Farewell, 2023. It was good knowing you, but frankly after nearly 365 days, we're not too sorry to see you go. Indeed the only reason not to say 'good riddance' is that your successor doesn't look as though they're going to be any more agreeable.
Looking back at 2023
Looking back, this was a year that began and ended with the same European war plus a bloody conflict in the middle east whose long term direct and indirect impact is hard to predict. On the plus side, as we head into 2024, we are not facing the shortages of glass and other dry goods that were an early consequence of the pandemic and the invasion of Ukraine, and inflation rates have fallen from their peak in most countries, but we are still living with far higher costs. And, of course, the effects of climate change are taking their toll. Between January and November 2023, the global mean temperature was the highest on record, just under the totemic 1.5°C above the 1850-1900 pre-industrial average, and 0.13°C higher than the same period in 2016, the previous record-holder.
Greece suffered Europe's biggest recorded wildfires and, as the Washington Post reported, Spain edged closer to suffering two-four months of this kind of event every year, and produced 14% less wine than in 2022. Chile, the southern hemisphere's biggest producer picked 20% fewer grapes for the same reasons, while spring frosts and hail caused Argentina to lose an even larger percentage of its crop. Elsewhere untimely rain and hail severely cut production across Europe, contributing to one of the smallest harvests on record. And, the changing climate did not just affect grapegrowing: in October, the Panama canal had to restrict shipping for the second time this year because of drought.
Laws of economics
Historically, the basic laws of economics would have led to a hike in wine prices, but this hasn't happened. A fall in production has coincided with a drop in consumer demand. This is explained by a number of factors ranging from the expansion in the number of alternatives on offer (including cannabis), to the increasing shrillness of the World Health Organisation's - WHO - calls for a reduction in, if not an absolute stop to, global alcohol consumption. Whether these can also be blamed for the collapse of the fine wine market - with prices falling back to where they were three years ago - remains to be seen.
Global oversupply, and more specifically in France, led to the subsidised uprooting of 10,000ha of vines in Bordeaux but there are calls for similar moves elsewhere in Europe, including Rioja. Australian grapegrowers are also facing some hard decisions over the future of their vineyards, following the collapse of their Chinese export market, and the same is true in California and more especially Washington State following the decision by Ste Michelle to reduce production.
Out of adversity comes opportunity
As publishers of news and analysis, we would be wrong to pretend that any of this list of disheartening things were not happening. But, out of adversity comes opportunity. Producers of low- and no-alcohol wine are enjoying a boom and, although the explosive US growth of a year or so ago has slowed, canned wine is still gaining traction globally. Wine producers focusing on the premium and super-premium (rather than investible 'fine wine') sector are doing well too, as the US retail 'sweet spot' moves upward from $15. These are also potentially good times for anyone wanting to sell a profitable and - crucially - scaleable brand, as Daou proved in California with its $1bn sale to Treasury Wine Estates and Brown-Forman did with its disposal of Sonoma-Cutrer for $400m to the Duckhorn Portfolio. Unfortunately, though, the number of would-be sellers probably outnumbers the number of buyers, so the offer will have to be attractive.
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We hope you enjoy reading Meininger's International and find our insights useful for your business, and look forward to publishing lots more of this kind of material next year. Please contact us - via email or on Linkedin - with suggestions of topics you'd like us to cover, and please come and say hello at events like Wine Paris, ProWein, Vinitaly and maybe at our own Meininger's International Wine Conference.
In any case, from everyone at Meininger's, we'd like to take this opportunity to wish you seasons greetings and a very safe and prosperous new year.
Dr Anja Zimmer & Robert Joseph
