
If distributors and retailers are now moving clear of their pandemic inventories or have been proceeding with lean stocks over the past year or two, any increase in consumer demand might fairly quickly translate into fresh bulk need. Further incentives for buying are the many attractively-priced opportunities on a range of quality wines that currently exist, together with a return to pre-pandemic shipping prices and schedules.
Consequently, the year 2024 arguably starts with more glimmers of hope than its predecessor.
The Ciatti team stands ready to draw on its many decades of experience to help buyers harness the opportunities, while assisting suppliers in finding good homes for their grapes and wines: don’t hesitate to get in touch. In the meantime, we wish all of our friends, clients and Global Market Report readers a very happy and prosperous year ahead.