There will be a fundamental shift in the availability and prices of wine this year and a profound impact on trends, Rabobank’s senior wine analyst Hayden Higgins said.
Prices for generic wines from major producers Spain and Italy started falling towards the end of last year and French prices by a smaller amount.
The falls will be more marked because the industry is coming off scarcer supply, especially from Europa and Chile, from the smaller 2017 harvest, Higgins said in his latest Wine Quarterly.
NZ wine exports remained flat in the year to September 30, up just 0.4% in volume on a year earlier, and up by 2% in value.
This country was one of four countries that sent increased volumes of wine into the important United States market over the first nine months of calendar 2018, the others being Italy, France, and Portugal. Imports from Chile, Germany, Argentina, South Africa, Spain and Australia declined.
Imports from NZ to America rose by 3% in volume and 4% in value but in the third quarter alone (July to September), volumes contracted for both bottled and bulk wine compared to 2017.
France had the best growth in supply to the US with volumes up 9% during the nine-months and value up by 16%, based on a good increase in bottled table wines.
The US is the major growth market for premium NZ wines and Higgins noted the US is now a major focus for Australia because it wants to reposition as a prominent premium producer.
While Australian exports grew well in the year to September, up 5% by volume and 11% in value, its shipments to the US fell in volume and by value, continuing a trend of recent years.
The US is Australia’s second-biggest market after China with NZ the fifth-biggest market after Britain and Canada.
Higgins said the extremely dry and hot weather in Australia this summer might reduce volumes in this year’s grape harvest.
In line with the lower 2017 harvest, France, Italy, Spain, Chile and South Africa all reduced export volumes but they increased in value. Argentina had a big increase in volumes, notably bulk wines, due mainly to a significant fall in the value of its currency.
Higgins reported a big lift in e-commerce wine sales, especially in Europe, over the last year and margins were higher because of the more premium mix of sales than is available in bricks-and-mortar stores.
In Western Europe total wine consumption fell by about 5% between 2010 and 2017 but e-commerce sales increased by 66%. Market-share of sales by value are higher than sales by volume because of the premium mix and consumer hunt online for uniqueness and being prepared to pay for it.
However, there are issues for e-commerce, notably regulatory requirements covering consumer-age and identity and also the increasingly very crowded market. In most European markets consumers had up to several hundred suppliers to choose from. Market consolidation will happen as weaker players are forced out.
A major benefit of e-commerce growth is that it provides valuable customer insights that could enhance performance across all sales channels, Higgins said.
