- Volume increases are not expected.
- The post-pandemic environment and the Ukraine-Russia conflict jeopardize consumer confidence.
- Buying of grape and bulk wine is still hesitant.
- Due to increasing logistics costs, buyers are careful with fixed prices for one year.
- Nevertheless opportunities persist, be it in Spain or Italy, Australia or Argentina.
None of the harvests in Argentina, Chile, South Africa or Australia appear to be above average in size, while an unseasonably dry winter in California, La Mancha, the Languedoc and northern Italy raises an early question mark over this year’s Northern Hemisphere crops.
Consumer Confidence in Turmoil
This might ordinarily suggest a persistence of the status quo, with the international white varietals shorter in supply and elevated in price, and the red and rosé markets stable, proceeding incrementally due to good carry-over stock levels. However, the post-pandemic inflationary environment – likely to be exacerbated by the outbreak of the Ukraine-Russia conflict – calls into question consumer confidence in Europe, North America and beyond as 2022 wears on.
This situation has created something of an impasse between grape grower and winery price expectations in some markets: growers understandably want to cover rising input costs, while wineries are deeply wary of buying grapes at prices that could make selling the resulting wines difficult in a tough economic cycle.
Buying Euphoria Has Yet to Come
Grape buying activity, we report this month, has consequently become more hesitant and has paused completely on some grapes in some markets.
Bulk wine buying is similarly becoming more incremental, with retail sales being watched closely for signs of consumer pull-back. As the Italy page of this month’s Ciatti report states: “This inflationary environment will oblige final buyers like supermarkets or big importers to change their future behaviour, probably fixing prices valid for less than six months.” A second year of spiralling sea freight prices and shipping delays – improvements are seemingly only intermittent, for now – is likely to test buyer loyalty; suppliers know buyer patience is finite and that they may eventually seek alternative sources if they are able.
But, as ever, in difficult times opportunities persist: Spain and Italy still hold some volumes of good-quality 2021 varietal whites; the price-quality ratio of South Africa’s premium Chenin Blanc is being increasingly recognised as representing an excellent alternative to the main white varietals; good-quality Argentinian Malbec remains in plentiful supply and its dollar pricing could be slashed if the peso is devaluated following congressional approval of Argentina’s recent debt-restructuring agreement with the IMF; Australia’s red wine prices continue to soften following China’s imposition of import tariffs. And so on.
Ciatti can draw on its decades of experience to help you find and harness opportunities like these – don’t hesitate to get in touch.