In the past months, the European bulk market has changed significantly in terms of price and timing. No longer is Italian bulk wine simply moving from south to north Italy, or from Italy to the traditional European markets. Now all the markets are connected, and what happens here can form the market price and determine what happens right along the chain, up to the final price of the bottle on the supermarket shelf.
In the last harvest, Italy produced about 54m hL (from my point of view, no more than 48m to 49m hL; I believe the official figures were not calculated correctly), while Spain reported its biggest crop in several years, reaching about 53m hL. According to avilable figures, the world produced almost 300m hL of wine in 2013, which means that world wine production has increased significantly; production in 2013 is about 16% higher than the 258m hL produced in 2012. Yet the total consumption of wine is less than 270m hL, the amount needed for juices, concentrates, distillation and food sectors, giving a surplus of about 30m hL.
In line with the law of supply and demand, there has been a gradual lowering of prices from October to December 2013. From early 2014 to the present, there has been a further sharp decline which has brought the prices of generic red, white and rose wines to that of seven years ago, a historic low. This was due to the drop in prices triggered by Spanish and Italian overproduction. Meanwhile, in other countries such as France and Germany, some bulk wines are practically impossible to find.
In the southern hemisphere, the situation is no better; in Argentina, the economic situation has caused instability in both the internal and export markets, with a poor outlook for the grape juice concentrate market and a downward tendency in bulk pricing. In Chile the market is better, and the quality of the wine should be very good, but the crop will certainly be smaller due to last year’s spring frost. Sales and prices are stable, with exception of Sauvingon Blanc and Pinot Noir, which are the most sought after at present. In Australia the crop is normal and sales are steady, except to China.
In Italy, exchanges are reduced and the loading of bulk wine that’s been purchased is prolonged, creating discontent among sellers in recent months. Bulk players achieved good sales with good quotations until December 2013; beginning from the end of February 2014, due to lower wine consumption with a consequent lower demand for bulk wine, the market came to a halt.
Nonetheless there are some IGT/IGP, DOC/DOP and DOCG bulk wines that are tight on the market. Examples include: Primitivo/Zinfandel IGT/IGP, Prosecco DOC/DOP – which continues to be successful all over the world – and also Frascati DOC/DOP and Gavi DOCG. Meanwhile, there are some IGT/IGP wines that are suffering very poor market conditions, such as Pinot Grigio IGT/IGP and Merlot IGT/IGP, which lost about 20% of their value.
In the first four months of 2014, Italy exported about 1.96 hL of bulk wine – a downward trend of about 3.8% – with a median price of €0.72c/L; this is a fall of 14.7%, according to ISTAT figures, when compared to last year. Figures from 2013 show that Italy exported about 5.73hL of bulk wine, down 12.6% compared to the previous figure, with a median price of €0.84/L – up 26.2% on 2012.
The situation in Italy at the moment is not very good for two main reasons. There has been lots of heavy rain and also some hailstorms leading to downy or powdery mildew, and so the flowering of the vines has not always been regular.
While it is too early to judge quality, the quantity is likely to be poor in some areas. The summer has been abnormal, especially in central-southern Italy, with a lot of rain and low temperatures. At the time of writing in August, everyone hope this abnormal weather will not be prolonged, because it may negatively impact the next harvest. Some are already forecasting that the 2014 Italian crop must be lower, now that Apulia, Sicily and some northern areas have been damaged by downy mildew.
Moreover, producers are scared about the new harvest and the grape price, to the extent that some might consider abandoning vineyards; it may not be profitable to cultivate vineyards once production costs are taken out.
We expect to arrive in September with some stocks of bulk wine, but not many, particularly when it comes to white wines and some appellations. It is probable that, during the first part of the harvest, prices will be steady or have an uptrend for some products to cover immediate needs. After the first part of vintage, we cannot afford to raise prices and lose competitiveness in foreign markets.
