As harvest season approaches, how is the bulk wine market performing?

Thursday July 15 2021 by Vitisphere

“Stocks are not such a worry as they were at the end of 2020”, stresses Rafael del Rey.“Stocks are not such a worry as they were at the end of 2020”, stresses Rafael del Rey. - Photo credit : Anagram Wine

Overall, the bulk market is doing well this year”, says analyst Rafael del Rey, director of the Spanish Wine Market Observatory (OeMV). “The latest figures I have worldwide until March 2021 show a minimal 0.2% decrease by volume, after a 1.3% decline at the end of 2020”. The improvement can be ascribed to the increase in trade between producer countries, due to frost damage and factoring in prospects for the 2021 crop.

The main beneficiary of this upward trend is Spain, which exports over 10 million hectolitres of bulk wine a year – nearly three times more than Italy, the second largest market player – and therefore plays a decisive role in global trade. “The frosts in France and Italy boosted Spanish exports, but we do not know to what extent, because ultimately it depends on the categories of products most affected”, points out del Rey.

According to international brokers Ciatti, the upturn resulted in a 20% increase in Spanish wine prices, although the increase could be short-lived. Although it is too early to make any forecasts at this stage, del Rey acknowledges that “the weather has been fairly conducive to wine production in Spain this year. There was some frost in January, but we avoided the most devastating cold snaps in April and May. Also, the rainfall has been quite good”. Ciatti is more categorical and says it is expecting one of the largest Spanish harvests of the past five years.

The forecasts are fuelling fears of overproduction, and calls for crisis distillation. “Only distillation is effective in reducing volumes”, claims del Rey. “The problem is how much funding will be available for this”. The decrease in Spanish inventories since the start of the year has led to an improvement in the situation: “In March 2021, stocks were 5 million hectolitres higher than in 2020, but production was up 12 mhl, which shows that the wines are selling well”.

 

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