As the 2025 vintage sampling season progresses in the Southern Hemisphere, early quality assessments have been encouraging.
Wineries and producers in key regions are reporting positive early indicators for wine quality, especially in established export markets like Chile, Argentina, South Africa, and New Zealand. However, behind this optimistic vintage outlook lies a global wine market still grappling with oversupply, sluggish consumer demand, and evolving consumption trends.
Sampling Momentum with Cautious Demand
The bulk of sampling activity is currently being conducted by established buyers — importers and retailers with longstanding purchasing programs and tenders. New international interest, however, remains scarce. Despite favorable conditions for production in most regions, the wine trade continues to operate within a framework of minimal speculative purchasing and subdued new business generation.
Chile and New Zealand stand out in terms of crop volumes, but for very different reasons. Chile is dealing with a crop estimated to be 25% below average due to adverse climatic events. This shortfall prompted swift action from both domestic and international buyers, eager to secure available batches early. In contrast, New Zealand reports a bumper harvest, one so abundant that some fruit was left unharvested due to high stock levels from previous vintages.
Northern Hemisphere: Stable but Subdued Activity
Meanwhile, in the Northern Hemisphere, bulk wine markets continue to move forward cautiously. Activity has remained steady but lacks momentum, with purchasing decisions largely shaped by immediate needs rather than long-term contracts. Buyers are primarily requesting small volumes in a just-in-time manner, reflecting broader uncertainty in consumption trends and stock management.
In both hemispheres, the lack of significant new buyer entry underscores a global market that is still correcting itself after years of overproduction, inflation, and changing consumer behavior.
Retail Challenges: A Shrinking Wine Shelf
Retail wine sales, particularly in North America and Europe, are struggling to regain pre-pandemic traction. For some countries, this marks the fourth consecutive year of declining or stagnant performance. Retailers are increasingly consolidating their wine SKUs, reallocating valuable shelf space to alternative alcoholic beverages such as ready-to-drink cocktails, beer, or spirits.
According to the Ciatti California Report, discretionary spending remains under pressure, with many consumers rethinking non-essential purchases. Generation Z — comprising all drinkers under 28 — appears notably disengaged from traditional wine culture, favoring beverages perceived as more modern, health-conscious, or convenient.
Global Consumption in Decline, Preferences Shifting
Provisional estimates by the International Organisation of Vine and Wine (OIV) suggest that global wine consumption in 2024 was 22 million hectolitres lower than in 2019 — a volume equivalent to half of Italy’s typical annual harvest or the entire Californian output. This significant contraction has forced producers and traders to adapt their offerings and market strategies.
One notable shift is the increased demand for lighter and lower-alcohol wines. White wines, rosés, and sparkling wines are rising in popularity globally. Even in traditional red wine strongholds like Argentina, demand from Scandinavian markets now includes tenders for rosé, white, and sparkling wines — a testament to the changing preferences of consumers prioritizing freshness, lower alcohol, and perceived health benefits.
Low-alcohol (6–10.5% ABV) and no-alcohol wines are small but fast-growing segments, driven by both consumer interest and regulatory changes, such as the UK's revised alcohol duty system which incentivizes lower-ABV wine products.
Vineyard Outlook: Costs, Weather & Crop Management
As the Northern Hemisphere enters summer, vineyard health appears generally positive. However, human decisions — more than natural conditions — are expected to influence final yields. Financial pressure is leading some growers to cut costs on vineyard treatments, while strategic bunch-thinning is taking place in regions like California in efforts to align grape supply with diminished demand.
Looking ahead to late-season reds of the Northern Hemisphere’s 2025 vintage — due in early 2026 — there is hope that market fundamentals will have improved. The current price-to-quality ratio for bulk wine is favorable, and producers are keen for that value to translate into revived sales.
France:
- Inventory: Bulk wine stocks remain high in southern France despite a 17% smaller 2024 crop.
- Availability: All wines available; only Pinot Noir and premium 2024 rosé are tighter.
- Pricing: Low and negotiable, possibly undercutting Spain and Italy; favorable for pre-harvest loading.
- Buyer Opportunity: Excellent price-quality ratio; good timing for securing multi-year supply.
- Emerging Source: Cognac region showing promise for generic white wines.
- Vineyard Conditions: Hot, humid summer follows wet spring; vineyards in good shape.
Spain:
- Pricing: Bulk wine prices have softened but are unlikely to decline further in 2025.
- Inventory: Total stock is 10% below the five-year average.
- Crop Outlook: 2025 harvest expected to be good-sized.
- Buyer Advice: Now is a good time to secure wines while full availability exists.
- GJC & Musts: Sulfated must prices have eased; 2025 GJC likely competitive vs. Italy.
Italy:
- Trade Impact: US demand reduced by 10% import tariff and weaker dollar.
- EU Demand: Slower, especially from Germany and the UK.
- Exports: Prosecco and Pinot Grigio DOC bottlings down 6% in May.
- Pricing: Bulk prices remain stable.
- Supply: White wine and GJC limited; red wine more available due to weak demand.
- Vineyard Conditions: Generally good, but drought concerns in Puglia and Sicily.
California:
- Pricing: USD 2.00/gallon floor is softening; most wines priced at or near ‘California’ appellation levels, except some premium Coastal wines.
- Opportunities: Competitive prices for both mid-tier and standard export programmes; multi-year contracts available.
- Product Range: Low and no-alcohol wines also on offer.
- Crop Outlook: 2025 crop potential is good, but overall tonnage will be limited by vineyard mothballing and bunch thinning due to low grape demand.
Argentina:
- 2025 Crop Size: 1.98 million metric tons, in line with the long-term average.
- Supply Outlook: Over 1.0 billion litres of new wine plus 630 million litres of estimated carryover (as of June).
- Pricing: Stable compared to last month, lower than a year ago, and open to negotiation.
- Competitiveness: Globally price-competitive across generic red and white wines, and white grape juice concentrate (GJC).
- Demand Trends: Steady international demand with increased interest in lower-alcohol wines (including Malbec), whites, and rosés.
- Currency: Peso stable around ARS 1,200/USD after April’s removal of currency controls.
Chile:
- 2025 Crop Size: Estimated 25% below average, tightening supply.
- Stock Situation: All wines and GJCs still available, but white varietals and generics already in short supply.
- Pricing: Stable at elevated levels; may increase as stocks diminish.
- Buyer Activity: Longstanding customers prioritized; active sampling by both international and domestic buyers.
- Currency: Peso stable around CLP 940/USD since early May.
- Outlook: Vineyard removals and rainfall deficit raise concerns for the 2026 crop.
South Africa:
- Vintage Size & Quality: 2025 crop is 11% larger than 2024 and of excellent quality.
- Availability: Good supply across all generic and varietal wines, including rosés; Pinot Grigio is tightest.
- Pricing: Stable since Feb/March; Rand weaker vs. euro and GBP, slightly stronger vs. USD.
- Demand: Steady international interest, mostly from long-term buyers; US demand affected by tariff uncertainty.
- Sampling & Logistics: Sampling active; loadings proceeding smoothly.
Australia:
- Market Activity: Bulk wine market quiet; sampling of 2025 vintage has begun.
- Availability: Entry-level 2025 white wines are readily available.
- Corporate Moves: Treasury Wine Estates revised down EBIT due to tough US market.
- Industry Shift: Vinarchy formed from Accolade and Pernod Ricard wine units; focusing on premium and sparkling wines.
New Zealand:
- Crop Size: 2025 harvest expected to be large.
- Pricing: Softer prices on 2023 and 2024 stocks.
- Quality: Strong international recognition for red wines alongside signature Sauvignon Blanc.
Conclusion: Promise in the Vines, Uncertainty in the Market
While early signs from the Southern Hemisphere point to a promising 2025 vintage, the global wine industry continues to face structural challenges. From retail rationalisation to shifting consumer preferences and the emergence of low- and no-alcohol alternatives, the landscape is in flux. A cautious optimism persists — rooted in quality production and adaptation — but until core demand rebounds, the bulk wine market will remain under pressure.
Source: Ciatti