Home > Rabobank Wine Quarterly: Trends and outlook for the international market

Rabobank Wine Quarterly: Trends and outlook for the international market

Supplier News

According to the Rabobank  Wine Quarterly, the 2012 harvest is the third consecutive below-scale harvest in Australia, resulting in a significant rise in grape prices in many regions since 2008.

The Australian harvest is estimated at 1.66 million tonnes, up 4% on the previous year. Red wine production recovered by 7% from the rain-affected 2011 harvest while white wine production remained much the same as last year.

Average grape prices have increased around 10-20% in the warm inland regions as well as key red wine producing temperate climate regions across South East Australia.

In terms of international trade, Australian wine export volumes are levelling out after a steady fall over the past couple of years due to lower supply. Export volumes are up 3.2% over the first four months of 2012, while values are down 5.1% relative to the same period last year. Bottled wine exports to China continue to be slow but at higher average export prices while bulk wine exports to the US has more than doubled over the period.

The grape harvest in New Zealand is estimated at 269,000 tonnes, down 18% on last year with substantial variations in size and quality around the country. Production in the Marlborough region, which contributed around 70% of the crop was down 23% but of good quality while there have been mixed outcomes across the North Island regions of Hawkes Bay (-8%) and Gisborne (+8%). Production outcomes in major South Island regions were also mixed with Nelson at -22% and Otago at +14%.

New Zealand’s export markets continue to register strong growth with shipments rising 15% in volume and 8.8% in value in the first four months of the year, compared to the same period last year. Export volumes to Australia at +16% YOY and US at +21% YOY have also increased strongly while average pricing has remained steady over the period. Shipping volumes to the UK (+13%) and Canada (+7%) however, show a steady decline in average FOB price per litre.

The growth in bulk wine imports into the US mainly came from suppliers in Chile, Argentina and Australia. The strong growth in Australian bulk wine imports has led to an overall volume increase in Australian imports for the first time since 2010 as US producers rely more on alternative sources of supply. The US imported 7.6 million cases in the January-March period this year from Australia, showing a growth of 12%.  

On the international market, global wine inventories continue to show signs of gradual tightening. Agribusiness banking specialist Rabobank estimates that global wine stocks are at their lowest point of the past decade, and the industry has moved closer to balance after many years of widespread oversupply pressures.

The impacts of the tighter supply situation are being felt somewhat unevenly, given other changes that are affecting demand. Fluctuating exchange rates continue to shift the competitive positioning of different countries, while the economic problems in many developed economies continue to pressure demand and constrain market pricing.

Though rising grape and bulk wine prices are good news for suppliers, it is creating margin pressure on wineries that are finding it difficult to pass on the cost increases to consumers in the present environment.

In contrast to 2011, the 2012 export growth story seems to be evenly balanced between the Old World and New World exporters. The reduction of excess inventories in Europe through 2011 has eased the aggressive pricing of Old World suppliers, helping to open up new opportunities for the New World exporters. Bulk wine exports account for a major share of the New World wine exports.

Newsletter sign-up

The latest products and news delivered to your inbox