Lameyse expressed the hope for a comeback of wine sales in the US and China which had been negatively affected. ‘The main question concerns the level of high stocks in the US and China, with no signs of consumption picking up. It is a very fragile situation, and the coming months will be crucial. Many major drinks companies invested heavily in operations over the past five years, financed by debt at low interest rates which are rising now. Increasing stocks imply need for more cash and selling at discounts. I expect to see further consolidation in the sector as a result of these challenges.’

However he said that stock depletions will also be high in the US and China in the coming months due to Thanksgiving, Christmas and Chinese New Year. “This is the first time since 2019 when the Chinese are ready for a big celebration. I hope it happens and China is a game changer.”

Rodolphe (Rod) Lameyse talked about the negative trend in terms of wine consumption, blaming it on price rises due to the rising costs of production and transportation, and a change in behavior pattern among younger consumers. Besides, people were drinking more in moderation due to health reasons everywhere. “One third of Gen Z in France do not drink alcohol because of health reasons and the taste of wine- much more than 20-30 years ago.” He also blamed pressure from the strong anti-alcohol lobby. But the younger consumers drink less on weekdays but still binge during the weekend.

The smallest production globally since 1961 had however, resulted in inventory reduction and could help bring a balance with demand in the coming year, with less volume available in the coming months, though some markets like India are expected to show growth in wine consumption, along with a projected rebound in the US and China. He was however more optimistic for the next 12 months.

Chile suffering heavy decline in consumption

Such is the global decline in wine consumption that a country like Chile is abandoning vineyards and in some cases considering uprooting them altogether, says Sebastian Labbé, the winemaker for Viña Santa Rita’s premier labels, according to a report in The Drinks Business yesterday.

Labbé paints a fairly bleak picture of the present situation in Chile though he also draws attention to positive aspects to wine production – above all the quality of the latest harvest, which he claims to be a fantastic vintage. But the decline in both domestic and foreign demand for Chilean wines, especially at the lower end is worrisome. Producers have started to worry, as they need to soon sell what’s in the vats and barrels to make room for the next vintage with the harvest starting in 5 months.

“A winery like Viña Santa Rita was in a relatively strong position, with a drop of sales in the past 12 months only at around 8-9% below budget, but many big names were down by 30-40% down”, he estimates.

As a result of a decline in sales, which is ascribed to drop in demand in key export markets like China, combined with low levels of domestic wine consumption several vineyards have not even been picked this year. He believes that further cultivation may be stopped at such sites. Chile boasts of 130,000 hAs in Chile, and a great number will be pulled out,” he feels, according to the Report. He adds, “We are looking at a couple of very difficult years in Chile, with probably these vintages being tricky.”

He feels that the fall in demand was generally for entry-level wines, though premium wines selling at over $40 a bottle are growing in sales. It is reassuring that this year’s harvest has been an excellent vintage.

This year has been hot and dry but night temperature fell by an average of 19°C keeping the freshness in grapes. The wines are thus ripe, with no herbal character. Due to early picking, alcohol levels have also been lower.

According to Lameyse there has been a growth in ‘super-premium category and above’, which covers bottles of wine priced in retail at €20 or more. According to figures released by the World Bulk Wine Exhibition (WBWE), in the first half of 2023, Chile’s bulk wine exports fell by more than 25%, accounting for 11.32million hLs worth  US$124.7million. Bulk wine accounted for 41% by volume and 17% by value of Chile’s wine exports in the first six months of this year, according to the WBWE- a show which is also organized by Vinexposium in conjunction with Pomona Keepers, a Spanish company.

Meanwhile, bottled wine exports suffered similar levels of decline, with a drop of almost 25% in both volume and value. Bottle wine exports from Chile account for a little over 56% of the volume and 80% of the value.

In Bordeaux, the agriculture ministry had announced a 57-million-euro fund in June to help finance pulling up around 9,500 hectares of vineyards in the region. Producers are being encouraged to invest in other crops, such as olives. The EU initially had allocated €160 million for the destruction of wine. The French government added additional incentives to bring the fund to €200 million. Bordeaux had 108,000 hAs of vines in 2022 and decided to pull out 9,500 hAs of vines to be pulled, a process called grubbing up-pulling up roughly 10% of its vines is expected to make the region reach a sustainable position.

Also Read: Wine Paris & Vinexpo Paris gets bigger and better in the 2024

Lameyse plans to be in Delhi for the Vinexpo India to be held for the third time in Delhi on 7-9 December 2023 and one can meet him at the venue, IICC (Yashobhoomi) Dwarka.

Subhash Arora