Numbers do not feel. Do not bleed or weep or hope. They do not know bravery or sacrifice. Love and allegiance. At the very apex of callousness, you will find only ones and zeros. Who doesn’t like quotes and this one is by from Amie Kaufman, an Australian author. While I have to admit to not having read her books, I consider adapt for this round of stats from all over the world we cover in the latest edition of the JollyCellarMaster Weekly:
The King of Sparkling, Two Sides of the Coin and Why Bulk Matters
Always look on the bright side
What do you do when you’re suddenly stuck with almost thirty million bottles of wine? You look at the bright side. That could well be the summary of the latest export stats coming from the Cape of Good Hope.
Yearly production among South Africa’s wine regions is on average somewhere around 10 million hl, of which more than half is usually destined for global markets. However, Last year, 20 million liters less wine left South Africa than in 2021, although the country suffered much less in terms of value thanks to rising bottle prices.
South African wine exports fell 5% last year to a total of 368.8 million litres. But the bright side of the somewhat grim revelation is that the value of exports only fell 2.4% despite reduced volume, suggesting premiumization is starting to take hold.
British consumers in particular is ready to drink more expensive South African wine. It remains South Africa’s largest wine export market and bucked the wider global trend last year by buying 8% more wine from the country than last year, buoyed by exports in bulk more expensive.
Bulk wine accounted for 62% of total export volume. Considering the worth of exports, packaged wine leads by far in terms of value, accounting for 77% of take-up, with global wine prices up 2.2% per litre.
The Chinese market, which had previously seen strong growth for South African wine, is looking rather bleak as exports slowed significantly due to prolonged Covid-related closures, leading to a drop in total wine exports to China of 38% in volume and 26% value.
Germany, the second largest export market for South African wine, also saw a significant drop in export volume, down 9% and 17% in value, which Wines of South Africa says, could be attributed to the decline in tourism in South Africa in recent years.
In addition to these factors, Wines of South Africa said the overall decline in global exports was due to shipping problems at the port of Cape Town, caused by poor weather conditions preventing ships from docking and a two-week strike by shippers.
Now it remains to be seen whether these export numbers are the confirmation of a trend since exports of still (ie non-fortified) packaged wines for the 2021 calendar year saw a decrease of 6% on the previous year, according to Wines of South Africa. On the other hand, still wine exports had jumped significantly after a weak two years before that and another massive drop from more than 422 million litres on a five-year average, which is a loss of almost 25%. At the same time, the South African industry finds itself in a period of consolidation as the area under vine has decreased from about 100,000 hectares in 2011 to somewhere around 82,000 currently.
Big and Bulky
It may only comprise 7% of the total value of wine exports, but bulk wine represents 33% of total world wine volume exports. Thus, while we often talk about the wonders and beauty of fine wine (and that depending on the definition of fine wine does not necessarily mean spending massive amounts of money on a single bottle), bulk wine matters. It is the second biggest category after bottled wine regarding world trade by product type and according to the OIV stats can have a significant share of total national production, for example, the large exporters that have the biggest shares of bulk wine exports in value terms in their total export value are Canada (68%), New Zealand (24%), South Africa and Australia (both with 23%).
Every year, the Ciatti Global Market Report looks back at the passed year and ahead to the new one, as WBI reports.
The summary for 2022 was, unsurprisingly, that high inflation and rising interest rates as a result of the post-pandemic pent-up demand met high shipping prices and delays and – from February onward – the Russia-Ukraine conflict’s impact on energy bills. Consequently, a wariness about consumer confidence, coupled with lags in getting the 2021-contracted wines onto retail shelves, had a dragging effect on bulk wine-buying across the world in 2022.
More surprising for the average consumer might be the relation between white and red wines: A number of shorter harvests for the white varietals in 2021 – and the greater resilience of white and sparkling wine sales versus reds in mature markets over the past few years – meant momentum on varietal whites remained comparatively strong through 2022. It did appear, however, that demand was cooling through the second half of the year as the 2022 crops came in good-sized and – perhaps due to slower retail sales – some previously contracted wines were placed back on the market. The red wine and rosé markets remained muted throughout the year except on specific types – high-colour, 14%+ alcohol reds, for example, or single-vintage pale/aromatic varietal rosé. Bordeaux growers are lobbying the French government for assistance with an acute oversupply of reds; Australia is selling its reds at ultra-competitive export pricing. Red wine inventory is large in many places, from Spain and southern France to Australia, from South America to California.
The report also provides an outlook for things to come and tries to strike a positive note. Inflation may have passed its peak and consumer confidence was ever so slightly on the rise. Shipping cost had seen a significant drop and China, having ended its zero-Covid policy, could potentially see a boost in demand for wine imports. A lot of ifs and buts, but as said before, it’s always better looking at the bright side, isn’t it?
The Only Way Is Up
And lastly, at least for this week, here are some truly bright side numbers from the king of bubbly, Champagne. Just read the press release issued by the Comité Champagne on January 18th and you will not only be left in awe but understand the role Champagn plays in the world of wine.
Last year, 326 million bottles were shipped and since we promised you good news, this equals an increase by 1.6% per compared with the previous year. The press release sees this as “proof of the dynamism of the global Champagne market, both in terms of volume and value“, as the value of shipments for the first time passed the 6 million euro threshold, but you need to consider that we find ourselves in difficult times (remember the inflation, pandemic, and war in Ukraine, we just mentioned?), so this clearly is a strong signal.
The numbers are divided as follows: France, with sales of 138.4 million bottles, recorded a small reduction (down 1.7%). Exports, at 187.5 million bottles, increased by 4.3% in the course of a year. Taking a majority share of the Champagne market, export’s share rose from 45% ten years ago to a little over 57% today.
Naturally, the responsible spokespeople were full of praise (which I will not reproduce year but rather point you to read them in full in the above mentioned press release) for the region’s efforts, which I find fair enough, but closing with the statement that “Global geopolitical and economic circumstances may encourage a prudent outlook“ is a nice way of putting that there is a rocky road ahead and not all of us can rely on such a strong product, I suppose. Anyway, I tip my hat.
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And that’s all for the week but 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.
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