Global wine production in 2018 is improving the wine supply situation considerably. Average to good harvests in the major wine-producing countries in the southern hemisphere at the start of the year and a larger grape harvest than in recent years in many European countries are ensuring that significantly more wine is flowing into the cellars of winegrowers, wine estates and wineries.
In 2017, the international wine industry suffered one of the poorest grape harvests in recent decades, registering a total volume of just 250 million hectoliters. This resulted, in some instances, in substantial price increases for major wine categories: From standard wines with no designation of origin and sold as “generic white” or “generic red,” right through to the major varietal wines of individual wine-producing countries, such as Merlot from the New World countries and Tempranillo from Spain – all of these saw significant price increases. Many contracts could not be fulfilled or only fulfilled at higher prices, whereby individual wines disappeared altogether from large retail chains’ listings or registered sales slumps due to increased prices.
Wine production is acquiring an international flavor
More than a third of total global wine production is now traded across continents and national borders. International trade in goods is also playing an ever-bigger role for wine. New countries and markets such as China and the rest of Asia, but also emerging economies in Africa and South America, are beginning to develop a taste for wine. The global volume of international exports has now risen to over 180 million hectoliters worth over €30 billion, according to the latest report published by the International Organisation of Vine and Wine (OIV) in Paris.
While 2017 will go down in history as a year in which there was short supply, 2018 is improving the situation considerably. International grape harvesting in 2018 is set to herald a return to normal supply levels. This will mean less stress for buyers when sourcing required volumes as well as more moderate prices for wineries and trading companies. Early indications regarding future developments in terms of volumes, markets and prices are crucial for the market, and an initial overview of the current 2018 harvest looks promising.
Well-balanced grape harvest in the southern hemisphere
In the Southern Hemisphere, after three modest harvests in recent years, Argentina managed to build on a normal fall once again with a preliminary crop yield of 2.55 million tons. With a yield of 1.85 million tons or 13 million hectoliters, Chile managed to bring in a harvest 36% larger than what it produced in 2017.
With 1.79 million tons, Australia was behind both competitors from Latin America and harvested around 20% less wine than in the previous year. With 1.2 million tons, which represents a drop of 15%, South Africa managed to produce considerably less wine than in 2017 due to one of the worst droughts it’s witnessed in the last 100 years. The prices for Chilean and Argentinian wines therefore fell slightly. However, the major wine categories in South Africa became a little more expensive.
The United States is expecting to harvest 3.8 million tons of grapes this fall. Some of this will be used for wine, but some will also be used for raisins and other grape products. As in previous years, the wine volume is expected to be around 24 to 25 million hectoliters.
As such, the U.S. cannot cover domestic demand for wine from its own harvest alone and remains the most important import market in the world for all other wine producers. Hot weather and catastrophic large-scale fires, which also rampaged through some of its wine-producing regions, had an adverse effect on yields, but the volume of wine produced is on a par with normal levels.
Europe records considerably larger grape harvests
After an abysmally poor harvest in 2017, Europe is getting back on track. Spain is expected to harvest around 6 million tons, or approx. 40 to 42 million hectoliters. As such, Spain would register a considerably larger harvest than in the years following the record harvest of 2013, which would be around 7% above the long-term average. Due to frequent rainfall and the weather conditions, the harvest in Spain was delayed by around 14 days. However, the yield is decent in terms of both quantity and quality.
With 6.5 million tons of grapes, which when converted into wine comes out to 45 to 47 million hectoliters, France’s harvest is in line with the long-term average. The winemaking industry in France actually had to cope with countless cases of freak weather conditions, including hail and heavy rainfall, yet the expected volumes make for a decent harvest.
Winegrowers in Italy also had to deal with problematic weather conditions and hence a difficult vegetation period. However, according to estimates from the Italian Association of Winegrowers (UIV) of around 52 million hectoliters, the harvest could be one of the largest recorded in recent decades.
With just shy of 11 million hectoliters, Puglia is set to catapult itself to become Italy’s top wine-producing region, ahead of Veneto. The supply of major Italian white wines such as Pinot Grigio, Chardonnay, Soave and Lugana and red wines such as Sangiovese, Negroamaro, Primitivo and Montepulciano d’Abruzzo should therefore be ensured this year and next.
However, there is still some uncertainty surrounding Italy’s harvest figures. Shortly after the Italian Association of Winegrowers, the Italian Ministry of Agriculture published a forecast for harvest volumes that was around 6 to 7 million hectoliters lower. Whether the final figure is a little higher or lower will not actually have a major impact – whatever happens, the grape harvest will be way above the long-term average and much more substantial than last year.
Promising outlook for Germany’s harvest
According to the latest available figures and statements by observers, the winemaking industry in Germany should expect an impressive harvest. Feared yield losses on account of the long drought are proving to be well-founded only in exceptional cases. The harvest has the potential to reach well in excess of 10 million hectoliters.
This would be significantly more than the 8.5 million hectoliters that reached cellars in 2017. On account of the maximum yield limit regulated by law, which restricts the selling of the harvest, numerous winegrowers will not harvest everything that has been grown on the vines – a loss that is a bitter pill for winegrowers to swallow.
In view of the strong and healthy grapes produced, many cannot understand why such a harvest cannot be fully utilized. Non-harvested volumes could help to compensate for potential poor harvests in the next few years. However, anything that is not regulated is not allowed, and so part of the German grape harvest will perish on the vines.
Smaller wine-producing countries in Europe, such as Austria, are also reporting solid harvest forecasts. With a volume of 2.6 to 2.8 million hectoliters, the harvest could also be slightly above average.
All in all, market observers are predicting a global grape harvest of around 270 to 275 million hectoliters, which would be around 2% above the long-term average and around 11% above last year’s level. In view of average global consumption in recent years totaling 240 million hectoliters, the global wine market is returning to normal supply conditions and hence seeing the return of moderate wine prices in international trade. Consumers can look forward to good-quality wine at affordable prices.