- Fear of smaller harvests might cause bulk wine prices to rise in California and South of France.
- Due to a reduced consumption of red wine, its bulk wine prices continue to stagnate. The quiet of the market is reinforced by slowing sales of white wine.
- High shipping costs fuel inflation.
From Lower Harvest to Higher Prices?
In California, where an already light crop – especially in the Coastal areas – was hit by a week of extreme heat at the start of September, fear of a smaller harvest might bring movement into the market. For the first time in a while, buyers inquire into unsold 2021 Coastal wines, while suppliers of unsold 2022 grapes became more bullish on price, perceiving a stronger market for 2022 bulk. In southern France, meanwhile, a hail-affected crop in Gascony, an important table white-producing area, has injected further rapidity into the market kick-off for the Languedoc’s 2022 white varietals, carryover being so limited and buyers needing the new vintage wines to fulfil bottling runs.
Consumer Restraint: Lower Demand for Red and White Wine
But, elsewhere, a calmness prevails, especially on red wine, inventories of which around the world – France, Spain, Italy, Argentina, Chile, Australia, areas of California – are more than enough to meet demand. As our Italy page states this month: “The feeling is that consumption of reds in many countries has reduced; the reasons for this decrease are not clear, but it seems to be a global trend.” Harvesting of late-season reds such as Cabernet in California and Europe is only now underway, however, so there is still time for reds to come in shorter than expected, prompting inquiries.
As reds have been long in supply, globally-speaking, for some while now, it is the more recent slowness on white wine sales that is probably a better indicator of a consumer slowdown. Many case-good programs have been revised downward, releasing pockets of high-quality varietal white supply onto the market, Argentina and South Africa being two recent places.
Pressure from High Freight Prices
Recent falls in the oil price have helped keep inflation in better check (the rate has recently ticked down in both the US and UK), but upward pressure continues from food and dry-good prices. As the wine industry has been all too aware of this their rise is partly attributable to very high shipping costs. In a world interconnected by shipping lanes, high container prices and added surcharges – together with container shortages still not fully resolved some months after the pandemic – are likely to lead to an elevated inflation level. High shipping prices put immense pressure on both the buyer and seller to make a transaction work with shelf prices often rising to accommodate. This is true in bulk wine as in any industry.
It may be time for shipping companies to play a part in easing the business cost burden, for the good of the global economy.
Bulk wine buyers are understandably highly sensitive to the risk of paying for something they will not actually need. As we move towards the final quarter of 2022, and the price of energy bills starts coming into play in the European autumn, then winter, the consumer sales picture will become clearer, and the bulk market can respond accordingly.
This report is provided by Ciatti. We can draw on decades of experience to help buyers and sellers alike to anticipate the future marketplace.