In October 2021, as the world started to emerge from the COVID-19 pandemic amid the vaccine rollout, we reported: “The global recovery is spurring inflationary pressure across supply chains and compounding a shortage of shipping containers, shipping vessels, and efficient port operations”. A year on, each of these problems persists, but we can say – in general – to a lesser extent. 

According to Drewry’s World Container Index as of 6th October, average 40ft container prices on the major US-China-Europe routes had dropped for over 30 consecutive weeks, standing 64% below their peak of 12 months ago. Although the current average price on these routes is still 160% higher than average 2019 rates – and on some routes even higher – the price trend appears to be moving in the right direction. Supply of containers is still tight on many routes but we are hearing of vessel space becoming easier to find and the shipping process growing smoother in general. 

At the same time, Europe’s 2022 harvests have come in average-sized (France and Italy) or at least close enough to the average (Spain) to keep pricing stable. A good barometer is the Languedoc’s white varietal prices: up versus 2020 due to the input cost rises in the intervening two years, but down versus 2021 due to the larger crop this year. Reds, meanwhile, remain in good volumes, with prices low and/or softening in France, Argentina (on Malbec), Chile and Australia; they recently rose in Spain, amid news the country’s 2022 reds were coming in shorter, but only back to the average level for the 2021/22 buying campaign after a prior period of softening. Chile’s 2023 grape prices, originally expected to remain in line with 2022’s, have started to soften due to a pull-back in grape demand. 

Exchange rates, meanwhile, are favourable for international buyers spending in dollars: the Australian dollar is worth USD0.62-0.65, the South African Rand USD0.05. The weakness of the Chilean (CLP920/dollar) and Argentinian (ARS157/ dollar) pesos potentially allows scope for export pricing to soften for dollar reasons there too. 

Many bulk buyers have purchased conservatively through 2022 to avoid the risk of sitting on excess supply if consumption falls, or to allow time for contracted wines to work their way through a dysfunctional supply chain. Consequently, buyer inventories may be growing limited enough that if market confidence were to rise, even only slightly, in addition to there being attractive bulk pricing, favourable exchange rates and more reliable and cheaper shipping, buying activity might see a notable uptick. 

Spring is now well underway in the Southern Hemisphere and no significant frost incidents have yet been reported. Water reserve levels in Argentina, Chile and South Africa appear adequate for the growing season, while a third-successive year of La Niña bringing above-average rainfall to Australia and New Zealand means an excess – rather than a scarcity – of water is the concern there. While there is understandable gloom about what 2023 might bring economically, the bulk market is – and will be – offering attractive price-quality opportunities and all sorts of possibilities for enterprise. Ciatti is here to help buyers and sellers defy the gloom and harness these: don’t hesitate to get in touch.

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