Strong Pre-Harvest Interest in 2022 Southern Hemisphere Whites

As the wine world begins to come to terms with a Post-Covid-19, 'new normal', buyers of bulk wine consider the opportunities and challenges that face them. An analysis by winebroker Angelo Cotrone from Ciatti.

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Wine begins to move more freely
Wine begins to move more freely

 

  • The Southern Hemisphere 2022 should be of average size - apart possibly for Chile
  • Northern hemisphere 2021 Chardonnay and Sauvignon are in short supply, apart from in Spain
  • Prices of these white grapes may rise
  • All wine prices may rise at a time when other inflationary factors are taking effect on consumers
     

 

As is traditionally the case, the bulk wine market was quiet in the first few weeks of the new year. Sales from the important October-November-December sales period were being assessed and the situation in the Southern Hemisphere’s vineyards – where picking is imminent –watched closely. It looks as though the growing seasons in all the major producer countries of that half of the planet – apart from Chile, where lack of water is an ongoing issue – have been wetter and/or more humid than normal, raising disease concerns. However, most of the crops are expected to come in at least close to average in size, though it goes without saying that – with harvests only just starting to get underway – there’s still plenty of time for Mother Nature to intervene.

Rising prices for key whites

Where contracts have not already been signed pre-harvest, the Southern Hemisphere’s 2022 white varietal grapes (namely Chardonnay and Sauvignon Blanc) are expected to be purchased rapidly. Demand for the resulting white varietal wines should be strong and prices are likely to rise. Spain appears to be alone as a market in coming into the new year being able to offer standard and organic 2021 Chardonnay and Sauvignon Blanc in relatively good volumes, though the best qualities are sold out and prospective buyers are urged to move quickly on what remains. The global market for reds is notably slower than on the whites, as inventory is decent on everything except specific small-batch premium reds and - in some areas of Europe where frost affected the 2021 crop - good-quality high-alcohol reds.

Inflationary fears

Another likely reason for the bulk market’s trepidation in January was uncertainty as to what 2022 is going to bring in terms of sales. On the one hand, COVID-19 is being referred to in the past tense in some markets – such as the UK and Scandinavia – and the World Health Organisation has said that, while the pandemic is not over, the world is now in a ‘ceasefire’ with the virus “that could bring us enduring peace”. We might then expect sales to return to their pre-March 2020 patterns. On the other hand, rising input and shipping costs – and inflationary pressure in general – are likely to compound the effect of higher grape and bulk wine prices so that, through 2022, consumers might notice higher shelf prices for wine just when they themselves are feeling the effects of inflation on their discretionary spending. Annual inflation has continued to climb in the US (+7% in December), UK (+5.4% in December) and the Eurozone (a record +5.1% in January). Until sales patterns have time to settle and solidify we can expect much bulk market activity to remain incremental, with buyers covering only their short or medium-term needs.

Buyers and suppliers are going to have to be extra amenable and flexible in their relationships this year in order to make things work. The WHO’s ‘peace’ will hopefully allow the return of well-attended global trade shows after two years without them, an important development for building and strengthening the relationships required to weather such economic pressures. ProWein in Düsseldorf was postponed due to Omicron, but only by two months to 15-17th May; the London Wine Fair has, in turn, moved back three weeks to 7-9th June.

Ciatti is ready to draw on its decades of experience to help you bolster your bulk wine and grape relationships through 2022 and beyond: don’t hesitate to get in touch.

 

 

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