|Oversupply pressures ease following reduced harvests around the world|
|Written by Laura Heywood|
|Thursday, 19 July 2012 11:23|
Global wine stocks are at their lowest point of the past decade, thanks to below-scale harvests in many of the major wine-producing regions, as well as rising grape and bulk wine prices, according to the Rabobank Wine Quarterly.
After many years of widespread oversupply pressures, the latest report claims the industry has moved closer to balance, with global wine inventories showing signs of gradual tightening.
The news has been welcomed by suppliers, who have lacked profitability in recent years. However, wineries are still feeling the pinch, according to Rabobank, with margin pressures mounting and difficulty in passing on the cost increases to consumers in the current environment.
In its Wine Quarterly, Rabobank reported there has been very little bulk wine available in the US and prices have risen dramatically, leading many wineries to secure supply via long-term contracts with growers or through the acquisition or expansion of vineyards.
Although it's early days for the Californian production season, which is just getting underway, initial reports suggest the crop is expected to be above average, which Rabobank says is "welcome news for many wineries".
In the European Union, with the exception of France, which has suffered some storm damage, the 2012 grape crop appears to be "off to a good start", according to Rabobank. EU regulatory bodies have also acknowledged the counter-productive impact of investments made to enhance vineyard productivity, as well as the high incidence of illegal vineyard planting activity in some member states.
Meanwhile, the Australian harvest has been estimated at 1.66 million tonnes, up 4% on the previous year. It is generally viewed to be "of a high average quality", Rabaobank adds, with red wine production recovered by 7% after heavy rain affected the 2011 harvest and white wine production remianing the same on the previous year.
The 2012 harvest is the third consecutive below-scale harvest in Australia, according to Rabobank, which has brought about the first significant rise in grape prices for many regions since 2008. Average grape prices increased around 10% to 20% in warm inland regions and key red wine-producing regions temperate climate regions across South East Australia.
In New Zealand the harvest has been estimated at 269,000 tonnes, down 18% on the previous year. Across the country, variations in size and quality vary widely, with production in Marlborough down 23% but of good quality, while Hawkes Bay is down 8%, Gisbourne up 8%, Nelson down 22% and Otago up 14%.
The wine grape crop in South Africa has come in much larger than expected at 1.3 million tonnes, which represents a 3.5% increase over the 2011 harvest. Whereas in Argentina, hail, high winds and drought have led to a 22% decline in production with the lowest value varieties, such as Criolla, most affected.
Chile has seen a healthy wine grape harvest with estimates suggesting a production increase of around 5% over 2011.