Nail biting time across northern hemisphere as producers and buyers hope 2018 can be a bounce back harvest
By Richard Siddle
Now we can all look back in our lives and pick out some better years over others in terms of our own personal experiences, successes, highs and lows. But rarely, if pushed, can we dismiss a whole year as, frankly, not being worth living through. Every year brings some sort of cheer and happy memories if you look hard enough for them.
Not winemakers. They spend more time dismissing whole years, vintages, and harvests than they do praising the years when all things aligned to create the wines they want to make.
After all winemakers and producers live in a parallel universe to the rest of us. Whilst professional buyers, retailers, distributors and importers can look at the world of wine as a multitude of wine producing counties that may or may not be relevant to them at any given time, if you are a producer you’re stuck with where your vineyards happen to be.
Which in 2017 brought more than its fair share of bad luck, desperate weather conditions and poor vintages to so many parts of the world. Particularly in the northern hemisphere with regions of France, Italy and Spain suffering their worst vintages since the days of the Beatles and JFK.
It has all culminated in one of the most difficult buying and trading times of the last decade as there has been so little wine around for major buyers to make long term plans.
Which has made 2018 such an important pivotal year for buyers and producers alike.
Compared to what happened around the world in 2017, where South America was hit nearly as badly as Europe, it’s been a case of so far, so good.
Harvests across Australia, New Zealand, South Africa, Chile and Argentina have all brought smiles rather than frowns to local producers and international buyers alike. They may not be bumper harvests, but they are all in line with average and certainly help to bring a level of status quo to the trade and help plug gaps on lists and get the global wine wheel turning again.
Look north
Now the attention turns to the northern hemisphere and what we can expect in the key growing areas of France, Italy, Spain and Germany and then over to North America, and in particular, California.
The signs so far are good. With a few exceptions here and there.
Europe is currently basking, or suffering, in one of the longest, sustained heat waves of the last 30 years.
There have been some bad frosts, and hail storms hitting parts of Burgundy, Bordeaux, and the Languedoc during the vital flowering period, but compared to 2017 these have been more localised rather than the big hits these key regions suffered last year.
That said Bordeaux lost 7,100 hectares when hail hit The Bourg and Blaye regions as well as parts of Médoc, Entre-deux-Mers, and Pessac-Léognan. Only last week parts of the Aude region in western Languedoc were “annihilated” by hail.
But overall the mood is quietly positive. Few in Europe, both west and east, are willing to count their chickens just yet, but we are hearing tentative predictions that if the weather stays as it is, and at some stage brings some late rains, then we could be looking at strong harvests right across the board.
Even in England there is talk of the best ever harvest for its burgeoning wine industry which is an indicator of how good things are looking in northern Europe. Champagne is also expecting a bumper harvest.
This, however, is now and things can change very quickly. One leading buyer told VINEX this week that that expecting a good harvest was more nervous than in a bad year, when you knew for weeks, if not months, where you stand.
When the conditions are so good as this in mid July than the adrenaline starts to pump and “you are crossing your fingers that things turn out as well as you are hoping” they said.
Nail-biting time
“It’s a nail biting time ahead,” said UK wine consultant, Simon Stockton. “But so far potential yields look good,” he added, pointing to the situation in Champagne. “We don’t need storms, hail, split berries, high humidity.” “It can go either way,” agreed wine critic, Tom Stevenson, founder of the Champagne & Sparkling World Wine Championships.
It is clearly too early to say definitively where we stand looking ahead to September and October when the bulk of the northern hemisphere crop will come in.
But the signs so far are we can expect at least average if not higher volumes in most major areas. Spain is currently on course for a slightly higher than average harvest, thanks to high rains during the growing season which means there are still water reserves to cope with the hot weather.
As VINEX’s own regional manager, Magda Pellicer, says: “The ripening season so far has been cooler than average which may impact the yields, but not significantly.”
As the market expects better 2018 volumes we are seeing a slight ease in pricing in Spain and Italy, but the situation will remain volatile until we get closer to harvest.
It will be interesting to see how far prices are squeezed if the expectant harvest do come in. The Côtes du Rhône, for example, has announced this week that is bulk prices are up 20% on the back of last year’s poor harvest.
Many north European regions are seeing this as an opportunity to try and use increased prices as leverage to keep them at similar levels even if there is a good harvest. The AOC Languedoc, for example, is calling for €1.50 per litre minimum target to keep its growers sustainable and even the €1.40 received in the last year due to a poor vintage is below where the market needs to be.
Then there are areas like Chablis that hope to benefit from a larger harvest by actually reducing prices to make themselves more competitive again. The last two years has seen Chablis prices double from around €650 euros to €1200 per feuillette (132 litre barrel) forcing buyers to look at alternatives.
Eastern alternatives
There will also be greater interest in Eastern Europe and the harvests in Slovenia, Moldova, Romania, Bulgaria and Georgia all of which have benefited in the last year from buyers looking for alternative wine sources. How much of that business they can hold onto remains to be seen, but the combination of volumes and lower prices is hard one for buyers to walk away from.
Producers such as Cramele Recas in Romania have long been making a name for themselves as a quality alternative for major varieties like Merlot, Pinot Grigio, but the last year has allowed them and others to build even more scale. Cramele Recas, for example, in 2017 produced 24 million bottles, had a turnover of €42.5 million and now makes 65 different wines under 247 different labels.
“Last year was just mad. We had a great vintage, unlike most other countries, and business doubled – that was after it had gone up 40% the year before. We’re struggling to keep up with demand,” says founder Philip Cox.
Tough buying conditions
The big losses in 2017 also means there are going to be shortages in the supply chain in the second half of the year regardless of the size of the 2018 harvest.
VINEX’s Europan manager, Inge Straetmans, has called the market conditions “the worst time ever to be a wine buyer” such is the shortage of availability. “There is, for example, no Vin de Provence rosé, no IGP Méditerannée in the market. We’ve traded a lot of Corsican rosé this year to replace Côtes de Provence,” she explains.
Key regions like Ribero del Duero in Spain, that lost 70% of its production in 2017, are now really struggling. Richard Cochane, UK managing director of Felix Solis, has said there are growing concerns about the last quarter of the year in particular.
Which means, for now at least, the negotiating power remains with producers who can still afford to wait for the right deal and work with long term partners.
Californian confidence
There is also quiet confidence in the US that the wine harvest, particularly in the key Californian wine producing region, are on track for a solid year. Predictions are coming in of an average to above-average crop of about 4 million to 4.25 million tonnes, according to sources such as Allied Grape Growers reported by Wines & Vines. Cooler growing conditions across coastal California has also helped with crop quality, but could see a slightly later harvest in those areas.
Producers in California are in a very different place to Europe where they are still sitting on big inventories of wine from a strong 2017 vintage, and if anything are looking to shift wine to make room for the 2018 harvest rather than clamber to eek out what they have got.