W27: Wine Update

In W27 in the wine landscape, the European Federation of Origin Wines representing European Wine Designations of Origin (DOs) have issued a warning, expressing concerns that reducing pesticide usage poses a risk to the wine sector. The European Commission's impact analysis indicates that the decrease in the use of phytosanitary products will lead to significant reductions in grape production, estimated at 28% in France, 20% in Italy, and 18% in Spain. This potential decline in grape production could have significant implications for the wine industry in these countries.

The United Kingdom (UK) is Argentina’s third-largest wine export market, accounting for 11.08% of total Argentinian wine exports in terms of value in Q1-23. Recent changes in the tax regime in the UK have impacted Argentinian wineries selling their products in the UK. Under the new tax scheme, different tax bands have been established based on the alcohol percentage in wine and sparkling wines. The new regime will be effective from August 1, 2023, with a transition period. Starting in August, both wine and sparkling wines will be subject to the same tax rate, whereas previously, wine had a more favorable tax treatment. Wines with up to 8.5% alcohol will be taxed at USD 2.04 per bottle, while those with up to 9% alcohol will be taxed at USD 2.15 per bottle. The new tax regime will result in reduced taxation for wines with up to 10% alcohol, while those with 10.5% or higher alcohol content will face increased taxes compared to the previous rates.

Demand for British wineries continues to grow in the Scandinavian market, particularly in Norway, which accounts for approximately 25% of UK wine exports. While exports make up a small fraction of UK wine sales, at 7% in 2022, this proportion is increasing, largely driven by Scandinavian markets. Norway, in particular, experienced significant growth, with an 85% increase in wine sales in 2021. Norway is the world's largest importer of wine produced in the UK, with Vinmonopolet, the national monopoly, reporting retail sales of 135,456 bottles in 2022.

Lastly, according to New Zealand Winegrowers, despite harvest yields falling by 6% to 501 thousand mt in 2023, New Zealand saw a 25% jump in value of exports to USD 2.4 billion in the year to May 2023 due to international demand. New Zealand has become the 6th largest wine exporter by value globally, despite producing only 1% of the world's wine. The country's wine, particularly Sauvignon Blanc, has been gaining popularity, especially in the US market. Overall, the 2023 vintage was considered excellent in the South Island, according to NZ Winegrowers. However, growers in the North Island faced unprecedented challenges due to unusually wet weather, resulting in the loss of an estimated 20 thousand mt of grapes. Despite this setback, New Zealand's wine industry remains robust and continues to meet international demand.