As a second year made topsy-turvy by COVID-19 draws to a close, bulk markets around the world are largely calm: sales projections for 2022 are murky and buyers have consequently been covering their needs in increments. In many cases the focus is on getting those wines contracted earlier this year to their final destination, often not a straightforward task given the global logistics situation.
We have seen the sea freight issue start to affect the bulk market directly, with buyers switching to alternative sources of supply should transport links with the traditional supplier no longer add up, time and/or money-wise. Longer shipping lead times can also inject speed into a marketplace, as we have seen on the 2021 Provencal rosé which – only just ready – is already being shipped to the important US market in order to ensure it can retail there from spring 2022.
By that time, we should be able to start gauging consumer reaction to increased shelf prices for wine brought about by dry-good and shipping cost increases as well as inflationary pressure on inputs more generally. The inflation rate in the US, for example, reached 6.8% in November, its highest since July 1982; in Germany it reached 5.2%, the highest since June 1992, and in the eurozone in general it was a record 4.9%; the UK’s inflation rate in October was at its highest (4.2%) since 2011. The European Central Bank has said this inflation is a passing “hump” that will decline next year; the noises from the US Federal Reserve have been less optimistic. Judging by ongoing consumer confidence, it seems that shoppers are not yet noticing the price upticks – or perhaps they are currently happy to keep up with prices because of discretionary spending power accrued during two years of intermittent COVID-19 lockdowns/restrictions. But it would be misplaced to assume such bullishness will persist indefinitely if inflation continues to rise.
As well as inflationary pressure, the retail price of white varietal wines in particular will need to cover higher bulk prices. The bulk market for varietal whites is now largely quiet around the world, if only because supply is limited: Chile is essentially sold out of 2021 varietal whites and the 2022 grapes are 80-90% sold (with the remaining fruit high in price); South Africa’s 2021 Chardonnay and Sauvignon Blanc is sold out; southern France is allocating as best it can to its traditional buyers following a very short crop; Italy’s Pinot Grigio and generic whites are experiencing big demand pressure both domestically and internationally; New Zealand’s 2021 Sauvignon Blanc has long been sold out. On the other hand, there is some availability in Spain and vineyard conditions in Argentina, Australia, Chile and South Africa all look positive, with confidence of at least average-sized 2022 crops in each country, though – two months out from picking – the usual caveats regarding Mother Nature’s capriciousness apply.
The world, and so the bulk wine market within it, continues to see a high level of uncertainty and 2022 is likely to bring little change in that regard. At such times, it pays even more to be in dialogue with your broker: Ciatti, with decades of experience, is here to help you safely navigate the obstacles. In the meantime, we wish you and yours a restful Christmas and a prosperous – and healthy – New Year.