W24: Wine Update

In W24 in the wine landscape, in Italy, May was the wettest month in a decade, with heavy rainfall occurring late in the winter season. Wine-producing regions such as Marche, Abruzzo, Molise, and Puglia were affected by continuous rain for over three weeks, leading to widespread disease pressure. Some wine suppliers have pulled their products from the market until the extent of the damage can be assessed. This situation, along with increased costs and high demand for grapes for grape juice concentrate, is expected to result in higher grape prices at the beginning of the 2023 season. Prosecco bottlings remained stable in May compared to the previous year, while Pinot Grigio DOC bottlings reached a record high with a 15% YoY increase. However, the red wine market in Italy continues to be slow. In Spain, the heavy rainfall in May and early June is expected to maintain attractive pricing. The vineyards have been rejuvenated by the precipitation, and the harvest is just three months away. The producers of wine grapes in the Valencian Community will be left without aid for crisis distillation due to the Department of Agriculture's failure to request it, unlike other autonomous communities. Only Catalonia and Extremadura have requested and will receive state funds for crisis distillation measures. Catalonia will receive USD 1.10 million from the Wine Sector Support Program (PASVE) budget for 2023, while Extremadura will receive USD 1.41 million from the wine sector intervention (SV) budget for 2024. The Valencian Community's wine grape sector has been experiencing a decline in profitability due to rising production costs, averaging 30%, and low sales prices for grapes and wine. Additionally, EU wine exports from January to April 2023 decreased by 8.5% compared to the previous year, resulting in an unprecedented accumulation of stocks in warehouses.

In South Africa, SAWIS estimates a 2023 harvest of 1,180,093 mt, which is a 14.5% YoY decrease from the already below-average 2022 harvest and one of the smallest in the past decade. This decline is attributed to rain, which significantly reduced the supply of Colombard and Chenin Blanc grapes, affecting the production of dry white and generic rosé wines. There is also a shortage of varietal rosé due to limited speculative output. Russia's share of global wine production is expected to surpass 3% by 2030, with the average annual wine export from Russia exceeding USD 9.3 million by 2023. Wine production in Russia is projected to exceed 50 million decaliters in 2023, indicating a 3.5% YoY increase. Furthermore, Russian wine producers demand a minimum of 50% customs duty on imported wines and a complete ban on brands from hostile countries. If approved, prices of imported wines currently sold at USD 3.59-5.99 would rise to 8.38-11.98, with restaurant prices ranging from USD 47.90-59.88 per bottle.

Over the last 10 months, the average price per litre of wine in the US market for DO Rías Baixas wine became 45.49% more expensive than domestically produced white wines and 12.62% pricier than Spanish white wines. DO Rías Baixas wines average USD 22.35/litre, while Spanish white wines average USD 19.53/litre, and local US whites average USD 12.16/litre. Argentina's 2023 harvest faced challenges due to late frosts impacting grape yields but resulted in high-quality wines with expressive complexity and good acidity. It marked the lowest yields since 1960, totaling just 1.437 billion kg. Lastly, Ireland has implemented new legislation requiring consumer awareness of alcohol-related risks and calorie content, effective May 2026. Thirteen EU member states, including Italy, France, and Spain, have raised concerns about potential violations of EU law. Moreover, the European Committee of Wine Companies (CEEV) filed a formal complaint with the European Commission to open an infringement procedure against Ireland for wine labelling and to avoid implementing this proposal.