Crops coming in short
The early signs are that the Californian, French and Italian crops will come in short of their averages. Of the Northern Hemisphere’s major producer countries, only Spain is potentially headed for an average-sized or larger crop. The lightness of harvests is due to climatic but also market factors: economising on vineyard spending, grapes not being picked, vineyard removals – all occurring in response to slow grape and bulk wine markets.
As our Italy page states in this month’s Ciatti Global Report: “Over the next few years, the industry will undergo a reset, losing vineyard area and businesses, and emerging on the other side more profitable.”
Whites in greater balance
Market activity has largely been slow, but there has been demand for 2024 white grapes in California, potentially because the Central Valley’s white grape crop looks like being lighter than average. Contracting of 2025 white grapes is underway in Chile, at higher pricing versus 2024, reflecting Chile’s low white wine stocks. Chile’s 2024 varietal whites are expected to be sold out by January.
Shorter crops over the past two years have helped move some white wines, in some markets, into supply-demand balance. For example, supplies in Chile, southern France, Spain, and South Africa are currently very limited. Red wines constitute the majority of global inventory and vines bearing red grapes are the ones more likely to be uprooted.
“Vibecession” continues
Retail sales of wine in Europe and North America continue to be squeezed by hesitant consumer spending on non-essential items. Post-pandemic inflation has eased but, in many cases, earnings increases have lagged inflation, reducing consumer spending power. The resulting economic pessimism – even if underlying fundamentals like employment rates are robust – has been dubbed a “vibecession”.
In this environment, wine’s higher price per alcohol unit versus its ever-growing number of rival beverages is a disadvantage. It is likely wine will see no concerted increases in retail sales in Europe and North America until 2025 at the earliest. Longer term, the perception among younger demographics that wine is old-fashioned and/or unhealthy raises a big question mark over future sales performance.
In this slower market, highly attractive bulk wine and grape opportunities exist and Ciatti’s global network is able to provide the full spectrum of choice. Don’t hesitate to get in touch at info@ciatti.com.
