Global wine inventories have been trending downwards in recent years, and while some see this as a shift towards a supply shortage, Rabobank’s latest Global Wine Quarterly says it marks a continued move towards balance – albeit with variations in geography, varietal and price segments remain.
The report warns this move towards a more balanced supply context could create challenges for certain wine-sourcing models, such as asset-light business models in some regions.
“There is no doubt that asset-light sourcing models – where wine companies do not own/operate the key vineyard or winery assets required to supply their brands – can offer significant advantages for wine companies,” says Rabobank senior analyst Marc Soccio, “as they limit the amount of capital tied up, particularly in vineyard assets.
However in light of declining global inventories, it is becoming increasingly important for wineries to have a realistic view of supply trends in order to secure their brands for the foreseeable future.”
The report says while the decline in inventories is a “phenomenon worth watching”, it can be partially attributed to short-term weather factors as well as a conscious effort by the industry to bring supply more in line with consumption.
“Over the course of 2016 we saw the supply situation in the northern hemisphere start to tighten due to an unremarkable harvest in California and adverse weather across much of Europe,” Soccio says, “with the 12 percent drop in the French harvest behind much of the decline in global production.
“Meanwhile it was a mixed bag in the south, with production up in New Zealand and to a lesser extent Australia, while significant declines were reported in Chile and Argentina.”
In terms of wine export volume growth, New Zealand has led the pack – with shipments up by 6.9 percent in volume and 5.3 percent in value during the first nine months of 2016. While this was aided by a strong rebound in annual shipments to the UK, imports continue to gain traction into the US, reflecting the broader ‘premiumisation’ trend.
