The first forecasts of wine production in the southern hemisphere indicate low volumes for 2020 in most countries

France | Production

The International Organization of Vine and Wine (OIV) has recently published a report on the production, consumption and international trade of wine in 2019.

4/30/2020

Vine.

The first estimates of wine production in the southern hemisphere indicate a forecast of low volumes for 2020 in most countries, with the exception of South Africa and Uruguay.

In 2020, a reduction in production volumes is expected in all South American countries, with the exception of Uruguay. In Argentina, the estimated production is 11.6 Mill. HL (-11%); in Chile, 10.5 million hL (-12%) and in Brazil, 2.0 million hL (-1%), while in Uruguay, 0.65 million hL (+11%), South Africa seems to continue a trend of recovery from the drought and foresees an increase of 5% compared to last year, reaching 10.2 Million hL.

In Oceania, Australia predicts a lower production level in 2020, estimated at 11.5 Million hL (-4%) due to drought and forest fires, while in New Zealand (2.9 Million hL, - 2%) Expectations for wine production are broadly similar, with the 2019 figures, or slightly lower.

Of course, these are preliminary estimates that must be interpreted with caution, especially considering the exceptional circumstances we are currently going through.

The impact of the Covid-19 in the wine sector

In this initial phase, the information and statistical data available are insufficient to provide an accurate forecast and to anticipate the scenario of the wine sector in the future. However, thanks to permanent contact with the Member States of the Organization, the OIV has certain qualitative information at its disposal.

The comments received from the Member States reflect a radical change or a transfer between the distribution channels. The expected balance sheet is a decrease in consumption, a reduction in average prices and, consequently, a general decrease in the value of income, margins and, finally, the total profits of the wineries.

In terms of exports, economies in recession are not a promising market and, during this pandemic, the main consuming countries have been the most affected. Trade flows can recover along with the economy, but permanent changes could be generated.

Alcohol consumption is also under debate. Messages about the positive effects of wine consumption are totally unacceptable and irresponsible. The same is true of the dissemination, in these circumstances, of general statements or biased messages that are the result of ideological concerns about wine consumption, such as abstention.

The OIV's work follows the Strategic Plan approved by the General Assembly in October 2019, which covers a period of five years until 2024. In the current context, the OIV's objectives and goals must accompany the needs that this crisis has placed manifest.

Stabilization of the vineyard surface

In 2019, the world vineyard size, which corresponds to the total vineyard area for all uses (wine, table grapes and raisins), including young vines not yet in production, is estimated at 7.4 Mill. Ha.

Starting with the northern hemisphere, a general stability can be observed in the vineyards of the European Union (EU), which remain for the fifth consecutive year at 3.2 million ha. Within the EU, the latest data available for 2019 indicate an increase in vineyard area in France (794 mha), Italy (708 mha), Portugal (195 mha) and Bulgaria (67 mha). The vineyard area in Spain (966 mha), Hungary (69 mha) and Austria (48 mha), on the other hand, decreased slightly compared to 2018.

In East Asia, after 10 years of significant expansion, the growth of China's vineyard (855 mha), second in the world in terms of surface area, only behind Spain, seems to be slowing down. 2014, and its estimated area in 2019 is 408 mha.

In South America, the evolution of the vineyard area between 2018 and 2019 showed a downward trend for the fourth consecutive year, the only exception on the continent being Peru, which increased by 7.1 mha (+17% / 2018 ) its vineyard area, reaching 48 mha. South Africa's vineyard area remained stable compared to 2018, at 128 mha.

In Australia, the vineyard area remained stable at 146 mha in 2019, in New Zealand the area grew by 1.6% reaching a record peak of 39 mha.

Production returns to average

World wine production, excluding juices and musts, in 20191 is estimated at 260 (259.0) Mill. HL, which represents a notable decrease of 35 Million hL (-11.5%) compared to the exceptionally high volume registered in 2018. Overall, after two consecutive years that can be defined as highly volatile, in 2019 wine production has returned to its average levels.

Italy (47.5 Mill. HL), France (42.1 Mill. HL), and Spain (33.5 Mill. HL), which together represent 48% of world wine production in 2019, experienced a significant reduction in its wine production compared to 2018.

Still within the EU, other countries that registered a decrease in production compared to 2018 are Germany (9.0 Million hL, -12%), Romania (5.0 Million hL, -4%), Austria ( 2.5 Million hL, -10%), Hungary (2.4 Million hL, -34%) and Greece (1.9 Million hL, -8%). 1 This is the production obtained from grapes harvested at the beginning of 2019 in the southern hemisphere and at the end of 2019 in the northern hemisphere.

The only EU country that, in 2019, experienced an increase in its wine production is Portugal, with 6.7 Million hL (+10% / 2018).

In Eastern Europe, weather conditions were favorable in Russia (4.6 Million hL, + 7% / 2018) and Ukraine (2.1 Million hL, +6% / 2018), while in Moldova the harvest was less abundant in 2019 and the production of wine was equivalent to 1.5 Mill. hL (-23% / 2018).

In Asia, the new data available for China indicates an estimated wine production of 8.3 Million hL in 2019, which represents a decrease of 10% compared to the already relatively low production level in 2018.

In North America, US wine production. USA estimated at 24.3 Million hL, a decrease of 2% compared to 2018. It seems that the slight decrease of 2019 does not depend on the adverse weather conditions or the uncontrollable fires that took place in California in October (the harvest was carried out just before), but is a reaction to counteract an oversupply of grapes and wine.

In South America, the general trend for wine production in 2019 is negative with respect to 2018. However, in Argentina (13.0 Mill. HL) and in Chile (12.0 Mill. HL) the productions of wine in 2019 were lower than in 2018, but in general lines similar or even higher than their five-year averages, Brazil (2.0 Million hL) registered a notable reduction in its production of wine in 2019 by more than 1 Million. hL (-34% / 2018).

In South Africa, 2019 production reached 9.7 Million hL. This represents an increase of 3% compared to the low volume registered in 2018, but it is far from the average production levels registered before the beginning of the drought that had a notable impact on the country for three years in a row (2016, 2017 and 2018).

With respect to Oceania, Australian wine production registers a reduction for the second consecutive year, reaching 12.0 Mill.h L in 2019 (-6% / 2018). In New Zealand, wine production was 3.0 Million hL in 2019, a slight decrease of 1% compared to 2018.

World wine consumption, in slight increase World wine consumption in 2019 is estimated at 244 Million hL, registering an increase of 0.1% compared to 2018.However, it should be noted that, due to the margin of error in the Following the world consumption of wine, this figure should be considered with caution.

USA USA confirms its first world position among wine consuming countries also in 2019, reaching a record peak of 33.0 Mill. hL.

With respect to China, the wine consumption for 2019 is estimated at 17.8 Million hL, which represents a drop of 3.3% compared to 2018. In light of this reduction for the second consecutive year, rapid growth consumption that has characterized these last 20 years seems to come to an end.

Japan is the second country with the highest wine consumption in Asia (and the fifteenth in the world), registering a stable level of consumption for the sixth consecutive year with 3.5 Million hL. In South America, general wine consumption increased in 2019 compared to 2018, with Argentina at 8.5 Million hL (+1.3%), Brazil at 3.3 Million hL (+0.5%), and Chile at 2.4 Million hL ( + 4.6%). There was a reduction in consumption in South Africa (4.0 Million hL, -6.2% / 2018), which returns to its 2014 level after four consecutive years in a figure greater than 4, 3 Mill. HL.

In Australia, wine consumption is estimated at 5.9 Million hL, a value similar to the high levels observed in 2017 and 2018. Expansion of international wine trade.

In 2019 the world wine export market –considered here as the sum of the exports of all countries– has increased with respect to 2018 both in volume, estimated at 105.8 Mill. HL (+1.7%), as in value, with 31 800 Million EUR2 (+0.9%). Large increases can be seen in exports from Italy (+2.0 Million hL), Spain (+1.3 Million hL), Canada (+0.4 Mill. HL) and Chile (+0.3 Mill. hL). However, significant reductions in exports were registered for Australia (-1.1 Million hL), South Africa (-1.0 Million hL), Ukraine (-0.4 Mill. HL) and Hungary (-0.3 Mill. .hL) .In 2019, the global value of wine exports follows a sustained upward trend that started in 2010 and reaches a new record peak. France is confirmed once again as the world's largest exporter in terms of value, with € 9,800 million exported in 2019. There were increases in the value of exports in many large exporting countries such as France (+ € 425 million), Italy ( +211 Million EUR), and New Zealand (+84 Million EUR). The largest decreases were recorded in Spain (-234 million EUR) and South Africa (-73 million EUR) .In 2019, international wine trade in volume terms was mainly dominated by three European countries (Italy, Spain and France) that together they exported 57.1 Million hL, which represents 54% of the world market.

In 2019 the three main importers in terms of volume were Germany, the United Kingdom and the USA. The USA, which together imported 40.4 Million hL, thus reaching 38% of the world total. These three countries represent 39% of the total value of world wine imports, reaching € 11.9 billion.

The first importer in 2019 is still Germany with 14.6 Million hL, even if its wine import volume decreased by 0.6% compared to 2018.

China, for the second consecutive year, experienced a significant reduction in its imported volumes (-11% / 2018), reaching 6.1 Million hL in 2019. In terms of value, the trend is similar, with an overall drop of 9, 7% compared to 2018, reaching 2,100 million EUR. The only category that increased both its volume (+8%) and its value (+8%) is sparkling wine, despite the fact that it represents only 2% of the total imported volume.2 Based on the monitoring of 92 countries to through the customs data of Global Trade Atlas.

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