Volume declines of Southern hemisphere harvest pushes up demand for bulk wines

By Arabella Mileham

Published: 14 May, 2015

Smaller harvest in the Southern hemisphere are set to boost demand for bulk wine, the latest report from Ciatti has said.

Volume estimates for the harvest across the Southern hemisphere are expected to be down on last year, the update said, with Argentina and New Zealand set to see the biggest declines.

This is helping to push up demand for bulk wines, as buyers look to secure supply, Ciatti said, particularly in New Zealand, which has seen a good quality harvest, although yields have fallen.

Argentina has suffered from a combination of bad weather during the late harvest and political and economic problems, which has seen the inflation rate soar by 30%. The future of the market remained 'uncertain', Ciatti said with government payouts for grape must not covering the cost of production, but elections in 2016 may bring a more positive scenario. The 2015 crop is down 8% on last year to 2.4m tonnes, or around 15% les than an average year. Although Malbec is said to be in "good shape", Cabernet Sauvignon has been particularly affected by poor weather, and volume and quality is likely to have suffered.

Elsewhere in South America, production is roughly in line with last year. Chile, whose 2014 crop was affected by frost, has recovered its volume, but is unlikely to see the same as the bumper 2013 crop. But Ciatti said there was an unexpected boost to its Sauvignon Blanc harvest, while Chardonnay volumes were in line with last year and the quality was good. It was the reds that have suffered a shorter harvest although this has boosted prices in recent weeks.

The Australian harvest is broadly in line with last year, but the average price for bulk wine has decreased however, down 4.7%, largely on the back of increased demand at the lower level. In the last 12 months, the country has seen a 3.6% rise in exports to 711mL, with strong demand from the UK and other markets, of around 6mL.

Bulk wine in the northern hemisphere is also strong, and the inventory remains low, the report said. In France, the prices for varietal wines was "stabilizing", but decreasing inventories was leading to concern about the availability of varietal wines before the next vintage. Bordeaux, Cotes du Rhones and the South West are tipped as alternative sources.

Spanish white and generic wines are also widely available, driving the market price down, but generic red and rosé inventories have fallen and the although price remain stable, these have risen for higher quality wines. Ciatti noted that inventories of Chardonnay, Sauvignon Blanc, Muscat and Merlot were almost sold out, while Cabernet Sauvignon and Syrah were also tightening.

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