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Ciatti - Insights into the Global Bulk Wine Market

 

The bulk wine market is witnessing a shift towards more normal activity levels, marking the second consecutive month of increased momentum following a sluggish period last year.

Much of this activity is driven by the demand for generic white wine, which is facing shortages and price hikes in key producing regions like Spain, Italy, Chile, and South Africa.

France

  • Demand for southern French non-vintage generic wines, particularly whites, remains strong, especially with indications of dwindling supplies of entry-level white wines from Spain.
  • Vineyard conditions in April will play a crucial role in determining whether Vin de France (VDF) prices will trend upwards or downwards in the months leading up to the 2024 harvest.
  • Potential frost events combined with elevated humidity following a wet spring could result in significant damage to vineyards, impacting pricing dynamics.
  • The varietal Indication Géographique Protégée (IGP) market is experiencing intermittent activity, with pricing softening across all wines, including Sauvignon Blanc and Chardonnay.
  • Current pricing in central and southern France presents a highly attractive opportunity for buyers across the board.

Spain

  • Spain's white wine supplies are experiencing depletion, resulting in noticeable price increases and prompting some importing, primarily from Chile.
  • Supplies of vintage 2023 varietal rosé wines are similarly limited, leading to elevated prices.
  • Prices for sulfated must and rectified concentrate are also high.
  • In contrast, availability of red wine remains ample, with pricing gradually softening from already highly competitive levels.
  • The growing season has commenced favorably, benefiting from helpful precipitation and warm temperatures, which have reduced the risk of frost.
  • The crop situation is expected to become clearer in May, providing further insights into the market dynamics.

Italy

  • Italy's generic white wines continue to experience price increases due to short supply, a trend mirrored in several other producer countries.
  • However, pricing is more stable for the main Denominazione di Origine Controllata (DOC) and Indicazione Geografica Tipica (IGT) wines, reflecting slower wine sales at retail, especially in Europe.
  • Sales uncertainty has prompted bottlers to adopt a just-in-time approach to acquiring wines.
  • Bottlings of Prosecco DOC and Pinot Grigio DOC slowed in March following a robust January and February.
  • The upcoming summer holiday period, coupled with events like Euro 2024 and the Olympics, is anticipated to stimulate wine sales and foster greater optimism within the industry.

California

  • California's bulk wine market is experiencing sluggishness due to ongoing destocking at US retailers.
  • Inventory is increasing as more 2023 wines enter the market.
  • As a result, pricing in both the Coast and Interior regions has softened.
  • Suppliers are receptive to exploring new sales avenues, presenting international buyers with attractive price-quality opportunities for export.
  • California boasts the capability to offer low-alcohol wines.
  • The state's grape market is quieter than usual, with the expectation that more vineyards will be out of contract this year compared to last year, barring significant weather events.

Argentina

  • Malbec pricing in Argentina is experiencing continued softening, presenting attractive opportunities across all quality levels.
  • Increased prices and reduced supply in Europe have led to heightened international interest in Argentina's generic white wines.
  • Argentinian grape juice concentrate (GJC) exports have seen a significant rebound this year, with a notable increase of 110.5% in January-February, driven by higher pricing in Spain.
  • The 2024 harvest in Argentina is anticipated to approach, though still fall short of, the 2-million-ton mark.
  • This harvest is expected to further build inventory, with carryover estimated at 250 million liters by June.

Chile

  • Chile's 2024 crop is forecasted to decrease by approximately 20-25% compared to the average.
  • This decline, coupled with increased demand for grape and bulk wine in recent months and improved export levels, has driven up pricing for white wines.
  • More recently, pricing for red wines has also started to rise.
  • Supplies of 2023 white varietals are expected to be depleted by May, and generic white grapes are anticipated to be in short supply this harvest due to drought conditions in the north.
  • Consequently, the 2024-vintage white wine market is expected to commence with high demand, particularly for Dry White wines.
  • Tintorera and Pinot Noir varieties are projected to lead demand in the red wine segment.

South Africa

  • South Africa's 2024 crop is expected to be short, potentially the smallest in 22 years.
  • Robust domestic demand, coupled with the reduced crop size, means that Dry White, Colombard, Chenin Blanc, and Dry Red wines will be in short supply.
  • Limited production of rosé is anticipated as output of Dry White and Dry Red wines takes precedence.
  • International varietals intended for export will be in better supply, with Chardonnay impacted by the crop shortfall while Sauvignon Blanc performed closer to normal levels.
  • Red varietal supplies will benefit from good carryover stock levels.
  • Pricing on international varieties remains stable, following a moderate increase between vintages.
  • The Rand's weak position against major currencies is a contributing factor to pricing stability.

Australia & New Zealand

  • China's removal of elevated import tariffs on Australian wines, effective March 29th, has sparked increased enquiries and pricing for red wines, including Dry Red (Shiraz, and Cabernet Sauvignon).
  • While the tariff news has injected positivity into the market, it is unlikely that export volumes to China will reach their 2020 peak.
  • The crop situation in China remains challenging to quantify, with some cool-climate areas reporting volumes below estimates, and red grape volumes left uncontracted.
  • New Zealand's shorter crop, estimated to be down 20-25%, has led to supplier hesitation in committing to larger volume deals.
  • However, pricing on the remaining 2023 Marlborough Sauvignon Blanc presents an opportunity.
  • Starting from May 1st, New Zealand wines will benefit from tariff-free entry into the European Union under the new NZ-EU Free Trade Agreement.
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