production Flashcards
Global over supply
Global Wine Oversupply: Greg Livengood, CEO of Ciatti Global Wine & Grape Brokers, reported an oversupply in the market, the first since the mid-1990s, primarily due to a drop in consumer demand
Consumption decline
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General Decline in Wine Consumption: Since 2017, wine consumption has consistently fallen
- In France, wine consumption decreased from 150 liters per person per year in 1950 to 40 liters in 2022
- In **England, ** the proportion of 16-24 year-olds who reported drinking in the last week decreased from 67% in 2002 to 41% in 2019, a 26% drop, making them the lightest drinking age group among adults. (NHS)
- EU: EuropeanCommission has revealed a big drop in wine consumption across the traditional wine growing and drinkingheartlands of Europe, with falls of 7% in Italy, 10% in Spain, 15% in France, 22% in Germany and more than a third in Portugal.
- China: in 2022, wine consumption in China fell by 16% to 880 million liters, with a notable shift away from Shiraz and Cabernet Sauvignon,
- UK: Portman Group found that 24% of British drinkers are keen to cut back on booze
Global Production vs. Consumption
In 2023, global wine production was estimated at** 244 million hectoliters (60 years low),** outstripping consumption by 12 million hectoliters. In other words, even in a much-reduced vintage, there’s a glut of wine. **Oversupply **at present almost **equivalent to the entire UK wine market at 13.3m **hl (1.7bn bottles)
UK - yields
British producers harvest almost 10 tons of grapes/ ha hectare on average in 2023 - 50% more than the previous record.
Champagne-yield
Champagne has capped yields for its impending harvest at a slightly lower level than last year, as sales fall by almost 4% in the first half of 2023.
Yield droped 5% from **12K/ha to = to 11,400kg/ha **on 2023
Pulling vines- Chile
Tim Atkin Chilean producers are talking about pulling out 20,000ha of vines.
France and Chile are removing vineyards to address oversupply. France is offering 57 mm Euros financial support for vine removal of 10K ha in Bordeaux in 2023, whereas Chilean vintners lack such support, and they are just leaving them because cant afford to pull.
Viña Santa Rita has ssales lower around 8-9% below budget”, but other “big names are 30-40% down”, said Sebastian Labbé, the winemaker for Viña Santa Rita. ( falling demand in key export markets, particularly China, combined with low levels of domestic consumption– which he said is just 12 litres per capita)
-in 2022, wine consumption in **China **fell by 16% to 880 million liters, with a notable shift away from Shiraz and Cabernet Sauvignon, key varieties in Australian and Chilean exports.
Tim :Grapes are the world’s third most valuable agricultural crop, ahead of potatoes and tomatoes, apparently.
Climate change
An in-depth study recently published in Nature Reviews Earth & Environment by seven scientists, including the revered Cornelis van Leeuwen of the University of Bordeaux
Germany - yield management and pulling scheme
German Winegrowers’ Association - DWV - calls for a ban on new planting, a viner-pull scheme and ways for people to leave the profession in a socially responsible way. “The industry needs to find a new balance where supply meets demand in the long term,” wrote Christian Schwörer, DWV General Secretary in February 2024.
“The VDP is open-minded and positive towards Piwis. However, we believe they are still on their way, especially in terms of their distinctiveness, expression and perfect suitability for certain terroirs.” Only when Piwis could replace traditional varieties to the extent that “the identity of our valuable appellations is unmistakably reflected and a statement on ripeness can be made, will engagement in the rare top locations be conceivable.” PIWI
France pulling vineyard
France and Chile are removing vineyards to address oversupply. France is offering 57 mm Euros financial support for vine removal of 10K ha in Bordeaux in 2023, whereas Chilean vintners lack such support, and they are just leaving them because cant afford to pull.
the EU has pledged France €160m to pull up vineyards. And the French Minister for Agriculture promised €230m in funding at the last Millésime Bio in Montpellier as emergency help and to fund a vine-pull scheme.
Germany Price
However, the price structure in the German market remains his core issue. More exports are one answer, as it is not possible in Germany to charge enough to cover production costs. A “renaissance of quality viticulture” is necessary; “cheaper and more” would backfire on the industry. It must be “recognized that appellations deliver different qualities, from top wines to simple table wine.” The profile of any wine from entry-level to the top must be clearly understandable to consumers, even in New York or Tokyo, said Christmann.
At Weinbörse, the VDP also launched its latest advertising campaign: The focus is on young talent. A public auction of these wines raised around €60,000 which is to be used for scholarships, among other things, said Christmann.
BULK ciatti
Short Southern Hemisphere crops
All of the major Southern Hemisphere producer countries – Argentina, Chile, South Africa, Australia and New Zealand – are heading for harvests shorter than the average, owing to a combination of climatic issues, vine removals, and uncontracted vineyards not being maintained. Whether because of Mother Nature or human hand, the global bulk wine market is getting the Southern Hemisphere crops it needs to restore some supply-demand equilibrium – at least on the white wine market.
Shorter 2024 Southern Hemisphere harvests, combined with the return of China – still a significant consumer market – as a buyer of Australian wine, helps create the appearance of better bulk wine demand versus 2023.
Exports decline
**: Australian wine exports fell by 10% to AU$1.86 billion in the year to June 2023, significantly impacted by China’s tariffs, which nearly erased the China market for Australian wine from AU$1.2 billion to just AU$8 million in value
Ciatti Report- April 24
The bulk wine market is witnessing a shift towards more normal activity levels, marking the second consecutive month of increased momentum following a sluggish period last year.
Much of this activity is driven by the demand for generic white wine, which is facing shortages and price hikes in key producing regions like Spain, Italy, Chile, and South Africa.
Spain
Spain’s white wine supplies are experiencing depletion, resulting in noticeable price increases and prompting some importing, primarily from Chile.
Supplies of vintage 2023 varietal rosé wines are similarly limited, leading to elevated prices.
Prices for sulfated must and rectified concentrate are also high.
In contrast, availability of red wine remains ample, with pricing gradually softening from already highly competitive levels.
Italy
Harvest: 2023 crop confirmed at 23% short of average
California
California’s bulk wine market is experiencing sluggishness due to ongoing destocking at US retailers.
Inventory is increasing as more 2023 wines enter the market.
As a result, pricing in both the Coast and Interior regions has softened.
Suppliers are receptive to exploring new sales avenues, presenting international buyers with attractive price-quality opportunities for export.
California boasts the capability to offer low-alcohol wines.
Argentina
Harvest: Estimated to be 24% larger than short 2023 crop
Malbec export pricing is already softening and could soften more significantly if Argentina’s new government enacts its second peso devaluation, potentially sometime mid-year.
This harvest is expected to further build inventory, with carryover estimated at 250 million liters by June.
Chile
Harvest: Chile’s 2024 crop is forecasted to decrease by approximately 20-25% compared to the average.
This decline, coupled with increased demand for grape and bulk wine in recent months and improved export levels, has driven up pricing for white wines.
More recently, pricing for red wines has also started to rise.
Positive bulk wine demand levels in the first three months of 2024, and expectations of a shorter-than-average 2024 crop
Chinese demand for generic reds has been robust, even after a modest price increase.
South Africa
South Africa’s 2024 crop is expected to be short, potentially the smallest in 22 years.
Australia & New Zealand
China’s removal of elevated import tariffs on Australian wines, effective March 29th, has sparked increased enquiries and pricing for red wines, including Dry Red (Shiraz, and Cabernet Sauvignon).
New Zealand’s shorter crop, estimated to be down 20-25%, has led to supplier hesitation in committing to larger volume deals.
However, pricing on the remaining 2023 Marlborough Sauvignon Blanc presents an opportunity.
Starting from May 1st, New Zealand wines will benefit from tariff-free entry into the European Union under the new NZ-EU Free Trade Agreement.
US Product Yields
California fourth consecutive year of below average tields. Avg 3,5 mm gallons vs +4 in 2018
