The large 2018 global harvest is starting to create a fundamental shift in the availability and pricing of wine, according to Rabobank’s latest global Wine Quarterly. And this is set to have a profound impact on trends in 2019.
As a result of the large global crop, bulk wine prices have started to ease, with prices for generic wines from Spain and Italy already easing in anticipation of the greater availability that the 2018 harvest will provide. International prices for Argentine wines are also lower, driven predominately by the peso devaluation, however.
This comes off the back of a smaller harvest in 2017, the report says, with global wine trade throughout much of 2018 reflecting the scarcity out of Europe and Chile.
In Australia, the report says average prices in local currency have remained stable, despite global trends, due to the favourable currency exchange and strong demand from China. That said, the report cautions global market dynamics may yet result in prices easing in coming months.
Although it’s still early in the season, expectations in late December 2018 pointed to an average 2019 local vintage – in the vicinity of 1.7 million tonnes. Although there are some downside risks, given the extremely dry and hot weather experienced so far in 2019.
Demand remains solid, the report says, with Australian wine exports growing by five per cent in volume and 11 per cent in value in the 12 months to September 2018. With growth reported in both bulk and bottled categories.
Exports showed continued growth in all key export markets (namely China, the US, UK, Canada and New Zealand) except the US, which recorded a drop in both value and volume – in the vicinity of 16 and 17 per cent. That said, the US market remains squarely in the sights of the Australian wine sector, with a focus to reposition itself as a prominent producer for the premium wine segment.
Canada “bucked the US trend”, the report said, with imports of Australian wine increasing by 16 per cent in volume, and nine per cent in value (year-to-date to September 2018).
China continues to be the most significant market for Australian wine exports, importing 25 per cent more Australian wine by volume and 24 per cent by value (year-on-year). That said, growth to this market slowed in the third quarter of 2018, compared to the same period during the previous year.