Back to the Future, Surplus and Too Little, plus No End to Brexit

While drought and heat have led to an early start of the harvest in the northern hemisphere – people here talk of twenty days difference in some cases – the wine world seems to have awoken. After a couple of slow weeks in terms of news, the past week has brought us various interesting developments. Here is our selection in the latest edition of the JollyCellarMaster:

Fine Wine, Fine Bubbles and What is to come

A Never-Ending Story?

Probably not, but sometimes it feels at least as there is no end to Brexit. In the latest instalment, the UK government is considering delaying the introduction of import labels for EU wine, which had been due to come into force on 1 October, until January 2024.

According to an article in The Drinks Business, “the possible delay would mean that bottles of wine and spirits from EU producers will be allowed onto the UK market if they include EU addresses relating to the importer or food business operator for spirits and non-wine products and the importer or bottler of wine for an additional 15 months. Importer labels identify the legally responsible business  – usually the bottler, vendor or importer – for non-EU wines entering the single market from a third country, which need to be applied to each bottle or container. Following Brexit, EU wine labelling rules were rolled into UK law, meaning  that wines from the EU being sold to UK consumers would require a UK based vendor or importer address on the label, in order to give the consumer recourse to a UK based business in the event that any issues arise with the product. However, this meant that separate labels would need to be used for bottles intended for the UK market, a move likely to cost importers and fine wine merchant tens of thousands of pounds, particularly for those trading in small quantities or purchasing/selling products in the secondary market.“

That’s all rather complicated and I wonder how they will eventually solve this riddle, but a solution must be found. Having said that, I’m also wondering whether this whole Brexit business really was such a great idea…

 

Recession and Fine Wine

Inflation is real and I would assume that few people you talk to wouldn’t lament the rise in prices. That in turn also means that we are likely to have less money in our pockets or elsewhere to spend on things that are less essential. So you might think. Decanter interestingly reports that the future at least for fine wines may not be so gloomy. While there have been suggestions that price momentum on the secondary market could cool, British merchants have reported strong buyer demand this year and the sector is known for resilience to economic uncertainty.

That is an interesting turn of events, not so much since we’ve been reading for months that the fine wine market was doing well despite the increasing number of concerning news for the overall economy.

It is interesting because it seems the way the story is spun slightly differently over the course of time and events with a slightly darkening theme becoming apparent. At least that’s how it feels, doesn’t it?

Eventually, only time will tell what the future holds for investments in fine wine. Unless you have a time machine like Marty McFly, of course. Anyway, talking about time, it’s probably a good idea to reiterate that at no point in this article or anywhere else on the JollyCellarMaster I provide information that constitutes or should be considered investment advice. In fact, while it may be a valid strategy (and I’m not saying it is), I’m a big supporter of drinking the contents of a bottle rather as you will know. So, that’s that.

 

Too much and too little

When I was sitting the course for the Weinakademiker Diploma on wines of the world, the organisers decided to group New Zealand and Australia into one sitting. I suppose the reasoning was that there are a few similarities between the two former colonies of the British empire. Both came into the limelight of the wine world at a relatively late stage, they are both countries far, far away (at least from a European point of view, but I’d assume that most would agree considering the average flight time). No indigenous grapes and a clean slate to start from. And both rely to no small extend on exports.

There are, of course, many differences between the two, both in general (size, production, grape varieties and so on), and in particular. The latter was subject of a brief article in Wine Business International that points out last year couldn’t have been more different in both countries: In 2021, Australia had its largest ever harvest, with just over two million tonnes of grapes. Frost-hit New Zealand, by contrast, picked just 370,000 tonnes, 19% less than in 2020.

Only a year later, it was the other way round: According to the National Vintage Report Australia’s 2022 crop was 1.73 million tonnes, a fall of 13.5% on the previous year, while New Zealand’s harvest was reported by the national Vintage Survey as 532,000 tonnes.

At the same time, the export situation has drastically changed as well: Australian exports still suffers from the tariffs imposed by China on products from Down Under. They can get as high as 218%, which unsurprisingly has led to a complete collapse of exports in wine for a market that was worth more than one billion Australian dollars before the measures.

New Zealand on the other hand rides a wave of strong demand from abroad. The meagre harvest of 2021 cost the country’s producers about 14 % in sales. The 44% lift in the grape harvest has therefore provided a sorely needed boost to supply lines. If you’re interested in the exact numbers and how they are distributed among regions and grape varietals (spoiler alert: Sauvignon Blanc accounted for 76,5%, but I don’t think anyone would be surprised), have a look here.

 

Changing the rules and its consequences

Little more than a year has passed since we discussed the changes to wine regulation of Champagne as part of this weekly update. Just to bring you back to speed, the Syndicat Général des Vignerons de la Champagne (SGV), which represent about 99% of the region’s winegrowers had decided to introduce an additional vine-training system that permits more space between vines and as such results in a lower number of vines per hectare. A higher density is often considered to produce higher quality. We highlighted that while Champagne proudly talks of its tradition of artisanal production, the changes would benefit greater mechanical working of the vineyards. There were also the effects of climate change to be considered as they were quoted to be the primary reason for the modifications. A study commissioned by the SGV had found that lower density vineyards would reduce greenhouse gas emissions by 20-percent by allowing the use of better equipment. So much for what happened in the past, though there was, of course, plenty of controversy about these changes, which you can find here if you are interested.

Now, only a year on, there seem to be concerns about Champagne’s high yields as the region’s attempt to even out harvest sizes has caused confusion and concern among some growers.

While some growers are in favour of the changes as they permit higher yield to meet the increased demand, others feel is not at all in line with the region’s economic, ecological and quality aspirations.The confusion caused by contradictory numbers, a complicated credit system for harvests across several years and naturally conflicting interests does not help finding common ground. Certainly more to come on this one…

And that’s all for today. However, if you have an interesting story to tell or simply want to chat about wine as a guest on the Podcast, connect on Twitter or drop me a line. And if you want to stay in the loop about things happening at the JollyCellarMaster and the world of wine, make sure you sign up to our newsletter.

Disclaimer: As always, I’d like to be completely transparent about affiliations, conflicts of interest, my expressed views and liability: Like anywhere else on this website, the views and opinions expressed are solely those of the original authors and other contributors. The material information contained on this website is for general information purposes only. I endeavour to keep this information correct and up-to-date, I do not accept any liability for any falls in accurate or incomplete information or damages arising from technical issues as well as damages arising from clicking on or relying on third-party links. I am not responsible for outside links and information is contained in this article nor does it contain any referrals or affiliations with any of the producers or companies mentioned. As I said, the opinions my own, no liability, just thought it would be important to make this clear. Thanks!

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