The "consumption" section of the Organization of Vine & Wine's 'State of the World Vine & Wine Sector 2023' reveals a troubling trend: global wine consumption dropped to its lowest level since 1996, reaching 221 million hectoliters in 2023, down 2.6% from the previous year.
Despite a significant increase in the global population, consumption has declined, with growth gains since 1996 unraveling. Factors contributing to this decline include a substantial drop in Chinese consumption, pandemic-related lockdowns, and economic pressures like energy crises and inflation.
This decline predates the pandemic, indicating deeper systemic issues within the industry, including reduced discretionary spending power among affluent demographics post the 2007-08 financial crisis and changing consumer preferences. Vineyard surface area has also decreased over the past two decades, with vine removals driven by environmental and economic factors. While a supply correction may be necessary, it's crucial to consider the real-world impacts on individuals, businesses, and livelihoods within the wine industry.
France
- Overall demand for bulk wine remains subdued.
- Enquiries are primarily focused on non-vintage generic whites and rosés. This demand is driven by shortages of these wines across Europe and price increases in Spain.
- Demand for varietal/vintage whites, rosés, and reds is comparatively slower. However, prices for these wines are softening, presenting an attractive price-quality ratio.
- The risk of frost has passed without significant incident. Additionally, previously dry areas have received beneficial precipitation in the past month.
- Confidence in a crop size at least close to average in bulk wine-producing areas is growing. This confidence is expected to exert further downward pressure on prices.
Spain
- Prices for white wine and rosé in Spain have slightly softened from their April peaks, reflecting a slowdown in demand.
- Imports of white wines from South America contribute to the softening of prices, alongside the approaching 2024 vintage.
- Despite the softening prices, some supplies of 2023 rosé and white wine remain available in the market.
- Pricing for sulfated must has been elevated, but the market is now showing signs of cooling.
- Demand for red wine remains limited in Spain, with significant availability and highly competitive pricing.
- The absence of major frost issues and favorable spring rainfall have instilled confidence in at least an average-sized 2024 crop. This outlook should help keep Spanish pricing competitive in the future.
Italy
- Overall sales remain sluggish, but there are exceptions in specific categories.
- Prosecco DOC saw a 3.4% increase, while Pinot Grigio DOC witnessed a significant rise of 22% in April.
- White wines are experiencing high demand but are limited in supply. April loadings surpassed March levels.
- The forthcoming tourist season will be crucial in determining consumer response to higher prices on Italian wines. These price hikes stem from bulk price increases resulting from the 2023 crop's shortfall.
- Italy's vineyards have faced few concerns so far, aside from limited frost damage in Soave and drought concerns in southern regions and Sicily.
California
- Due to significant bulk inventory and sluggish demand, prices in the wine market have begun to soften.
- Coastal wines, particularly Cabernet and Pinot Noir, are presenting potential export opportunities with a globally unmatched price-quality ratio.
- Wine suppliers are receptive to exploring new sales avenues to adapt to market conditions.
- Central Valley wines, along with reduced-alcohol options, are readily available in the market.
- The grape market for 2024 is notably quiet, indicating subdued activity in the industry.
- More vineyards are expected to be out of contract this year compared to last year, barring significant weather events.
- Vine removals are currently underway, leading to longer wait times for certain removal services.
Argentina
- Argentina's 2024 harvest of around 1.9 million tons, combined with significant carryover stock, ensures continued ample availability of bulk wine.
- The quality of the vintage has been praised as excellent, dispelling earlier concerns about low alcohol levels.
- Malbec, generic white, and GJC (Generic Jug Cut) wines continue to dominate international inquiries, showcasing Argentina's strength in these varieties.
- Export pricing has softened compared to the end of 2023. Further softening could occur if the government removes currency controls, possibly around mid-year, leading to a devaluation of the peso against the dollar.
Chile
- The 2024 crush in Chile has been notably short due to erratic growing conditions and significant vineyard removals.
- Despite the challenges, improved export performance and increased domestic demand have led to a rise in all of Chile's bulk wine prices.
- Current availability of some wines, including 2024 reds, is lower than anticipated, prompting buyers to act swiftly in entering the market.
- While there has been a rise in exports, exemplified by European demand for generic white wines, some of this increase is attributed to one-time deals rather than sustainable growth.
- Chile, like other major wine-producing countries, continues to grapple with structural oversupply issues, despite recent market dynamics.
South Africa
- The aftermath of South Africa's very short crop is gradually becoming clearer.
- South Africa can offer the 2024 Sauvignon Blanc, 2024 Chardonnay, and the 2023 and 2024 international varietal reds.
- Availability is limited or challenging to find for the 2024 Pinot Grigio (due to the short crop), Chenin Blanc, and Colombard (due to positive domestic Dry White demand), and 2024 varietal rosés (due to domestic Dry Red demand).
- Export pricing remains stable, despite the weakened Rand.
- Only Dry White and Red pricing is considered globally uncompetitive, attributed to high domestic prices.
Australia & New Zealand
- The removal of punitive import tariffs on Australian wines by China has led to increased demand for entry-level Dry Red, Shiraz, and Cabernet, as well as high alcohol (14%+) and high-color wines.
- Consequently, pricing has risen in response to the heightened demand in the Chinese market.
- Chinese buyers have expanded their portfolios by seeking small volumes of white wines, including Moscato, Chardonnay, and Sauvignon Blanc.
- The surge in Chinese demand has resulted in some wineries fully allocating certain stocks to meet market needs.
- Total bulk exports for the 12 months to March 31st saw a 1% increase in volume, driven by the UK, Canada, and Belgium, while experiencing a 3% decline in value.
- Crush numbers in New Zealand are expected to decline by 20-25% due to cool spring weather conditions.
- Pricing for New Zealand's 2024 Sauvignon Blanc is in the mid NZD4/liter FOB range, while bulk 2023 Sauvignon Blanc remains available at competitive pricing.