The Northern Hemisphere's wine harvest for 2024 is concluding, with key wine-producing countries facing reduced yields. France and Italy, two of the world’s largest wine producers, are expected to see their crops fall short of the five-year average by 11% and 12.8%, respectively.
Meanwhile, California’s harvest is projected at 3.2-3.3 million tons, slightly below historical norms, but not too far from the five-year average of 3.5 million tons. Spain is an outlier, with its harvest anticipated to meet the average, though a rainy end to the season might limit the availability of high-alcohol wines (11%+).
Despite these developments, the global bulk wine market has not seen a corresponding increase in activity. Italy, which saw its smallest harvest in 50 years in 2023, now has a slightly larger crop (7% higher than last year), but both Italian and Spanish bulk wine prices have been on the rise. This pricing reflects the lingering effects of Italy’s historically low output last year, which drove demand in Spain and other countries. Yet, the wine trade’s buying campaign is starting off quietly, a symptom of fragile underlying sales dynamics.
The pandemic-induced stockpiling by retailers and distributors has yet to stabilize, creating further challenges for the wine industry in 2024. In the US, wine retail sales volumes dropped by over 6% in the year leading up to August 10th. Similar trends are likely affecting Europe, where Spain was the only major country to register a sales increase in 2023. Growers, facing rising input costs and lower yields, have pushed for higher grape prices. However, wineries and bottlers are grappling with sluggish demand from retailers and distributors, which has squeezed margins, strained cash flow, and reduced their capacity to borrow. This could lead to a reduction in vineyard areas as financial pressures mount.
France
- The 2024 growing season faced challenges, with damp conditions at both the start and end, reducing yields and/or alcohol levels.
- A lower-than-average crop size is expected for 2024.
- There has been an increase in enquiries about 2023 red wines, firming up prices, possibly due to concerns about the quality of the 2024 vintage.
- Southern French AOP wines dominate the available supply.
- Carryover of white wines is low.
- Due to the lighter 2024 crop and rising operating costs, prices for the 2024 vintage, particularly for white and rosé wines, are expected to start higher than for the 2023 vintage.
- Special bulk wine opportunities that were available over the summer are now rarer, but suppliers are still eager to sell, encouraging buyers to inquire.
Spain
- Spain's 2024 crop size is expected to return to the average, after last year's shortfall.
- A wet end to the growing season has likely reduced the average alcohol content; higher-alcohol wines may command a premium.
- The bulk wine market is paused as European harvests are being assessed.
- Higher Spanish wine prices compared to last year have made buyers more cautious, leading them to buy incrementally, expecting prices to soften.
- Red wine carryover is still available at lower prices than mid-year.
- White wine carryover is minimal, and early buyer interest is focused on the 2024 white wines.
Italy
- Italy’s 2024 crop is projected to be 7.1% larger than the 2023 record short crop, but still 12.8% below the five-year average.
- Carryover stock is 7.0 million hectolitres lower this year compared to last year.
- Many appellations are arriving at harvest with very limited inventory.
- Producers are likely to raise prices to offset two consecutive smaller crops and higher input costs.
- Buyers are encouraged to secure the volumes they need sooner due to lower volumes and potential price increases.
California (USA)
- California's 2024 crop is difficult to estimate, with an October heatwave adding complications. Current expectations are around 3.2-3.3 million tons.
- Signs of a shorter crop have stimulated increased interest in grapes and bulk wine over the past 2-3 months, especially since the heatwave.
- Despite this, bulk wine inventory and uncontracted grapes remain high, and market prices are low.
- Export opportunities exist for a wide range of Californian wines: competitively priced generics, typical bulk export offerings like White Zinfandel, high-quality Coastal wines for mid-tier programs, and low- and no-alcohol wines.
- Multi-year deals are available, and potential buyers are encouraged to inquire about the latest opportunities.
Argentina
- There have been some international enquiries for Argentina's generic white wine and white grape juice concentrate (GJC).
- Argentina's bulk wine market is largely paused until the frost risk passes in mid-November.
- Frost fears are high due to dry early spring conditions and low overnight temperatures.
- The Uco Valley experienced a frost in mid-September, with damage still being assessed, but East Mendoza has so far been unaffected.
- Argentina's bulk wine exports increased by 11% and GJC exports rose by 110% from January to September 2024 compared to the same period in 2023.
Chile
- Vintage 2024 white wines are in limited supply, while total red wine stocks are larger, though standard-quality bulk wines make up only part of the inventory.
- Prices for both red and white wines have increased.
- Expectations of vineyard removals reducing the 2025 crop have driven grape prices higher between vintages, with anticipated higher bulk wine prices in 2025.
- Buyers are seeking extra supplies of 2024 red wines and are pre-harvest contracting 2025 whites.
- International buyers are advised to assess their 2025 white wine needs early.
- The forecasted La Niña dryness has not yet materialized, with rainfall in September and October, and fewer frosts than expected. Vineyards are currently in good health.
South Africa
- Wineries are assessing their sales and remaining stocks of 2024 wines to start setting prices for the 2025 vintage.
- Buyers needing wines early in 2025 are encouraged to make contact now.
- A lack of domestic availability and the strengthening of the South African Rand (from ZAR19 to ZAR17 per USD) have sparked discussions about importing Dry Red and Dry White wines.
- South Africa is facing historically low export volumes due to limited availability and slow demand in Europe.
- Early signs suggest a better-sized vintage for 2025, though vineyard removals could limit the potential yield.
Australia & New Zealand
- Australia's bulk wine market remains slow as attention shifts to the Northern Hemisphere harvests, and China works through earlier wine purchases.
- Frosts have caused widespread damage in South Australia and New South Wales vineyards, worsened by a dry winter and early budburst in some areas.
- New Zealand’s wine export value and volume declined in the 12 months to June 2024, with strong performance in January-June unable to compensate for a large decline in the second half of 2024.
- Leading markets, including the US, UK, and Australia, have been buying less volume from New Zealand.
Heading into the crucial October-December (OND) period, consumer confidence remains weak in major markets like the US and UK, comparable to last year when holiday wine sales disappointed. In contrast, confidence in France, Germany, Italy, and Spain is slightly higher than in 2023. While the wine industry hopes for a boost in final-quarter sales, there is little expectation that a significant recovery will materialize. Forecasting remains difficult in this uncertain economic and consumer climate.
Source: Ciatti