The global wine market is navigating a landscape shaped by long-term consumption shifts, geopolitical developments, and a string of underwhelming harvests.
As the International Organisation of Vine & Wine reports that worldwide wine consumption in 2023 dropped to levels last seen in 1996, this year’s Ciatti Bulk Wine Market Analysis paints a complex picture.
A Deflated Demand Bubble: The Chinese Market Retreats
The contraction in Chinese wine demand, once a significant growth engine, has accentuated underlying sales declines in developed markets, ongoing since the 2007-08 global financial crisis. This cooling demand has necessitated an adjustment in vineyard hectarage, leading to a noticeable contraction in some of the world's major wine-producing regions, including France, California, Chile, and Australia.
France:
- Significant Decline: The 2024 harvest is estimated at 37 million hectolitres, a 23% drop compared to 2023.
- Below Five-Year Average: The harvest is 17% smaller than the five-year average.
- Steady Downward Revisions: Estimates have been reduced by 0.5 million hectolitres since October and 2.3 million hectolitres since September.
- Historically Light Crop: Comparable to the notably small harvests of 2017 and 2021.
Spain:
- Crush Size Recovery: Back closer to the long-term average after a short 2023 harvest.
- Lower Alcohol Levels: Wines with 11%+ alcohol are commanding a premium.
- Rising Prices: Higher pricing for all wines and sulfated must has slowed buying activity to smaller volumes.
- Buyer Caution: Many buyers are waiting until 2025 to assess price trends.
- Imports Interest: Some domestic enquiries into wine imports have been noted.
- Organic Wine Premiums: Increased as EU subsidies for organic production end, reducing supply.
Italy:
- Active Market: Strong demand for main appellations and generics driven by a second consecutive short crop.
- Prosecco & Pinot Grigio Growth: October bottlings increased by 16% (Prosecco DOC) and 11% (Pinot Grigio DOC).
- Better-than-Expected Sales: Likely aided by reduced availability from competitor countries.
- Price Increases: Higher pricing for sparkling bases, organic wines, sulfated must, and GJC.
- Urgent Buyer Action Needed: Supply is expected to tighten rapidly across various products.
California:
- Retail Challenges: Struggling sales and larger inventories compared to last year limit spot market activity.
- Lower Grape Pricing: Reduced prices haven’t spurred significant interest in multi-year contracts.
- Focus on White Varietals: Buyers are prioritizing securing white-varietal volumes from the 2024 vintage.
- Opportunistic Deals: Private-label programs leverage 2023 premium-appellation wines at value pricing.
- Export Opportunities: Demand exists for competitively priced generics, White Zinfandel, and Coastal wines for mid-tier programs.
- Low-/No-Alcohol Wines: Continued interest in this growing segment.
- Multi-Year Deals Available: Opportunities for long-term contracts persist despite subdued interest.
Argentina:
- Strong Export Growth: Bulk wine shipments are driving exports ahead of 2023 levels.
- High Red Wine Stocks: Significant inventories remain, primarily of red wines.
- Focus on White Wines: New demand centers on generic white wines and white GJC, driven by Europe's short 2024 harvest.
- Stable Dollar Pricing: Pricing is stable but negotiable for large-volume purchases.
- Potential Price Softening: Prices may decline in early 2025 with confidence in an average or better 2025 crop and a potential peso devaluation.
Chile:
- Low Supply of 2024 Whites: Varietal whites are nearly sold out, with Dry White essentially unavailable.
- 2025 Whites Pricing: Expected to align with current 2024-vintage pricing; early buyer interest is encouraged.
- Red Wine Inventory: Ample supply remains, including rare opportunities for higher-end reds.
- Bulk Market Demand: A 25.5% rise in bulk wine shipments (January–September) has slowed vine removal momentum.
- Vineyard Reduction: Surface area is still expected to decrease significantly in 2025 compared to 2024.
South Africa:
- Limited 2024 Availability: Supply is tight, with robust domestic demand.
- Buyer Recommendations: International buyers should register requirements early to access opportunities.
- Potential Re-Releases: Suppliers are reviewing contracted wines to determine if unshipped volumes can re-enter the market.
- Stable Export Pricing: Rand-based pricing remains consistent.
- Import Interest: Ongoing inquiries about importing generic wines.
- Healthy Vineyards: Spring conditions have been normal, though growers remain cautious after three short harvests.
Australia:
- Frost Damage: September frosts are still being assessed, creating caution in quoting 2025 white wine volumes.
- Slow Bulk Market: Activity is subdued, with hopes for a strong festive season driving bottlings.
- Export Growth: Total wine export volumes increased 7% to 643 million litres, fueled by renewed Chinese demand.
New Zealand:
- Sauvignon Blanc Pricing: 2023 carryover prices have softened in anticipation of the 2025 vintage.
- Export Decline: Wine exports fell to 276.5 million litres (down from 308.5 million litres the previous year).
- Rising Domestic Consumption: Up by 4%, reflecting stronger local demand.
Tariffs and the Political Landscape
Adding to the complexity, the re-election of Donald Trump as U.S. President and the associated return of tariff discussions are raising concerns. The wine trade, which had previously faced challenges due to U.S. import tariffs, must now brace for potential policy shifts that could disrupt pricing and international trade flows.
Looking Ahead
As the global wine industry adjusts to changing consumption patterns, geopolitical uncertainties, and climatic challenges, agility will be key. Pricing will likely remain a critical factor in stimulating transactions, particularly for varietal and generic white wines, where lower prices could unlock demand.
Source: Ciatti