Generic whites in better balance
Much of the activity has been driven by generic white wine because of its apparent shortness in Spain, Italy, Chile and South Africa. Italy’s short 2023 harvest severely limited supply, driving up demand and prices there and in Spain. This in turn increased European demand for Chile’s generic whites just as 2024 crop expectations in northern Chile – a significant generic white-producing region – are pessimistic due to severe drought. South Africa, meanwhile, is on course for its shortest harvest in over 20 years, constraining its generic white supply just at a time when domestic demand is positive.
Chinese boost to reds
The global red wine market remains slower than the white wine market. The big news for red wines came at the end of March, when China finally ended the 200%+ import tariffs on Australian wines it first imposed in 2021. China-based and domestic enquiries into Australia’s generic reds and other reds immediately increased. If Australia’s red wine export pricing subsequently rises, prices in other countries may, in turn, appear more attractive to buyers.
Short Southern Hemisphere crops
All of the major Southern Hemisphere producer countries – Argentina, Chile, South Africa, Australia and New Zealand – are heading for harvests shorter than the average, owing to a combination of climatic issues, vine removals, and uncontracted vineyards not being maintained. Whether because of Mother Nature or human hand, the global bulk wine market is getting the Southern Hemisphere crops it needs to restore some supply-demand equilibrium – at least on the white wine market.
A corner turned?
Shorter 2024 Southern Hemisphere harvests, combined with the return of China – still a significant consumer market – as a buyer of Australian wine, helps create the appearance of better bulk wine demand versus 2023. But it remains questionable how sustainable this appearance will be if the 2024 Northern Hemisphere crops perform average or better, all the while North American and European consumption remains subdued. With the US and Eurozone economies staggering on, and the UK technically in recession, it still appears unlikely that 2024 will bring the concerted momentum in retail sales required to boost wine industry cashflow and confidence.
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