In W35 in the wine landscape, according to European Commission data, from Jun-22 to the present, several European countries have experienced significant declines in wine consumption, including a 7% drop in Italy, 10% in Spain, 15% in France, 22% in Germany, and 34% in Portugal. France has allocated approximately USD 214.37 million to support producers and address wine surplus due to declining demand caused by increased craft beer consumption, weaker sales in China, and intensified competition in export markets. France's wine surplus for 2023 is estimated at 300 million liters, accounting for 7% of 2022's total wine production of 4.2 billion liters. Most of the aid will benefit the Bordeaux and Languedoc regions, involving the distillation of excess wine into ethanol for various industrial applications such as perfume, cleaning products, and hand sanitizers.
Bordeaux, the French red wine-producing area, has been affected by extreme weather conditions such as hail, frost, and drought, influencing grape yields and quality. Additionally, changing consumer preferences for wines with lower alcohol content have also contributed to a drop in Bordeaux red wine production, leading many wineries to seek government subsidies, with 584 subsidy applications submitted in a short period of time.
Italian wine companies are facing challenges with record wine stocks in cellars, reaching 4.5 billion liters as of Jul-23, and declining exports to non-European Union (EU) countries, particularly the United States (US). Notably, there has been an unprecedented stock increase of high-quality wines, with Protected Designation of Origins (PDO) seeing a 9.9% year-on-year (YoY) rise. Among the top 10 non-EU buyers, export volumes have increased only to Russia, while there have been double-digit declines in quantities sold to the US, Canada, Japan, Norway, China, and South Korea. Overall, wine exports in the first half of 2023 decreased by 9% in volume and 5% in value, with sparkling wines seeing a 13% reduction and bottled still wines declining by 5% compared to the previous year.
Similarly, Spain is grappling with an oversupply of wine, leading to the planned disposal of 40 million liters of wine. The Ministry of Agriculture in Madrid has expressed concerns that this surplus could push prices below production costs. To address this issue, producers from two regions, Catalonia and Extremadura, will receive EU support totaling EUR USD 2.89 million until October 15 to aid in the disposal of excess wine.
Lastly, Chilean wine production in the 2022/23 season declined by 11.4% YoY, marking the third consecutive year of decline. This drop is attributed to weak global wine demand, frequent climate disasters like wildfires and droughts, and cost-related issues. Of the total wine production, 923 million liters (83.8%) came from wines with a designated origin, 150 million liters (13.6%) from wines without a designated origin and unspecified varieties, and 292 thousand liters (2.6%) from wines made from table grapes. The main wine-producing regions in Chile are Maule, O'Higgins, and the Capital Region, accounting for 90.2% of the country's total wine production.
