Short Northern Hemisphere crops
The Northern Hemisphere harvests are now complete and all appear to have come in below their five-year averages. France (-17%) leads the estimated shortfalls in Europe ahead of Italy (-12.8%) and Spain (-4.7%). California’s 2024 harvest remains hard to quantify; our rough estimate is still 3.2-3.3 million tons, below the five-year average of 3.5 million tons.
Greater balance in some market areas
The shorter 2023 and 2024 Northern Hemisphere harvests, together with below-average 2024 Southern Hemisphere crops, are potentially helpful for inventory levels during a period of struggling retail sales. The lack of wine need is illustrated by the bulk market, to quote the France page of our November Global Report, “exhibiting none of the early energy that would – in years gone by – have been stimulated by such a short crop”. However, there are calls to action on a number of wines this month, including specific Italian appellations and white wines in South Africa and Chile, demonstrating that supply is not universally plentiful.
Tariffs – back on the agenda?
Donald Trump was re-elected US president on 5th November. During the election campaign he promised to impose tariffs of 10-20% on all imports. His inauguration is on 20th January. We are in the process of assessing what the wine industry can potentially expect. Tariffs were imposed on EU imports during the first Trump administration. This included – as collateral in the long-running Boeing-Airbus trade dispute – 25% import tariffs on French, Spanish and German still wines from October 2019 until they were suspended in March 2021. These tariffs had a particularly significant impact on French wine imports into the US, reducing their value by hundred of millions of euros.
UK duty changes
Commencing 1st February 2025, still and sparkling wines between 11.5 and 14.5% alcohol will be subject to a new duty regime in the UK: every additional 0.1% alcohol level between 11.5% and 14.5% will incur additional duty, meaning 30 different duty charges in that band. The new regime is projected to reduce the duty payable on a 750ml bottle of 11.5% alcohol wine by GBP0.12, but increase the duty on – for example – 11% alcohol wines by GBP0.09/bottle, 13% alcohol wines by GBP0.21/bottle, and 14.5% alcohol wines by GBP0.54/bottle (an increase of 20%). The 11.5-14.5% band accounts for approximately 80% of wine on the UK market; wine duty accounts for 30% of the cost of the average bottle of wine in the UK. The UK’s Wine & Spirit Trade Association has called the new regime “bewildering”. More detailed information can be found on London-based wine importer Enotria & Coe’s website here.
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