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Global wine supplies relatively 'balanced', but expect premium supplies to tighten, Rabobank says

Published:  15 April, 2015

Global wine inventories appear to be balanced, according to the latest wine report from Rabobank - but the report warns of variations in supply between the premium and generic ends. 

Global wine inventories appear to be balanced, according to the latest report from Rabobank - but the report warns of variations in supply in the premium and generic ends. 

Premium wine grapes appear to be slightly tighter, Rabobank's Wine Quarterly Q2 2015 report said, but generic and commodity varieties have "much broader availability". 

Some of what is driving a tighter premium market has to do with a drop in production in a few key wine producing areas across the globe.

California's wine grape production fell by an estimated 10% in 2014 according to the latest United States Department of Agricultural Crush Report. However, it is important to note that wine grapes coming from central California in the San Joaquin Valley, which supplies more of the US' value end and bulk wine markets, is heading towards an excess of supply, according to Rabobank.  

Across Europe supplies seem to be tightening following lower grape production in specific wine producing regions that have until 2014 been growing in volume.

Despite the increase in wine grape production across many areas in France for 2014 compared to 2013, "inventories across many regions remain tight- particularly for white wines," the report said.

Further the Rhone Valley, amongst other regions in France may be able to benefit from the poor harvest in the Languedoc in 2014 as supplies are tightening.The report said: "The poor harvest in Languedoc has important repercussions for the market, as many buyers are left scrambling for product."

Weather was a major challenge for several regions across Italy in 2014, which saw overall grape production decrease 15% for the harvest. Italy's production has been declining and, according to Rabobank figures, has reduced by 25% over the last decade.  Despite the reduction in grape production, Italy is still one of the top producing wine countries in the world. Year over year Italy has been consistently found amongst the top three wine producing countries rivalling France and Spain.

Spain saw a healthy sized crop for 2014, but has been increasingly moving more inventory on the bulk market. According to Rabobank figures, Spain saw a 40% increase in bulk wine exports in 2014.

In the Southern Hemisphere, the Chilean crop is looking to have recovered from last year's lighter harvest. Crop estimates for 2015 in Chile look to rise at least 15%.

Equally, Argentina is expecting a moderate 2% increase in production for 2015, but with  exports dropping an estimated 16.6% in 2014 according to Argentine Viticulture Observatory figures, downward pressure on price will increase.

South Africa's 2015 harvest although slightly lower in size than the record 2014 harvest, the quality it expected to exceptional.