Bulk wine market to be hit hard by 2017 harvest

Wednesday, 6. September 2017 - 16:15

WikiCommons/Graham

Vintage 2017 is taking place around Europe, including in Italy, where harvest began in Sicily during the last week of July. The same trends are showing across Italy: there is a shortage of both white and red grapes, mainly due to the spring frosts in April, as well as the hailstorms that caused major damage to vineyards in various areas. Not only that, but this summer has also been the driest of the last 30 years, with prolonged high temperatures that exceeded 40 °C. Inevitably, there has been a 30% to 35% fall in the quantity of grapes, along with a fall in must yield per 100 kg of grapes.

While it is too early to judge, we have visited producers in the main production areas of Italy, and if the forecasts are confirmed, the next harvest could be one of the most problematic we have seen in the past 30 years.

The last report of Assoenologi estimates a production volume of about 40m hectolitres, down about 25% on 2016. From our point of view, that’s an optimistic prediction. So far we only have indications of what the grape prices will be, given that the wine market has yet to open, but we are certain that it will be a very bad situation for prices on the bulk wine market.

The situation is similar in other European countries such as France. Production from France’s 2017 vintage may fall by as much as 17%, to around 37m hectolitres. This would be a historic low, according to a French ministry report. That 17% would be lower than the five year average and worse than 1991, one of the poorest vintages in memory, because it was also hard hit by frost.

In Spain, the first estimates indicate a slight decrease compared to last year, to about 38m to 39m hectolitres. While there were also some adverse climate events they did not severely impact Castile-La Mancha, the country’s largest production area, responsible for nearly 50% of Spanish production.

To put all this in context, the 2017 is a situation that has not happened before. World production will fall below world consumption for the first time in 70 years. Europe will probably lack between 20m and 25m hectolitres. The first task of any company will be to secure supplies before submitting any offers. Prices will probably reach record highs from the moment that dealing begins.

Bottling companies that closed on contracts to supply between January 2017 and January 2018 may struggle if they haven’t already covered their needs, as they will have to pay more to secure the wine they need. Unfortunately, Eastern Europe can’t help, as there will not be a big vintage there either.

Luigino Lazzaretto, bulk Italian wine broker, and president of Intermediazioni Lazzaretto