Prepare for the global wine drought

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Small harvests mean you can expect a 25 percent price hike in desirable areas like Burgundy.

Mother Nature gives and she takes back.

In the old days, when I was a child, the actors fell in love with the socially inept among us who, desperate for something to discuss, settled on the most banal and predictable subject of all: the weather. How times have changed.

Talking about the weather these days – especially if you work in wine – is almost too stressful and controversial for polite conversation. Extreme weather events caused by climate change – spring frosts after bud break, forest fires, droughts, floods, scorching heat and humidity, frogs falling from the sky (maybe I invented this one) – have brought down the harvests in many bold regions around the world.

Almost all the wine regions of France have been affected; on average, harvests are expected to be down 29 percent this year compared to last year, according to France’s agriculture ministry. In Champagne, this figure is even higher: around 36%. Anecdotally, producers are reporting losses of up to 90 percent in Champagne, which could cost producers nationwide nearly $ 2 billion in lost sales.

In Marlborough – which produces 75 percent of New Zealand wine – the harvest has been reduced by about a third. Yields in Napa are 25-40% below average, with desirable mountain vineyards hit the hardest. In Italy, the harvest is down by around 9 percent.

And that’s just the tip of the iceberg, the most obvious handbag in regions where economies depend on regular wine production to function. How should wine enthusiasts and members of the $ 340 billion wine market prepare for what appears to be an inevitable wine shortage this year for whites, and a few more for reds? For an overview and ideas, read on.

Foresight

Hindsight is 20/20, but that doesn’t pay the bills. Foresight, however, is a gold mine for distributors and producers.

“When we saw the harvests drop by 30 to 25% in Marlborough, we became very concerned,” said Brett Vankoski, co-founder and wine director of global merchant Latitude Beverage Company and 90+ Cellars, which sells 500,000. cases of wine per year. . “During their harvest period, which of course comes at a different time from ours, there were severe spring frosts in the main wine-growing regions of Europe. “

In an effort to limit the damage in advance, Vankoski says they have started to “stock up on existing vintages in the bottle. We bought more rosé from Languedoc, more Prosecco, more Argentinian reds, Sauvignon. New Zealand white “.

He estimates that they have increased buy-ins by around 20 percent, to “extend the current vintage, avoid a shortage in the spring of next year and prevent a significant increase in prices.”

At Cain Vineyard & Winery in Napa Valley’s Spring Mountain District, where glass fire destroyed the winery, heritage barn, homes and many acres of land on the 500-acre property, winemaker Christopher Howell and manager sales Katie Lazar, a married couple who lived there – face this latest crisis with the serenity and confidence that comes with a long line of obstacles overcome behind them, and the awareness that they are ready to face that -this.

“We had 90 acres of the 550-acre estate under vines before the fire,” Lazar said, explaining that in normal years they could expect to produce 10,000 to 12,000 cases. “We are always trying to find out what we can recover, because it can take a year or two for a vineyard to recover from a fire. This year, with the damage caused by the fire and the low yields due to the drought, we have harvested around 40-50 tonnes. “

As they have started to replant – almost 10 acres have been planted this year, with 12 more planned for next year and more the following year – this has to be done slowly because “the little vines need so much. ‘water. We are at the top of Howell Mountain, and our water for the vines is from the sky. “

A normal year brings 60 inches; last year brought in just under 30, and this year has been dry so far. But an old-fashioned library program is keeping them afloat, having completely lost their harvest in 2019 and 2020, and facing a serious shortfall this year.

© Domaine Brancott
| Even Marlborough’s normally crowded vineyards have offered less fruit this year.

“Due to the financial crisis, between 2008 and 2010, no one in Napa was selling their vintages,” says Lazar. “I decided to make a silk handbag from a sow’s ear and create a library program. It made sense in other ways as well, because the fruits of the mountains need time. Years in cask and in bottle before they are really ready.

As of 2009, Cain started saving about 25 percent of their vintage for the library.

“Now that sounds like a great business strategy,” Lazar says. “And in fact, it really helps restaurants too, because as you know during Covid many sold in their cellars to keep themselves afloat. Now I can sell four packs if 2009, 2010, 2011 and 2012 under of a “replenish your cellars” program. Six – packs of 2006, 2007 and 2008 are also being picked up, and that will give me 36 months to figure out how to resolve the shortage issue. “

Logistics challenges

Those who realize that they do not have the gift of foresight that drives business, unfortunately, have more bad news to come.

“I’m already seeing significant price increases on some of the most sought-after wines,” says Matthew Green, National Sales Director at Europvin, a luxury importer and distributor. “An example is that I received a call with an offer in early spring for a Sancerre bottled at the estate. In the three days it took me to return the call, spring frosts hit and the lot sold for 25% more than what they offered us for. Due to the demand for Loire and Burgundy wines in particular, we are going to see tremendous pressure on prices, and some areas may become inaccessible to most people. “

Expect prices to increase in Burgundy and other desirable areas by 15-25%, he says.

This latest storm comes in the wake of tariffs (canceled for now) and Covid, both of which have created incredible logistical challenges at every stage of production and the supply chain.

“The undisputed elephant in the room is the logistical challenge that everyone faces,” notes Green. “Another one-off example is when I recently discovered that there had been a 40% increase in the cost of a container ship en route to us while still on the water. The seller said the incredible demand for these containers ships justified the price increase, and I had no choice but to pay. But I had already set prices with other partners that I couldn’t go back. “

The costs of supplies – from gas to labor to glass bottles – are also increasing across the board, often unpredictably when prices have already been set, causing unexpected hemorrhaging for a period already economically. difficult for everyone in the business.

For retailers like Crystal Cameron-Schaad, owner and sommelier of Crystal Palate Wine & Gourmet in Norfolk, Va., Sourcing staples like New Zealand Sauvignon Blanc “has been nearly impossible this year. We must receive our first shipment this week, which we usually have availability for customers at the end of April. “

Keeping champagne in stock has also been a struggle, she says. “Many great houses and champagnes from well-known producers have been sold out for months. We have made every effort to source and offer a range of alternative frothy options.

Change of headlamp

While consumers “can expect to pay more for their favorite bottles next year,” Cameron-Schaad believes “there is an opportunity for small retailers to drink outside the box and focus on hyper-local wines and lesser-known wine regions. For example. , with the shortage of New Zealand sauvignon blanc, we offered Verdejo de Reuda as an alternative and our customers fell in love with it! “

It’s not all bad news, Green agrees.

“Status’s Spanish wine hasn’t performed as well in the industry as a whole recently, but our portfolio is going against that trend,” said Green. “We will be 15-18% ahead this year compared to 2019, because 2020 does not count.”[percentaheadthisyearwhencomparedto2019because2020doesn’tcount”[percentaheadthisyearwhencomparedto2019because2020doesn’tcount”

While he will always “take all the Burgundy” he can get, “even at a higher price”, Green plans to heavily promote Ribera Del Duero, Priorat, Rioja, and also plans to expand Europvin’s portfolio. to include others, of lesser importance. known regions.

Despite crop declines of 20 to 25% linked to weather conditions in La Rioja, Jose Navarro, US Export Director at Grupo La Rioja Alta, with four brands in Spain and 1 million bottles produced each year, also sees an opportunity to his business to gain a foothold in the United States.

“The grapes we have this year are of excellent quality, and in our cellar in Rias Baixas we also had an excellent quantity, in fact higher than usual”, explains Navarro. “The Rias Baixas will be sold next year and the Rioja will hit the market in 2026-2027. Wine prices across the board have gone up due to tariffs and other issues, so in comparison, our wines – which are still considered to be in the luxury niche – are mid-priced, and we’re only planning to increase our prices by 2 to 5% this year. Our demand exceeds our supply at this stage. “

Not a big problem to face.

Time will tell how consumers react to price hikes related to weather and logistics that can’t be as easily explained as, say, tariffs, where an orange bogeyman could be blamed.

Will wine lovers pay higher prices for Burgundy, Bordeaux, Champagne and Napa Cab? Will wine lovers look to regions – such as Rioja and Ribera del Duero – with a pedigree that has fallen off the 100 mulled wine list? Or will they start exploring the cheapest and most abundant fringes – from Virginia and Pennsylvania to Lebanon and Uruguay?

While we wait and see, producers, distributors, importers and retailers would be smart to line up contingency plans, then contingency plans for contingency plans.

Is it happy hour already?


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