The global bulk wine market at the midway point of 2024 shows improved activity levels compared to the same period last year, as Ciatti reported.
Two main factors contribute to this positive trend:
- Supply-Demand Balance in Generic White Wine: There has been a stabilization in the global supply-demand balance for generic white wine. This balance follows the short harvests in 2023 in Italy and Spain and the 2024 harvests in Chile and South Africa.
- China’s Removal of Import Tariffs on Australian Wines: The removal of China's punitive import tariffs on Australian wines in March 2024 has rejuvenated Australia’s red wine shipments significantly.
Potential Market Disruptions
A new development that could become significant in the latter half of the year is the emerging tariff war between the EU and China. The EU has announced extra import tariffs on Chinese battery electric vehicles (BEVs), citing unfair subsidies in China. In response, China has threatened to increase tariffs on a range of EU imports, including wine. This tension could impact the market, with potential new tariffs influencing trade dynamics. There has already been an increase in Chinese interest in French bulk wines, possibly in anticipation of these new tariffs.
France
- Southern French bulk wine prices have softened since the frost risk passed without major issues and the new vintage approaches with good water supplies.
- While some wineries have sold out and supplies of better-quality wines are dwindling, buyers seeking large volumes should act soon.
- With summer underway and the new vintage two months away, vintage 2023 rosés and white varietals currently offer attractive price-quality deals.
- Charente could potentially provide fresh juice from the 2024 vintage, enabling the production of competitively priced white wine.
- Additionally, US and Chinese demand for French wines has increased recently, potentially in anticipation of future trade wars.
Spain
- Pricing for Spain’s whites and rosés returned to an upward trend through May, with limited supplies available.
- White wine is competitively priced compared to European rivals, though elevated against traditional Spanish levels. Some white wine is available as part of package deals with reds.
- Rectified concentrated grape must prices have mirrored the white wine market, reaching a high in May.
- While red wine prices are trending softer, supplies of high-quality 14% alcohol reds are being drawn down.
- The short 2023 crop helped limit the size of the red wine inventory, reducing storage headaches.
- Vineyards are in good shape, and water reserves should adequately meet irrigation needs this summer.
Italy
- Italy’s white wine supply is limited following the short 2023 crop, with some DOC and IGT wines being sold as generic white to clear tank space ahead of the 2024 crop.
- Demand for generic white wine is high, and Prosecco and Pinot Grigio sales remain positive, with IGT Pinot Grigio nearly sold out.
- In contrast, red wine supply is more plentiful, but demand is sluggish relative to whites.
- Drought concerns persist in southern Italy and Sicily ahead of the 2024 harvest, while good water supplies in northern Italy have bolstered confidence in at least an average-sized crop.
California
- With bulk wine pricing softening across California, new opportunities are emerging for mid-tier export programs featuring high-quality, high-cachet Coastal wines.
- There are also opportunities in the Central Valley for more typical bulk wine programs.
- The market offers a full range of red and white varietals, including Zinfandel rosé and low-alcohol wines.
- While bulk wine and grape activity has seen a slight uptick in recent weeks, the overall market remains sluggish.
- Large volumes of unsold inventory are expected to linger, and many vineyards may enter harvest without contracts.
- However, the growing cycle is proceeding on a normal timetable, and vineyards are in good condition.
Argentina
- Export pricing on Argentina’s 2024 vintage starts at a slightly elevated level compared to 2023, as suppliers aim to offset increased input costs due to December's peso devaluation and a 500% rise in energy bills.
- The 2024 crop, at 1.9 million tons, is slightly below average, with lower average alcohol levels than the previous year.
- A second peso devaluation is on hold until the Milei government passes its economic bill through congress.
- The weather in late autumn has been unusually snowy and cold, with many cool hours. Additionally, La Niña is forecast to arrive mid-year, potentially bringing dryness.
- New statistics from Bodegas de Argentina and Mendoza’s National University of Cuyo show that in 2023 wine exports alone were down 31.2%, with bulk wine exports plummeting 44.7% to 43.1 million liters and bottled wine exports decreasing by 26.6% to 162.2 million liters.
Chile
- Price increases across the full spectrum of Chilean wine have been driven by steady international demand, improved export performance, and a short 2024 crush.
- With minimal carryover from 2023, the switchover to 2024 white varietals has been rapid, and some wineries are nearly sold out of certain whites.
- Although red wine supply is relatively more abundant, red wine prices have seen the most significant rise, starting from a lower base.
- Feedback suggests the 2024 vintage quality is excellent. Winter has begun snowy and wet, with many cool hours, but La Niña is expected to arrive in July, potentially bringing dryness and the risk of frost.
South Africa
- South Africa can offer 2024 Chardonnay and Sauvignon Blanc at globally competitive pricing, with red varietals also available.
- However, the availability of other wines is more limited due to a very short crop and steady domestic demand.
- International demand is currently quiet, and export volumes have been declining over the past few years at a rate outpacing wine sales declines in key European markets, raising concerns that South Africa may have lost market share.
Australia & New Zealand
- The removal of China's punitive import tariffs on Australian wines has resulted in immediate increases in shipments, particularly for commercial Dry Red and varietal reds, accompanied by notable price rises in recent weeks.
- Sales of mid-range and premium wines are slower, and pricing for white wines has remained stable. The pace at which the Chinese market absorbs initial orders and the demand for subsequent volumes are uncertain.
- Meanwhile, stocks of 2023 Marlborough Sauvignon Blanc from New Zealand are available at attractive prices lower than the 2024 vintage.
- Despite a 14% decrease in export volumes over the past year, the value of New Zealand's wine shipments has held steady.
Future Outlook
- The outlook for the second half of 2024 remains cautiously optimistic but with uncertainties surrounding geopolitical tensions, climate conditions, and economic policies that could impact global wine trade.
- Proactive market strategies, such as diversification of product offerings, strategic pricing adjustments, and sustainable vineyard management practices, will be crucial for navigating these challenges and capitalizing on emerging opportunities.
In conclusion, while the global bulk wine market in mid-2024 displays resilience and some areas of growth, it also faces complexities and uncertainties.
Source: Ciatti