W38: Wine Update

In W38 in the wine landscape, from Jan-23 to Aug-23, Georgia wine exports to Russia increased 22.7% year-on-year (YoY), totaling 41 thousand metric tons (mt) valued at USD 112.1 million. This surge in wine exports accounted for 24.2% of Georgia's total exports to Russia. Similarly, Spanish wine exports in the first half of 2023 saw a 1.3% YoY increase in value, reaching USD 1.54 billion, although the export volume dipped by 0.3% YoY to 1.018 billion liters. Notably, the export value of Protected Origin (DOP) wine declined by 7%, while bulk wine exports dropped by 3.3% in value and 0.9% in volume. Regarding export destinations, the United States (US) remained the primary market for Western bottled wine despite a 2% YoY decrease in sales. The United Kingdom (UK) experienced a 15% increase in sales, while strong growth was observed in bulk wine exports to Germany (20%) and Portugal (25%). However, Italy saw a 50% decrease in bulk wine exports, and France experienced a 4% decline.

Moreover, in Spain's Castilla-La Mancha and the Valencian Community, the recent hail storms impacted the grape supply for wine production. Damage assessment is ongoing in these areas, and as a result, prices for grapes of acceptable quality are expected to increase. In Italy, the fungus Plasmapara Viticola has caused significant damage to grapevines in various regions, resulting in a 12% reduction in crop production compared to the previous year. The hardest-hit regions are located along the Adriatic coast, including Abruzzo and Molise, with crop losses of 40% and 45%, respectively. Southern Puglia, known for its red Primitivo wine, also saw a 25% decline in grape production. Furthermore, Italy's total wine production for 2023 is expected to drop to less than 4.4 billion liters, down from 5 billion liters in 2022, causing Italy to lose its position as the world's leading wine producer to France.

Many winegrowers and winemakers in Greece are facing a dire situation in 2023, with some unable to harvest grapes due to early downy mildew, hailstorms, and strong spring winds that damaged young vine shoots and flowers. Additionally, a prolonged Jul-23 heatwave impacted even mountainous regions, and Thessaly experienced catastrophic floods. Overall, Greece is expected to see a significant decrease in 2023's wine production, estimated at 25% to 30%, or even as much as 40%. Some areas, especially organic vineyards, may suffer losses exceeding 70%. On average, the country's wine production is down by around 30%, possibly nearing 40%, with the full extent of the damage becoming apparent as the harvest progresses.

In the US, wine sales during the first half of 2023 dropped by 7.3% YoY due to reduced purchasing power, particularly concerning sales of wine for home consumption (-8.2%), with red wines down by 9.6%. On the contrary, the decrease in dining out was less severe (-0.9%), and consumption of white wines now matches that of reds in this context. Although wine-based ready-to-drinks have a relatively small market share (around 2%), there is a growing trend towards on-trade demand for wine cocktails, primarily featuring Champagne, Prosecco, and Asti Spumante, driven by younger consumers.

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