Ciatti Report: Adapting to Shifting Demand and Supply Dynamics

This month’s Ciatti Global Market Report looks back at the year just passed. If 2022 was characterised by inflation, and 2023 by interest-rate increases to tackle inflation, then 2024 was characterised by the hangover. A word for it: “Vibecession.” 

Reading time: 2m

Image: Generated by AI, DALL_E
Image: Generated by AI, DALL_E

Consumers squeezed

“Vibecession” meant a disconnect between the more positive economic indicators emerging through 2024 and consumer perceptions of the economy. In some cases, earnings increases have lagged 2021-23 inflation, reducing spending power outright. But more generally there is a sense of a “cost-of-living crisis”: essential living expenses – mortgages, rent, fuel, energy – are noticeably higher than four years ago and take up a greater share of total spend. In this discretionary-spending squeeze, wine’s higher price per alcohol unit versus rival beverages is a disadvantage.
 

Declining global sales

This might help explain International Organisation of Vine & Wine statistics published in April 2024, showing a steep decline in global wine consumption since 2021. This decline is an acceleration of a pre-existing trend from 2018 onwards, when concerted growth in China’s demand for imported wines went into sharp reverse. It now appears likely that Chinese demand growth through the 2010s masked sales stagnation in mature markets, perhaps due to changing demographics and consumer behaviour.
 

Short crops help normalise market

The bulk market in 2024 took on a more ‘normal’ appearance after an extended period of slowness. This was due to two years of lighter crops, which caused supply tightness and price rises on white wines – generics, varietals, sparkling bases – in Europe, Chile and South Africa. Higher prices on particular wines led to new enquiries into alternative sourcing. Meanwhile, some lower prices – mainly on reds – opened up attractive opportunities for those buyers who could identify a retail market need or niche.
 

Hectarage reductions

A decline in consumer demand for wine ultimately affects the winegrape grower, who in 2024 pulled out, mothballed or minimally farmed vineyards in ever greater number. Chile may have removed up to 20% of its vineyard area across 2023 and 2024. State-sponsored removals are underway in southern France, where wine industry bodies suggest some 100,000 hectares require uprooting. Tens of thousands of acres were likely removed in California over the past 18 months. Steps to “right-size” supply into better balance with demand will yield results sooner if consumption stabilises in North America and Europe. All hope 2025 will be the year.


With offices around the world, able to react quickly and provide live industry information, Ciatti is uniquely positioned to help facilitate the just-in-time business model becoming the norm on the bulk wine market: 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.

News

At the end of 2024, we can look back over a year on the global bulk wine market that was quite unlike its predecessor.

Reading time: 2m

 

 

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