The Northern Hemisphere's 2024 wine harvest is progressing, with initial signs pointing to average-sized yields at best. A combination of climatic challenges and economic pressures, such as vineyard cost-cutting and some grapes being left unharvested, are contributing factors.
Grape and bulk wine markets remain sluggish, prompting some vineyards to reduce their operations or remove vines altogether. This trend indicates that the wine industry is poised for a reset in the coming years, potentially shrinking in size but emerging leaner and more profitable.
In North America and Europe, retail wine sales continue to suffer as consumers exhibit cautious spending on non-essential goods. Although post-pandemic inflation has stabilized, consumers still feel the pinch of higher prices compared to four years ago. Wages haven’t kept pace with inflation, which has led to reduced spending power and an overall sense of economic pessimism, often referred to as a "vibecession." Despite robust employment rates, consumers are tightening their budgets, and wine's relatively higher cost per unit of alcohol, compared to other beverages, has made it less appealing.
Additionally, wine is facing a generational shift in consumer attitudes, particularly among younger drinkers. Many view wine as outdated, unhealthy, or mediocre, especially when compared to more trendy or affordable alternatives. This perception is compounded by recent negative health messaging surrounding alcohol consumption, further dampening enthusiasm for wine across all age groups.
France
- Southern French 2023 whites and rosés are becoming limited in supply.
- Full range of red wine qualities remains available, from entry-level to premium bottled reds.
- Premium red wines are being offered at lower prices than usual.
- 2024 crop in southern France is coming in lighter than average for white wines and rosés.
- Pricing for the 2024 vintage will be set from October onward.
- A state-sponsored uprooting plan is on hold until a new French cabinet and Minister of Agriculture are appointed, causing frustration among growers.
Spain
- The Spanish bulk market has been quiet as domestic, Italian, and French harvests are evaluated.
- Confidence in a good-sized Spanish 2024 crop, with grape prices mostly in line with 2023, up 10% for generic whites.
- Some buyers, short on white wine supply, are already purchasing 2024 white wine batches.
- Small lots of 2023 white wines are sold quickly as they become available.
- 2023 red wine supplies are larger, with some price reductions to free up tank space.
- Total export volumes are similar to last year, with strong bulk demand due to Italy's short 2023 crop, balancing weaker bottled red wine sales.
Italy
- Italy's focus is on the 2024 harvest after a 2023 vintage that was 25% below the long-term average.
- 2024 has been another challenging year with spring rain, hail, mildew, summer drought, and extreme temperatures affecting most regions.
- Early crop estimates suggest shortfalls: Pinot Grigio DOC may be down 10%, Marche-Abruzzo 20%, and Sicily 30-35%.
- Grape weights in Puglia appear lower, but no specific size is quoted.
- Prosecco production appears stable compared to 2023.
California (USA)
- Central Valley white grape tonnages appear to be below average.
- Increased demand for Central Valley Pinot Grigio, Sauvignon Blanc, Chardonnay, and generic white grapes.
- Coastal Sauvignon Blanc grapes and 2024 Sauvignon Blanc wine are also seeing a rise in demand.
- Demand for red grapes remains low and highly price-sensitive.
- Many vineyards remain uncontracted, and custom-crushing is less attractive due to a slow bulk market.
- Vineyard removals are expected to continue.
- Bulk wine inventory is high, offering strong export opportunities for standard and mid-tier programs.
- Coastal wines, including low- and no-alcohol options, present good export potential.
Argentina
- Argentina maintains healthy stock levels of Malbec across all quality tiers.
- Export pricing for Malbec remains stable with steady international demand.
- Domestic demand for a variety of wines has also been consistent.
- The Argentine peso continues a controlled, gradual devaluation against the dollar.
- Uncertainty persists over when currency exchange controls will be lifted.
- Winter brought consistent cold and precipitation, benefiting vine health and water reserves.
- Spring temperatures have arrived, with hopes they remain high enough to prevent frost.
Chile
- Chile's white wine stocks are extremely limited, expected to sell out by January.
- 2025 white grape contracts show increased pricing compared to 2024.
- Large overall wine inventory, but primarily standard/premium-quality reds.
- Red grape prices have risen due to demand from the juice concentrate industry and ongoing vineyard removals.
- 2025 bulk wine pricing is expected to increase but remain globally competitive.
- Elevated frost risk this spring due to La Niña, though no further Polar frosts are anticipated.
South Africa
- Supplies of 2024 varietal wines, particularly whites, are limited and available only in small lots.
- Export enquiries have been slow, partly due to the shorter supply.
- Rand export pricing remains stable, with the currency strengthening after nearly six months without load-shedding.
- Cashflow issues are hindering vineyard investment, though some larger producers are replanting.
- The cold, wet winter in the Western Cape has boosted cool-hour accumulation and water reserves, raising hopes for a larger 2025 harvest compared to previous years.
Australia & New Zealand
- Bulk markets in Australia and New Zealand have been quiet, typical during the Northern Hemisphere harvest season.
- Australia's shipments to China have slowed as demand has been met, but suppliers hope for an uptick before Chinese New Year in January.
- New Zealand Sauvignon Blanc from both the 2023 and 2024 vintages remains available.
- Spring has begun in both countries, with concerns about continued dryness in Australia and frost risk in New Zealand.
Conclusion
The global wine industry is navigating a complex landscape in 2024, with harvests across key regions such as Italy, Spain, France, and the Northern Hemisphere showing varied outcomes. Challenges like climate impact, economic constraints, and shifting consumer preferences are influencing supply, demand, and pricing across the board. While white wine supplies are tightening in regions like Chile and South Africa, red wine inventories remain abundant. Generational shifts and price sensitivity in consumer spending continue to weigh on wine markets, as both the bulk and export sectors adjust to these evolving pressures.
Source: Ciatti