Global wine inventories have been trending downwards in recent years and, while some see this as a shift towards a supply shortage, Rabobank’s latest Global Wine Quarterly says it marks a continued move towards balance – albeit with variations in geography, varietal and price segments.
The report warns this move towards a more balanced supply could create challenges for certain wine-sourcing models, such asset-light business models in some regions.
“There is no doubt that asset-light sourcing models – where wine companies do not own/operate the key vineyard/winery assets required to supply their brands – can offer significant advantages for companies,” said Rabobank senior analyst Marc Soccio, “as they limit the amount of capital tied up, particularly in vineyard assets. However in light of declining global inventories, it is becoming increasingly important for wineries to have a realistic view of supply trends in order to secure their brands for the foreseeable future.”
The report says while the decline in inventories is a “phenomenon worth watching”, it can be partially attributed to short-term weather factor, as well as a conscious effort by the industry to bring supply more in line with consumption.
“Over the course of 2016 we saw the supply situation in the northern hemisphere start to tighten due to an unremarkable harvest in California and adverse weather across much of Europe,” Mr Soccio said, “with the 12 per cent drop in the French harvest behind much of the decline in global production.
“Meanwhile it was a mixed bag in the south, with production up in New Zealand and to a lesser extent Australia, while significant declines were reported in Chile and Argentina.”
For Australia: The value of Australian exports were up strongly in the first 10 months of 2016 (+7.3 per cent) largely to the ‘premiumisation’ trend in the US market, while export volumes were down slightly (-0.6 per cent) with strong growth in the Chinese market not enough to offset significant declines to the US, UK, Germany and Japan.