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Ciatti - Global Bulk Wine Report (Dec-2023)

As the curtain falls on 2023, the global wine market reflects a challenging landscape marked by flat or declining sales amidst consumer pessimism and economic uncertainties.

Bulk markets, which have languished throughout the year, continue to exhibit sluggishness across most segments, with transactions predominantly incremental and price-sensitive.

Here’s a detailed assessment of key global wine regions and their current market dynamics.

France: Yield Stability Amidst Market Caution

France, a bastion of wine production, reports a stable crop estimated at 46 million hectoliters, slightly above the five-year average. However, market sentiment remains cautious:

  • Purchasing Trends: Incremental buying prevails due to uncertainty over 2024 market conditions, impacting bulk wine demand.
  • Product Focus: Demand highlights include green, cool-climate-style 2023 Sauvignon Blancs, which are anticipated to be in short supply, while Chardonnay performs relatively better.
  • Market Conditions: Opportunities arise in Gascony, Loire Valley, Burgundy, Rhône Valley, Bordeaux, and Beaujolais wines, although the bulk market remains slow.

Spain: Yield Challenges and Market Adjustments

Spain anticipates a harvest shortfall of 10-20% compared to 2022, reflecting broader market adjustments:

  • Export Declines: Spanish wine exports declined by 5.8% in volume and 3.3% in value during Jan-Sep 2023, underscoring export challenges.
  • Pricing Dynamics: While white wine prices have seen an uptick due to initial strong European demand, red wine pricing is showing signs of softening as the buying campaign progresses.

Italy: Supply Constraints and Product Focus

Italy grapples with significant supply constraints following a challenging harvest:

  • Harvest Estimates: The harvest is estimated at 38-40 million hectoliters, with northern Italy experiencing a 9.5% drop and central/southern Italy facing more substantial declines.
  • Product Availability: Shortages are notable in Prosecco and Pinot Grigio DOCs, while good-quality reds are more available, albeit with less upward price pressure.

California: Quality Potential Amidst Market Softness

California’s harvest, estimated at 3.5-3.6 million tons, reveals quality potential amidst market softness:

  • Market Conditions: Bulk wine pricing in coastal regions is softening and converging towards California-appellation pricing, driven by sluggish demand.
  • Export Opportunities: Quality remains high, offering attractive price-quality opportunities, especially with normalized freight costs post-pandemic.

Argentina and Chile: Market Resilience Amidst Challenges

Argentina and Chile navigate market dynamics with resilience amidst varying harvest conditions:

  • Argentina: Maintains good volumes of 2023 Malbec with stable pricing, awaiting potential economic policy shifts post-election.
  • Chile: Faces challenges with the 2024 harvest timing uncertainty, while showcasing competitive pricing on 2023 reds and whites following positive reception at global exhibitions.

South Africa, Australia, and New Zealand: Regional Insights

South Africa anticipates an earlier crop amidst varying varietal availability:

  • Product Availability: Varied availability with Chardonnay and Pinot Grigio sold out, while varietal reds present opportunities.
  • Market Dynamics: Lowest wine carryover in years expected by January 2024, emphasizing red wine stocks.

Australia and New Zealand manage unique market challenges:

  • Australia: Expects tariff removals to boost market prospects despite a smaller 2023 crush.
  • New Zealand: Benefits from stable 2023 Marlborough Sauvignon Blanc volumes post-frost season.

Key Takeaways: Market Dynamics and Future Outlook

The wine industry concludes 2023 amidst cautious optimism and strategic planning:

  1. Consumer Sentiment: Belt-tightening persists due to inflation and interest rates, influencing purchasing behaviors.
  2. Market Adaptation: Lower grape pricing may soften 2024 bulk wine pricing, creating opportunities for new brands and consumer engagement.
  3. Global Dynamics: Economic shifts and geopolitical factors will shape 2024 market conditions, necessitating flexibility and resilience from industry stakeholders.

In conclusion, while 2023 posed challenges, the global wine market navigates towards 2024 with resilience, leveraging quality offerings and strategic adjustments to meet evolving consumer demands and economic realities.

Source: Ciatti

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