Sep 07 2017

The Price Of Wine: How High Can It Jump? France_Part 1

Earlier Harvest: Earlier Results

Finally the results for losses regarding the European viticulture Industry, in the EU are starting to come out, after months of waiting and hoping for the best results possible to arrive.

The meteorological events that took place earlier in Spring this year, has left a lot of viticulture, agriculture, horticulture and other  entrepreneurs, large and small, in limbo.

All due to the ravages of last April by the “black frosts” across many European countries; many of these entrepreneurs are economically and psychologically  affected to the point that some of  them may not even be able to carry on with their businesses.

As a result of these occurrences it is estimated that major European countries such as France, Italy and Spain, Germany etc, will see their wine capacity production and yields fall by at least 10%, and perhaps more, in 2017.

It is estimated that the maximum capacity in hectolitres achieved last year by the European Union wine growers of 165.6 million hectolitres, ( which was considered already low,) will fall short of this target at least by some 1.76 million hectolitres in 2017.

Output Of French Wines In Decline

In France for instance, while supply yields decline exports are increasing fast. When comparing outputs with 2016 periods, wine exports have increased by 6% in volume and by 15% in revenue in the last three months of this year.

Exports of quality wines from the Champagne region, also affected by bad weather, by the adverse minus -0 to -6 temperatures, have also seen increases in demand while supply is lower.

International export of Champagnes and quality Bordeaux wines for instance, have increased respectively by 7% and 11% in volume and 12% and 26% in revenue.
Moreover, as a whole, wine production across France wine regions has been estimated to be historically low; a low 37 million hectolitres. A minus 17% in production of French wines, compared with last year; and minus 16 % when compared with the last 5 years. Even lower that the 1991 harvest, the year wine producers dread and compare the damages to 2017; when similar destructive weather  conditions, and the spread of mildew and rot took place.

Experts: The General Opinion

The variations and yields obtained between parcels of land affected and non affected by incremental climatic conditions, was also taken into account and measured during the period of maturation. For that French experts selected a total of 55 areas. 32 parcels of land not affected by the Spring ”black frosts” and 23 that had been affected by it at various levels. The results came out as 110 to 120 hectolitres per hectare for the non affected areas of vineyards and 40 to 50 hectolitres per hectare for the ones that sustained frost damages.

Other studies were performed  by the Cognac Inter-professional  National Bureau or the (BNIC), as to regard of production quality and quantity such as weight and measures, acidity and sugar, alcohol and ph levels etc.

It is important to point out that these are earlier studies and that opinions of different experts diverge over the exactitude of these findings. Their comments vary and there is even denial and others dispute the truth. Some believe that the statistics for the calculation of yields were calculated and printed too earlier.
No one will know exactly until the harvests are completed finished and the final number of tones of grapes is added up and transformed into a finished product.

One thing that everyone can be sure of is that the losses are socially and economically enormous for some, in particular for a great 75% (an average) of a non- insured majority of wine and other agricultural producers and growers. After all this is a recurring problem and insurance isn’t reasonably costed.

Winners Are Grinners

All of these entrepreneurs who were covered and survived and/ or weren’t directly affected by the all the nasty events of climatic changes throughout the year – very low, very high temperatures fluctuations, at the wrong time of the year, the hail storms and the phytoplasm diseases and other, could end up doing very well this year in their sales.

Wine Prices Already Up

Prices for all sorts of wines are up or on the way up worldwide.

Most European larger suppliers of wines including England have their eyes set on the international exports to the United States and other larger countries including China.
Stocks of wines were already low in the European Union in 2016, again due to adverse conditions in the weather patterns, virus and diseases spreading like fire across European vineyards.

Assuming that the unfortunate recent and devastating natural disasters in the US and elsewhere in the world don’t come to affect the healthy appetite of the Americans for wine, and the international importers like the Chinese demand more and more, these wine producers with stocks are the winners in 2017, as they can perhaps ‘name’ their prices to these markets.

The prices for generic brands of wines bought and sold in bulk have already started to come up as demand outweighs supply.

Pre-packed, pre-bottled, DOP wines are also to be dearer since there is less available quantities in stock. It is only natural that if wine stocks lower further, there is also going to be an increase in competition  among traders, buyers and sellers, in the process of obtaining these wines.

Besides the higher costs for the ”liquid gold”, the biggest problem, as I imagine, is the continuation of low yields and not being able to replenish the wine cellars; if the vineyards have been so much damaged it will take some time, perhaps even years, for the normal cycles to balance and the vines to recuperate from being stressed and  their loss of energy.

The Winners In The Years Ahead 

Everything points out to a worldwide wine shortage in 2017 and in the years ahead.

There is very little doubt that production yields of European Wines, from France, Italy, Spain, Germany, England etc, are dwindling in volume and quantities, year after year. Lets just assume that wine supplies were to decrease again in successive years due to this being a fact and Europe, England can’t supply enough wine and spirits.  Who else will be in a position to fill the gap for exports if these countries can’t? Countries like New Zealand, Australia, China could capitalise on this and be the winners if the climatic conditions were to favour them.

European countries are not alone. Nations affected by low yields include South America countries. Countries of the new world too have suffered extensive losses in their wine production, receiving  low yields for 2017, due to adverse climatically conditions and other problems beyond their control.
The statistics are that Argentina, Chile and Brazil, lost respectively, 9.4, 10.1 and 1.6 hectolitres in their 2017 wine production.

South Africa’s wine production too is down by -3 per cent.

In the majority of cases this year’s wine supply is really last year’s wine harvest. If correct, 2017’s wine is really the wine to be sold in 2018.

To me it sounds odd that many countries in Europe and elsewhere, including England are trying to sell more and trying to gain and expand into new international markets at the wrong time, when supply is going to be or could be short .

 

God Will Provide

Everything seems to be in the hands of the Gods until harvests are finalised. Reliance on good weather until then is paramount.

The man on the land tends to find ways to resist, survive and prosper. However despite all men’s resilience and strengths and no doubt some frustration and bewilderment, these losses seem palpable and very hard to take .

Wine Losses in France: Case per Case

From North to South and East to West, main French viticulture areas have experienced the worse that can happen in the life cycle of their vineyards. Odd weather patterns, that arrived in different periods of the year and when least expected; extreme very low temperatures and very high hot and humid temperatures.
While the former destroyed the vegetative growth cycle the second coupled with hail storms and lack of rain contributed to even greater losses. Minus negative temperatures in Spring destroyed the vegetative buds and tender leaves, the high Summer temperatures and hail storms destroyed the young grapes during their period of gestation and growth.
Accordingly to government experts, their calculations and statistics, wines usually reserved for the manufacture of spirits such as cognacs and other fortified wines, champagnes, Chablis wines etc, have been decimated. Reduced this year from 7.72 million hectolitres to just 5.36 million hectolitres ; that is the equivalent of a loss of 31% compared with 2016 records.
AOP and IGP, classy French protected wines and other classic wines have also fallen  by millions of hectolitres.
These AOP wines will also be diminished this year by 2.55 million hectolitres, and IGP wines reduced by 1.91 hectolitres, compared with 2016.
For other more common wines, bulk wines and supermarket bottled, there is also less availability as supply dropped by more than a 1000 hectolitres.

Where to from here? No decent wine stocks, no money in the Bank for the wine producers affected and burdened in debt, who appear to be in a great number.

What will be the final result depends very much on decision making in many areas of viticulture and oenology procedures. These affected areas of vineyards will have to recuperate from this very stressful and energetic demanding year.
Many question come to mind.

  1. Will world WINE Supply dwindle in the Northern Hemisphere and should Australia and New Zealand. other be prepared for this? 
  2. Will the weather patterns change again and will viticulturists be better prepared for it?
  3. What practices best to adopt to speed up the process of restoration of French vineyards?
  4. What is the role of the viticulturists, enologs and other experts in all of this?
  5. And lastly how high can the price of wine and spirits go?
    In my next post I will be looking at Italy’s position and how the Country is coping with their viticulture losses.

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