The 2024 campaign, another buyers’ market?

Traditionally, the wine market is slow over the summer and harvest period, but as the northern hemisphere crop picture for 2024 becomes clearer, markets are starting to pick up. What’s less clear is how low inventories and a short crop will translate to sales and pricing…

A cursory glance at current production estimates reveals the almost uncanny convergence between the three main European producer countries. Shortfalls on one side and increases on the other have virtually aligned this year’s crop expectations in Spain, France and Italy around the 40-million-hectolitre mark, give or take a million hectolitres or so. As the supply picture comes into sharper focus, it is starting to act as a catalyst for renewed activity in some markets. “Everybody is looking at each other to see who’s going to fire the first shot”, sums up Florian Ceschi , European director of international brokerage firm CIATTI Company .

Renewed activity in Italy

In Italy, where it was announced this week that production would come in below average at 41 mhl, buyers have sprung into action. “Over the past few days, we have seen a lot of concern, especially over the generic white wines”, says Ciatti’s Italian representative. “People were expecting to pay a lot less than last year but over the past fortnight, big companies have realised that the offer they made to supermarkets and the quantities are not the ones they expected at the end of August, so they are now wanting to close contracts on the generics as soon as possible”. Low white wine inventories and relatively short harvest volumes are a story that is common across the main producer countries, whilst red wines continue to weigh heavily on the industry. “There are no stocks of white wine”, concurs Ceschi. “For the reds, the problem is that there are stocks everywhere”. On a more upbeat note, though, availabilities of often good quality red wines at reasonable prices leaves plenty of scope for new buying programmes. Ceschi also stresses the quality of 2023 reds in a number of French co-operative wine cellars: “They would be wise to hold on to them and sell them at a later date potentially at higher prices, possibly adding a small percentage of 2024 wines to refresh them”.

Spain steps up as a key player

Generally speaking, however, the contrast between the fortunes of white wines and those of reds has probably never been starker, or more global. Within the bulk market, white wines are not only riding their own crest of popularity, they are also being buoyed by demand for sparkling wines. Italy exemplifies the trend: sparkling wines are not only driving domestic demand for wine, they are also leading the charge in export markets. The producer country most likely to benefit from base wine import requirements for sparkling wines is Spain. Even if initial crop estimates will probably be revised downwards to around 38 mhl, generally speaking Spanish wines will be available to plug this gap. Spain has witnessed a significant 17% drop in inventory levels of must and wine this year, but a longer 2024 crop could put pressure on prices. “The cause of the price increase in Spain last year was the small Italian crop”, explains Ceschi.

“Spain knows that its bigger crop this year will require it to drop its prices. Also, if rain causes Airen grapes to swell, the Spanish will put pressure on themselves to lower their prices in order to secure the French and German markets for white wines”.

The challenge of securing whites

France is indeed in a challenging position when it comes to white supplies: “France is hardly swimming in wine. Everybody talks about Cognac, but the reality is that the amount that can be sold as Vin De France is very small and the wines will probably be sold to French companies first, due to the prices”. With Gascony and Languedoc predicting smaller crops this year, Spain is likely to be in a comfortable position to supply Europe’s white wine import market. “Italy will probably need to buy some wines abroad for the generic white category and maybe also for some reds because the quantity produced is not enough for its needs”, confirms Ciatti’s representative in Italy. “I expect that next year, maybe in April or May, Italy will need to buy some wines in Spain”. Like Spain, Italy’s inventories are low: “Stocks at the end of July reverted more or less to the same level as in 2018, after the very short 2017 harvest. And with another very short crop this year, we will probably reach a record low in stocks next year”.?

Making wine relevant again

The data reveal the extent to which the rule book regarding conventional market dynamics in the wine industry has seemingly been torn up. In the past, it would be a given that a small crop and low inventories would create a sellers’ market. This year, pricing looks set to remain stable or at best to experience a slight uptick, despite spiralling production costs. The complexities of the market heading into the new campaign, with major pockets of growth alongside challenging market segments, make access to information key. More than ever, the WORLD BULK WINE EXHIBITION (WBWE) will act as a bellwether for the global bulk wine industry, delivering essential resources on pricing, availability and demand. Between now and then, the industry can pin its hopes on the Europe-wide promotional campaign for wine – VITAEVINO Campaign – which launches on October 1st in a bid to stem the tide of declining consumption and restore wine’s image as an essential component of the European lifestyle. It certainly couldn’t come at a more opportune time…

?By Sharon Nagel

Vinexposium

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