Crop picture still not clear
It remains too early to quantify the California crop, as it is running behind by 2-4 weeks due to a wetter and cooler than normal growing season; it is believed to have sized-up through September. The French crush is estimated at 46m hl, up 3% versus the 2018-22 average, although an important region for bulk wine, the Languedoc, has seen lighter tonnages and expects a crop 10% down from the average. Spain’s harvest is expected to be short of the average but by how much is not yet known – it will not be as significantly down as in Italy, said to have had one of its shortest crops of the past 50 years.
Spanish market reacts
The bulk wine market globally has not reacted to the harvests, except in Spain where there has been a rise in European demand due to Italy’s crop shortfall. Most demand is for 2023 white generic wines for sparkling base wine production, ready-made sparkling base wines, 2022/23 red generics between 11% and 11.5% alcohol, and red and white organic wines. Prices in Spain have risen slightly, although they remain highly competitive.
A year of unusual weather
While the subject of “climate change” can be a controversial one, 2023 has certainly been a year of unignorably unusual and unpredictable weather. The pattern seems to be for generally drier winters, wetter and cooler springs, hotter summers (alternating between heatwaves and deluges), and milder autumns. This can take a toll on vines and grapes and protecting them requires investment – not something that comes easy for growers and wineries in the current slow sales environment when cashflow is limited, particularly with higher interest rates and inflationary pressure. Some vineyards may start to look a little frayed at the edges; some plots may get pulled out and turned to something more financially viable.
Argentinian competitiveness
The global bulk wine oversupply situation could be exacerbated later this year or early next year by the re-entrance of Argentina onto the world stage as a competitive supplier after a year-long absence. The country’s presidential election is due to be held on 22nd October and both leading candidates – Javier Milei and Patricia Bullrich – would likely implement a significant peso devaluation if they were to take office in December. Considering Argentina’s bulk wine export sales were down 38.9% in the January-September period versus the first nine months of 2022, largely due to price uncompetitiveness, a significant peso devaluation could release a considerable supply of more competitively-priced bulk wines onto the global market.
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