Global shortfall to deliver “unprecedented” impact, says Kingsland

By Andrew Catchpole

Published: 07 December, 2017

“The dynamics of the current market are unprecedented,” Kevin Wilson, Kingsland’s buying controller for South America and South Africa, has told Harpers, with reference to the OIV-estimated 10% global vintage shortfall in 2017.

“I had a strange situation at the recent Bulk Wine Fair, where a South African producer approached me, to ask if we have any wine to sell – supply is very tight, it’s worrying,” he added.

On the extent of the shortfall, Wilson’s colleague Adam Marshall, the company’s buyer for Europe, highlighted the rarity of current supply situation.

“1997 was the last year we had a failure of the crop in the north and the south, so this is a 20 year event,” said Marshall. “Things have been changing, global consumption and production are coming much more into line.”

“Prices are definitely going to go up, they will be affected for sure. From Europe this will impact more at the bottom end, but many well know names such as Chianti and Chablis will also be affected,” Marshall said.

“What we have lost in Europe is the equivalent to the output of South Africa and South America combined,” he added, underlining the volume shortfalls of 2017.

With South Africa and Argentina in short supply, Wilson said that Chile will become an ever bigger factor on the bulk market, with Argentina already having sourced a record amount of wine from its neighbour following a small harvest last year, and China now stepping up as the number one bulk importer from Chile, paying a higher price than Germany or the UK for its wine.

The Kingsland wine team makes the perhaps inevitable point as a major importer and supplier that to secure supply on a lot of wine, orders will have to be placed early.

“Pre-harvest contracts, agreeing volume and price, will be important to secure supply… the balance has shifted and it will be far harder for those [retailers] that would often wait and buy at the last minute to meet their requirements.”

What Wilson and Marshall do predict, though, is that there will be opportunities for less well-known regions to step in and plug some of the gaps.

“This opens up some interesting opportunities – things we haven’t seen on the shelf for a while could come back.”

With prices for top name wines and regions already on the rise and this likely to be exacerbated by the shortfalls in so many regions, Kingsland’s buyers cite examples such as Bergerac, which could take up some of the slack for Bordeaux, while the Rhone may also continiue to deliver comparatively good value.

As with much of the trade, as the potential impact of 2017 and its implications begin to feed through, Wilson and Marshall say the are “praying” for a better global crop 2018. However, Marshall added that an “average” harvest in 2018 would be unlikely to make up the shortfall, as consumption continues to rise.

With regards to the UK market, they remain optimistic that producers will stand by the market, sressing the importance of relationships forged for the long term.

“We are saying to producers that there may be some short term pain, but it’s not worth losing a listing, so we are taking a longer term view and suppliers are also doing that,” concluded Wilson.

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