A fan of The Horse’s Mouth recently sent us an article (below) about a rise in wine prices following a decline in global production and we thought we’d write more about the forthcoming global shortage equivalent to 1.3 billion bottles next year.
According to the article (source: The Metro) global wine production in 2012 will be at the lowest level for three decades. This will lead to an increase in prices as demand exceeds supply. World wine output will fall nearly half a billion gallons this year; France, Italy, Argentina, Spain, Hungary and New Zealand have all seen production fall.
The International Organisation for Vine and Wine (OIV) says that global wine production in 2012 will fall to its lowest level since records started in 1975. Global wine production is expected to be just under 250 million hectolitres (that’s just over five billion gallons). So compared to 2011 production of 265 million hectolitres it’s a major decrease.
In Europe, France and Italy, the world’s two largest wine producers, have also been very badly knocked. Cool weather and heavy rains damaged vineyards in France this year leading to a 19% fall in production, while Italian winemakers struggled with an abnormally arid summer resulting in a 3.4% production decrease. Outside Europe, Argentina has been the hardest hit and will see output will fall 24%.
With the thirst for wine growing, particularly in the developing world, it is likely that demand will outstrip production leading to a rise in prices. The biggest hit will be in cheap bulk wine – wine exported from its country of origin in bulk and packaged in the country it is sold in. Excelsior traditionally bottles the whole crop rather than selling bulk wine.
The weather is the primary factor in the decrease in production for 2012 but, particularly in the major European producers, the area under vineyard is declining. And even though wine production is increasing in many countries, it hasn’t been enough to act as a counterbalance. The figures from the OIV show that in 2011 the global wine-growing surface area dropped by 94,000 hectares compared with 2010, making the global total 7,495,000 hectares. It’s a result of a combination of factors, like the re-structuring of vineyards and the impact of the wine-growing crisis. But the shrinkage of the EU vineyard has been partially offset by the planted surface areas in the rest of the world; they are on the increase in China and Australia, and have remained more or less constant in the USA and South Africa. One major producer to buck the 2012 production trend is the United States where output has been predicted to increase by 7%
South Africa is also part of the club that is bucking the global trend. In the Southern Hemisphere, production in Chile and Argentina was ‘mediocre’ this year, with only South Africa producing “correct” volumes, according to Bertrand Girard, chief executive officer of Groupe Val d’Orbieu, the largest still wine cooperative group in France. Excelsior’s production this year looks promising and the latest estimates for South Africa indicate a 7.1% increase in production of local wines. SA Wine Industry Information & Systems have pointed out that the shortage in the rest of the world creates greater potential for exports, although the economic downturn is still having a negative impact on consumer spending, particularly in Europe. But South Africans need not fret about a shortage – export growth won’t affect local supply or prices!
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