Ciatti Report: Another Year Far from the Old Normal

A year on, COVID-19 already feels like something of the past in many countries, but the shock it gave global business – subsequently compounded by the outbreak of the Russia-Ukraine conflict this March – is still being felt and has ensured that, although pulling clear of the pandemic itself, 2022 is another year far from the old normal. An outlook by winebroker Angelo Cotrone.

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Supply chain challenges (Photo: Pawinee/AdobeStock)
Supply chain challenges (Photo: Pawinee/AdobeStock)

 

  • White wine from the Southern and the Northern Hemisphere is highly limited, bulk prices are therefore rather high. Red wine is less in demand.
  • Inflation’s impact on retail sales and the supply chain headaches pose great challenges.

 

In June last year Ciatti’s Global Report said: “The Northern Hemisphere autumn will be a litmus test as to whether vaccines have truly broken the cycle [of lockdowns] and so paving the way for the first ‘normal’ year, 2022, since 2019.” It turned out worse than expected:

The global supply chain crisis, the shortage of dry goods and spiralling fuel and energy prices were regular topics of discussion in May at the first ProWein fair in three years. These factors have a major negative influence on the economic development of the wine markets.
 

Red-White Split

The Southern Hemisphere nations were able to showcase some of their freshly-produced 2022 wines. On the bulk wine market, whites continue to lead buyer demand: South Africa’s supply of 2022 Chardonnay, Pinot Grigio and premium Sauvignon Blanc is already highly limited; levels of interest in Australia and Chile’s 2022 whites greatly exceeds interest in most of their reds; New Zealand Sauvignon Blanc is able to command very high bulk pricing at around NZD6.00/litre (EUR3.60) ex winery.

The red-white split is replayed in the Northern Hemisphere: France, Spain and Italy possess large volumes of uncontracted standard and entry-level red wine, while whites are in shorter supply.
 

Supply Chain Headaches

The slow retail sales that reds have been experiencing is compounding the logistical delays getting the wines onto retail shelves in the first place. This means that, on some reds in some instances, there remains a backlog to load, ship and retail before thoughts can turn to the 2022 reds.

 

But inflation’s impact on retail sales, and the supply chain headaches, are increasingly being felt on the white wine market too: Italy’s Pinot Grigio DOC bottlings have slowed due to a shortage of clear glass bottles; Chile’s supply of varietal whites is being contracted briskly but at a slower rate than in 2021; Spain still possesses some limited volumes of 2021 varietal whites at pricing lower than it was mid-campaign; South Africa holds good volumes of standard-quality Sauvignon Blanc and premium and standard-quality Chenin Blanc.

“Challenging times with plenty of dark clouds on the horizon.”

Our Italy page candidly reports this month: “The feeling in the industry is that the next 12 months will probably be – for the wine business – more challenging than COVID-19, with plenty of dark clouds on the horizon.” For businesses, anticipating and projecting, the future has not been this challenging for many years. But there is very little Ciatti, with its decades of experience, has not seen before…

 

Ciatti can draw on its decades of experience to help you navigate the bulk wine and grape – don’t hesitate to get in touch if you need help finding and harnessing the latest opportunities.

 

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