Entry-level wine prices up as harvest falls short

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Global shortages are sending entry-level wine prices skywards, leaving UK buyers with little negotiating power and having to make speedy decisions under pressure.

 

 

This year’s world wine harvest, which will come in, according to Harpers sources, at under 260 million hl, will be inadequate to meet market demands. With the European harvest expected to be at an “historic low”, there are major ramifications ahead for the trade.

 

 

Anya Robson of specialist bulk wine broker Murphy Wine Company told Harpers entry-level wines were facing price hikes. “That’s where the fire is,” she said.
Prices for Spanish and Italian entry-level wines “have doubled in two years” and people seeking cheaper wines are looking elsewhere.

 

 

Eastern Europe, one of their first ports of call, is facing similar problems, said Robson. Add to that its inexperience in export markets and sometime quality issues, and the difficulties are compounded.

 

 

South Africa and Chile, generally good sources for generic wines and which had abundant harvests, are putting their prices up as stocks go short. “If you don’t sign good deals today, tomorrow the prices won’t be the same,” warned Robson. “The buyers are worried not only about pricing, but where they will get the volumes. We have a double whammy: we desperately needed wine and the northern hemisphere harvest was poor - we could be missing up to 20-25 million hl in Europe.”

 

She added: “We will find wine but people have to react very quickly and UK buyers aren’t used to that. The negotiating power has moved from buyer to supplier.”
Buyers must now look at longer-term contracts and consider labelling wine by
variety rather than by country.

 

 

Sainsbury’s winemaker Emma Holland said the current economic pressures and harvest challenges meant the “balance of supply and demand” for bulk wine has changed. “It is more challenging to source the wine quality that we demand for own-brand products while maintaining great value.

 

 

“We work very closely with our suppliers, many of whom we have been working with for a number of years, but we are also identifying various developing wine regions that are capable of supplying excellent quality at a more affordable price.” She said

 

 

Romania and Hungary were two lesser-known regions Sainsbury’s was not looking at.
Enotria’s commercial director for buying, Mark Kermode, said bottling at source and long-term partnerships with private producers and co-operatives meant it “can avoid most of the issues involving spot pricing, and short vintages are not a concern”.

 

 

Harvest quantities

Going down:

Argentina: down 29%
Australia: down 11%
New Zealand: down 9%
Europe: Expected to be down 25 million hl

 

Going up:

South Africa: up 4%
Chile: up 10%
California: up 9%

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