The exception
Italy – having experienced a crop size well short of the average – is the main exception. As anticipated in our report last month, Italy’s 2023 production most likely came in well below average, with a joint report published in November by Unione Italiana Vini (UIV) Observatory, Ismea and Assoenologi estimating a range of 38-40 million hectolitres. Prices in Italy are feeling upward pressure. Hardest to find are generic white wines and sparkling base wines which, this vintage, lack most of the production from central and southern Italy. UIV-Ismea-Assoenologi estimates that, on average, northern Italy saw a 9.5% drop in wine production this year, but central Italy (-29.5%) and the south (-38.2%) experienced even greater falls.
Consumer caution
The leading causes of consumer belt-tightening on discretionary items like wine – grocery price inflation and elevated interest rates – have been trending downward this year but are widely expected to continue making themselves felt in 2024, accentuated by high household debt and banks retreating from business loans and credit card financing. Consumers are keeping a watchful eye on spending, as shown by news from the UK that the use of cash – bank notes and coins – in transactions rose in 2023 for the first time in ten years.
Margin squeeze
Retail price rises on wine, just like on any other product, get noticed by consumers, and retailers know it – their argument for taking less wine than before, or pushing back against suppliers seeking to protect margin. Such pushback ultimately falls upon the grape grower, operating in a high-cost environment while facing lower grape prices and/or less demand. The only recourse is greater efficiencies, many of which can be unpleasant, such as removing uncontracted vineyards.
Opportunities in 2024
If grape pricing is lower in 2024 it could help open up some highly attractive price-quality bulk wine opportunities. These can be used to fulfil new brands and products that might better engage new consumers and younger demographics. We are already seeing such opportunities open up on the 2023 vintage, with quality products like Marlborough Sauvignon Blanc and Coastal Californian wines lower in price versus a year ago. With the levelling price effect of less demand, and the return to pre-pandemic freight costs on many routes, 2024 could prove to be the best year for some time in which to get proactive and creative with bulk wine sourcing.
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The Ciatti team can draw on its many decades of experience to help buyers harness these opportunities, while assisting suppliers in finding good homes for their grapes and wines: don’t hesitate to get in touch. The team would like to wish all of its clients, friends and associates a Merry Christmas and a Happy New Year.
