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Good prospects for the grape harvest in the northern hemisphere

August 1, 2012 by Ma. Soledad González | in Latest news, News

As it is pointed out in a report made by Rabobank, the United States and the European Union will have a better grape harvest than last year as regards volume.

After a year of lean grape crops, in this new season the northern hemisphere is back on its feet with a normal-volume grape harvest. This is indicated in the report “Trends and outlook for the international market” produced by Rabobank.

A harvest above average is expected next season in the United States. The report of the Dutch bank strongly connected to agricultural activities around the world, Rabobank, stressed that as a result of shortage of wine grapes in the last harvest, today the market is in balance. In fact, wineries have been forced to sign log-term contract with grower or even buy or expand vineyards in order to secure supply. Another option has been bulk wine import. Many wineries consider it a valid alternative to maintain their brand in the market and not generate shortage.

As regards the European Union, the report reveals that “With the exception of France, which has suffered some storm damage, the 2012 European grape crop appears to be off a relatively good start.”

“On a more structural level, the effectiveness of the EU supply rationalization measures is coming under intense scrutiny. […] EU regulatory bodies have recently acknowledged the counter-productive impact of investments made to enhance vineyard productivity, as well as the high incidence of illegal vineyard planting activity in some member states.”

Delicate balance

Regarding global wine inventories, the report states that they “continue to show signs of gradual tightening.” By Rabobank estimates, global wine stocks are at their lowest point of the last decade, and the industry has moved closer to balance after many years of widespread oversupply pressures.

However, the report is not conclusive on the effect this has on the demand.

“Fluctuating exchange rates continue to shift the competitive positioning of different countries, and the economic malaise in many developed economies continues to pressure demand and constrain market pricing.”

Generally speaking, rising grape and bulk wine prices are good news for many suppliers who have lacked profitability in recent years. “However, it is creating margin pressure on wineries that are finding it difficult to pass on the cost increases to consumers in the current environment,” summarizes the report.

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