Shorter harvests fail to stir uncertain bulk market

The Northern Hemisphere harvests are in full swing and this month’s report relays the latest news from the vineyards on crop size and grape quality. Only one of California, France, Spain and Italy appears on course for a crop size in line with its five-year average, the others look set to come in short to varying extents, whether due to Mother Nature, vineyard removals/mothballing, or both. But with inventories long and North American and European retail sales of wine continuing to struggle, the bulk market has been largely unmoved. This month’s report identifies the activity that has occurred.

Inflation and a cost-of-living squeeze are increasingly cropping up again in industry conversations. While the worst of the post-pandemic inflationary tailwinds are in the past, grocery and energy prices remain significantly elevated versus 3-5 years ago and consumers are reducing their spending on discretionary items accordingly. Annual inflation is back on the rise in the US, UK and Eurozone, while this year political and economic uncertainty seems to be common to many of the largest wine-consuming – and wine-producing – nations.

Low consumer confidence has become the norm: Eurozone consumer confidence was last in positive territory in June 2021; market research company GFK last gauged UK consumer confidence as positive in March 2016. As made stark by the International Organisation of Vine & Wine’s State of the World Vine & Wine Sector report published earlier this year, China is no longer around as a rapidly-growing consumer of wine to mask the erosion of consumption occurring in nearly every mature market.

Little wonder we report this month that the bulk wine businesses of Europe are looking ahead to the new 2025-vintage campaign with some trepidation, despite the harvests coming in far from bumper in size. One UK-based online wine retailer has sought to make a marketing virtue of the wine market’s current supply-demand imbalance, offering a “Crisis Deal” on wines from one particular producer region and positioning the situation to consumers as the region “asking for help” with “unprecedented” retail prices. This is perhaps a fair reflection insofar as the wine market – bulk and bottled – currently offers a highly advantageous price/quality ratio for coaxing more consumers to the wine category. This month’s report sniffs out such opportunities on the bulk market.

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