Over the past month, the global bulk wine market has remained largely quiet, with only Chile and Spain reporting steady activity.
Prices in these two markets have seen an upward trend in recent months, driven by shorter harvests and healthier demand – or at least the perception of healthier demand – compared to the previous year.
The market dynamics indicate that the current state of supply and demand, along with external trade pressures, are shaping the immediate future of the bulk wine industry.
Vineyard conditions indicate that overall crops in California, France, and Spain are likely to be near their average sizes. However, Italy is facing adverse weather conditions, with excessive rain in the north increasing disease risk and extreme heatwaves in the south causing insufficient rainfall. Last year’s short crop in Italy had already tightened the generic white wine market in Europe and beyond, and this year’s below-average crop sizes in Chile and South Africa are exacerbating the situation.
Impact of Trade Tensions
Trade tensions between the European Union (EU) and China are escalating, posing additional challenges for the wine industry. The EU has imposed extra import tariffs of up to 37.6% on Chinese electric vehicles, following a significant increase in China's share of the EU electric vehicle market. In retaliation, China has initiated anti-dumping probes into EU pork and brandy imports, raising concerns for the Cognac brandy business and potentially the broader European wine industry.
Despite these tensions, the impact on the wine industry may not be as severe as in the past. Wine imports into China have declined for six consecutive years, with wine consumption shrinking significantly from 17.6 million hectolitres in 2018 to an estimated 6.8 million in 2023. This decline is a contributing factor to the downward trend in global wine consumption.
France
- Prices softer across southern France. Attractive price-quality ratio opportunities.
- 2023 vintage rosés for quick loading. Non-vintage rosés for bottled, canned, or aromatized beverages.
- Remaining 2023 Sauvignon Blanc and Chardonnay stocks.
- Range of standard and high-quality red wines.
- Potentially competitive 2024 generic white wines and sparkling base wines from Charente.
- Mildew pressure in Bordeaux, South West, and eastern Languedoc due to rain.
- Dryness a concern in western Languedoc.
- Languedoc overall on track for at least an average-sized crop.
Spain
- Generic and varietal white wine supplies drawn down. New white-wine buying campaign to start quickly with firm pricing.
- Average-sized crop expected.
- Potential slower demand from grape must and distilling industries.
- Bulk wine pricing could soften medium-term.
- Recommended buyers secure some needs now and watch market trends.
- Greater supply of red wines, but pricing is elevated.
Italy
- Italy’s bulk wine prices stable at elevated levels, especially whites.
- Some appellations nearly sold out.
- Total wine stock in May 8.0 million hectolitres smaller than a year ago.
- Some grape varietals almost 100% contracted.
- Forecast for a slightly below-average crop.
- Risk of disease in the north and heat damage in the south.
- Clearer picture expected next month.
California
- Attractive pricing on Coastal bulk wines for mid-tier and Central Valley wines for standard programs.
- Prices lower than recent years, likely to soften as the 2024 crop approaches.
- One-year and multi-year deals available.
- Export activity mainly for Zinfandel rosé for Europe.
- Low- and no-alcohol wines available for export.
- Domestic buyer interest in bulk wines and grapes up, mainly inquiries.
- Vine removals continue.
- Heatwave in late June/July; crop expected to be at least average.
Argentina
- Argentina has good volumes of all Malbec qualities at stable pricing.
- Offers other varietal wines, generics, and white grape juice concentrate.
- Export pricing could soften if the new government devalues the peso.
- Early, cold winter with significant snowfall in the Andes benefits vine health.
- Expected La Niña arrival raises frost risk in spring.
Chile
- Prices rising on most of Chile’s bulk wines. Expected to level-off, but not fall.
- Buyers urged to move quickly to secure needed qualities.
- Tight white wine supplies; red wine supplies also limited. Rising prices on most reds.
- Attractive opportunities: lower Pinot Noir pricing and excellent ultra-premium reds and whites available in bulk.
- Unusually wet start to winter; central Chile in rainfall surplus.
- Significant Andes snowpack. La Niña influence could increase frost risk in spring.
South Africa
- Good-quality 2024 Sauvignon Blanc, Chardonnay, and red varieties available for export at stable Rand pricing.
- Limited availability of other wines due to the short crop and strong domestic demand for generics.
- Rand has strengthened against major currencies in the past two months.
- South Africa's bulk market in a quieter mid-year period.
- Suppliers assessing additional wines for the rest of the campaign.
Australia & New Zealand
- Entry-level Shiraz, Cabernet, Merlot, and Dry Red in demand post-China tariffs.
- Activity has slowed but mid-range and premium reds see uptick in domestic demand.
- 2024 red grape output 40% lower than 2021 peak; total harvest 9% larger than 2023.
- Declining soil moisture levels amid limited rainfall in Australia.
- New Zealand’s 2023 and 2024 Marlborough Sauvignon Blanc prices continue to soften.
- Robust wine exports contribute to record month for New Zealand’s total national exports in May.
Conclusion
The global bulk wine market is navigating a complex landscape characterized by supply constraints, cautious buyer activity, and escalating trade tensions. While Chile and Spain show some market activity and rising prices, California is seeing increased inquiries without a significant conversion to deals. Meanwhile, the broader European wine industry is bracing for potential impacts from trade disputes with China. As the market enters a traditional lull period, the industry's stakeholders are closely monitoring these developments and their potential long-term implications.
Source: Ciatti