Vineyard conditions mixed
California, France and Spain currently appear on track to have harvest sizes at least close to their averages. Much of California has been experiencing a record heatwave through the first half of July that could slow sugar accumulation and slightly affect yields. But as the growing cycle in California was running three to four weeks ahead of where it was in 2023, and water supplies are good after a wet winter, the heat is not – yet – a significant concern. After the country’s short crop in 2023, conditions in Italy are again troubling: there has been too much rain in the north (increasing disease risk) and too little in the south (where heatwaves have been extreme).
Attractive opportunities
It was Italy’s short harvest in 2023 that led to a tightening of the generic white wine market in Europe and beyond, exacerbated by shorter crops this year in Chile and South Africa. Buyer need has been created by this shorter supply, rather than any noticeably concerted uptick in retailer-distributor demand. The slow market has opened up attractive one-year and multi-year opportunities on a wide range of quality wines for bulk and mid-tier programmes, from standard red and white varietals through to items such as declassified high-end French rosé, New Zealand Marlborough Sauvignon Blanc, and Coastal California appellations with cachet.
EU-China tensions concerning
Trade tensions between the EU and China continue to escalate. Claiming “unfair subsidisation”, the EU has, as of 5th July, imposed extra import tariffs – of up to 37.6% – on electric vehicles from China. In retaliation to this and ongoing EU investigations into Chinese wind turbine and solar panel imports, China is carrying out anti-dumping probes into EU pork and brandy imports. This is of great concern to the Cognac brandy business, but also Europe’s wine industry, which understandably fears it could be next.
Shrunken Chinese market
Chinese tariff hikes may not have the same impact on the wine market as before: according to the International Organisation of Vine and Wine (OIV), wine imports into China have declined for six consecutive years. Wine consumption in China is estimated to have shrunk from 17.6 million hectolitres in 2018 to 6.8 million in 2023 – a factor in the downward trend in global wine consumption. But extra trade barriers are far from ideal during a period of bulk wine market slowness, particularly for red wines.
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