Regional Manager Report - Europe

As the clock ticks down to the start of harvests across Europe we turn to Paul Attwood-Philippe, VINEX’s business development director for Europe, to get his take on what we can expect in terms of volume and quality from the major wine producing countries.  

How do you see the overall picture in Europe as we get close to harvest season?

The recent heatwave we have seen across most of western Europe has had a huge impact on vineyards. Some areas have lost 50% of their crop, but the average is nearer to 10 to 15% across the main wine producing areas. So we are talking across France, Spain, Italy, particularly northern Italy, Germany and Switzerland. They have also suffered from the subsequent rains and hail following the heat. Central Europe has been more on the edge of the heat wave and we understand has fared better.  

Any areas particularly badly affected?

La Mancha is Spain is thought to be 30% down, and it’s a similar situation in northern, coastal areas of Spain and into Rioja and the Priorat. There could be up to 50% in some areas. Some vineyards have been burnt away, including old vines. The losses in La Mancha will be key in terms of the bulk wine market. Most areas of France have been affected and we can expect France overall to be down 10-15%. The eastern side of France has been more affected than the west. The storms in June had an impact on the south of France as well.  

What about the quality?

Even outside the heatwave, temperatures across Europe have been two to three degrees Celsius higher than average. So we are looking at grapes with higher concentration, bigger tannins and high alcohol. It’s not going to be a keeping year, but more of a younger dinking vintage. Over in Central Europe, including the Balkans, it will be a little different as they have not had the intense heat. So they are quietly confident that they will get a good quality crop.  

What impact is all this likely to have on availability for the rest of the year?

The good news is there is still quite a lot of wine around from last year’s harvest. You can still get, for example, red and white generic wine at 10.5% abv for 30c a litre from central Spain. The trouble is no-one is buying at that price because of the quality of wine now available and the intelligent buyers are waiting. Spanish producers are privately quite happy as they will be able to top up this year’s smaller harvest with older vintages which will help in terms of quality and colour. So I expect volumes to balance out in the main.  

And pricing?

We can expect to see prices go back up to the mid to late 30c a litre. The smart buyers will know what wine will be available and will move fast to pick up allocations. But generally we can expect to see 10-15% price rises, particularly across France, Italy and Spain. It will be more stable pricing in Central Europe which might see increases of around 5%.  

How is the market overall?

We have not seen major buyers coming back into the market as much this year to top up volumes and stocks. There has not been the demand to find two or three extra tanks as we have seen in the past. Which probably reflects the downturn in overall consumption levels. The market has been pretty balanced across Europe which has seen a lot of buyers revert back to their old haunts as it were, their tried and tested suppliers, rather than have to go out and look for new places to source wine from. Old relationships are coming back to the fore. But we have also seen a lot of demand from China, particularly for cheap wine.  

And into the future?

The impact of the heat and damage to vineyards this year will also be felt next year as well. So it will be interesting to see what people do in 12 months time as there will be a knock-on effect.

What other trends are you seeing?

The canned wine market really seems to be picking up. VINEX has probably been asked to work on 20 to 30 different canned wine projects this year. More and more people are looking to source wine for canned wine. What is interesting is that these projects are being led more by technical and winemaker staff who are looking at the viability of packing and selling wine in a can. They are testing the waters. So rather than look at Cabernet Sauvignon or Merlot in a can, they are looking for more unusual varieties, like from Portugal or Austria. We have seen a lot of interest from mid tier importers, mostly from the UK, Ireland and Germany. As well as bottlers in Germany and the Netherlands. It’s certainly an area you can see growing over the next five years.  

Anything else?

From a VINEX point of view we are seeing more buyers working with us from Germany, Scandinavia and the Netherlands. Businesses who are starting to look outside their traditional supply base and into Eastern Europe. But overall people are looking at smarter ways to buy wine.