The Northern Hemisphere harvests are now complete and all have come in lighter than average, though the shortfalls in Italy and Spain (both estimated by OIV to be -9% versus the five-year average) are not dramatic in an historical context, unlike France’s very light 34 million hectolitres, down 27% since 2020. We estimate California’s crop to be short of the 4-million-ton mark that could be said to be the approximate state ‘average’, though not as short as 2020’s 3.4 million tons. 

These short crops north of the equator have ensured this year’s global wine production will be – according to the OIV – “extremely low” at 247.1-253.5 million hectolitres, down from a provisional figure for 2020 of 262 million and 7% down from the 20-year average. However, it ought to be noted that the OIV also identified the 2021 Southern Hemisphere as having had a “record-high” crop, up 19% versus 2020, with only New Zealand seeing a shortfall. Other than on the international varietal whites Chardonnay and Sauvignon Blanc, we are not seeing a particular shortage, with – globally-speaking – the international red varietals and generic red and white wines in sufficient supply for demand, which is not currently intense. Argentina, Australia and Spain are carrying red inventory, so too France despite this year’s short crop, and both Australia and France are seeking to use the greater demand for whites to shift red wines via package deals. 

Outside specific items – Chardonnay; Sauvignon Blanc; high colour, high alcohol reds, Pinot Noir in some instances; Italy’s Prosecco and Pinot Grigio – demand levels reflect the uncertainty you would expect to see with the world in such a novel position: emerging from a global pandemic. The past 20 months have so warped market rhythms and trends that making long-term sales projections is brave. The rapid economic bounce-back could, in 2022, be the very thing that harms economies, as supply chains struggle to meet demand and inflation, in turn, stagnates consumer spending. 

New Zealand Winegrowers CEO Phil Gregan succinctly summarised the supply chain problem: “Like every industry dependent on sea-freight, the ability for New Zealand wineries to ship products to market has been greatly impacted, as transport costs more than double and shipping reliability plunges. Unfortunately, this is a worldwide problem without any quick fix.” Every major wine-producing country is reporting wrestling with port backlogs and a shortage of shipping containers, to varying extents. The inability to ship as quickly as in the past is scuppering potential bulk deals (currently exacerbating red wine inventory as China struggles to find wines that it can import in time for Chinese New Year) and will, if it continues in the medium to long-term, inevitably shift the focus away from trade across oceans toward more local markets where possible. Increased input and freight costs, and deals based nearly as much on time/location as on best price, are likely to increase shelf prices for wine just as consumers start to feel the inflationary pressure. In the bid to claw back margin, could the trend away from generic to more expensive wines start to reverse? We shall see in 2022. 

In the meantime, we urge buyers and sellers to stay in dialogue with each other, plus with ourselves and the freight-forwarders, in order to help mitigate as best as possible the impact of any delays. Read on for detailed updates from each market, get in touch with us directly for help, and stay safe.

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