Poor European harvest and Californian wildfires resulting in wine shortages and price hikes
Poor wine grape harvests across much of Europe this year as well as wildfires in Calfornia’s wine growing regions will inevitably lead to higher wine prices, according to Rabobank.
Spain, France and Italy, which between them produce over half of the world’s wine, are expecting their worst harvests in decades after extremes of weather damaged grapes. This year total volumes were down to 14.5 billion, compared to 18.2 billion in 2013-2014, and 16.9 billion last year. Heavy hailstorms and harsh frosts in spring, combined with summer droughts conspired to hit the size of harvests across the continent. And unusually warm weather means that many grapes ripened early and as a result are smaller than usual.
"We still foresee a dramatic decline in wine availability going into 2018," said Stephen Rannekleiv, a global beverages strategist at Rabobank. "We expect the decline [in consumption] to be felt most tangibly in the lower-priced tiers."
The European Commission says that this year's regional harvest is expected to be the worst since 1982. Europe is set to produce 14.5 billion litres of wine this year, a drop of 14% from 2016. Italy, the world's biggest producer, will see volumes fall 21% to just above 4 billion litres. Production in Spain and France will decline by roughly 15%.
"It has not been uncommon for one of these three producers to have an off year, but rarely have we seen such poor harvests for all three simultaneously," Rannekleiv said. The shortages are already having an effect, with the price of some wine varieties increasing by up to 10% this year.
"The rise in Italian and Spanish bulk wine prices is particularly noticeable and it started as early as May, when the first threats to production materialized," Rannekleivn said. And the ongoing devastating wildfires in California which have razed some wineries to the ground mean that the US, the world’s fourth largest wine producer, won’t be able to make up for shortages elsewhere. While the harvests in Sonoma and Napa are around 90% complete, there is a fear that the remaining grapes could be lost or tainted by smoke.
"The real danger is the potential loss of damage to the vines for future years. We are a long way from knowing what that could mean for wineries," said Michael Kaiser, vice president of WineAmerica.
In an average year, global producers usually produce more wine than is consumed each year. Some is released into the market in subsequent years, while the rest is distilled or used in other products. The surplus was around 2 billion litres in 2016, according to data from the International Organisation of Vine and Wine.