OIV: Fall in Global Wine Production expected in 2020

After the exceptionally high production of 294 mhl (million hectoliters) in 2018, the production fell to 256 mhl last year and with an estimated 1% growth to 258 mhl this year over 2019, but the world wine production volume is expected to be below average for the second year in a row. These are the first estimates of world production, that are traditionally announced at a Conference at the Paris Headquarters in October every year but this year due to the pandemic, a web conference was organised.

In a nutshell

There has been lower than average production volume in the EU, where measures to reduce the harvest volume had a significant impact in Italy, France and Spain despite the overall favourable climatic conditions. Forecasts in the US indicate volumes in line with 2019, but uncertainty caused by wildfires might lead to downwards revisions. There was a drop in South America’s wine production, especially in Argentina and Chile due to unfavourable weather conditions but South Africa finally came back to normal crop after years of drought. Australia has recorded a low harvest due to bushfires but New Zealand shows a record harvest volume in 2020.

Also Read : OIV: Estimates of World Wine Production in 2019 show Drop of 10%

This is not considered as bad news for the wine sector given the current context where geopolitical tensions, climate change and covid-19 pandemic are generating a high degree of volatility and uncertainty in the global wine market.

Northern Hemisphere

With 159 mhl, the EU represents 62% of the world wine production. The 3 largest producing countries indicate there was a drop of 1% in Italy (47.2 mhl), increase of 4% in France (43.9 mhl) and a big increase of over 11% in Spain (37.5 mhl), as compared to 2019. These countries account for 49% of the world wine production and 81% of the EU. The preliminary levels of production for 2020 are just below their last five-year averages.

A positive growth with respect to 2019 is recorded in other large EU wine producing countries such as Germany (8.9 mhl, 8%), Hungary (2.9 mhl, 22%) and Austria (2.7 mhl, +10%). These levels are in line or above their last five-year averages. Portugal at 6.5 mhl was the same but Romania (3.6 mhl) and Greece (2 mhl) show a negative growth of 7% and 2% resp.

Outside the EU, the production is high in countries like Russia (4.7 mhl, 2%) and Ukraine (1.0 mhl, 1%), but Georgia and Moldova (experiencing drought) have recorded a reduction in production with 1.7 mhl (-3%) and 1.2 mhl (-18%) respectively. Wine production volume in Switzerland in 2020 was also less by 10% (0.9 mhl).

Also Read : OIV: WORLD VITI-VINICULTURE STATUS 2018

In the USA, the preliminary estimate for wine production is at 24.7 mhl (+1%).This figure is based on USDA forecasts on the wine-grape harvest, but could drop significantly when more information on the real effects of the wildfires in Napa and Sonoma are available. Fire and smoke taint may prevent part of the grapes from being vinified. Furthermore, the oversupply issue that characterised the last few years might also play a role in the production decisions.

Data on grapes harvest in China is not available. However, wine production is likely to continue to show a decrease that started in 2016 for structural reasons. No data is indicated about production in India too but based on our estimates there were bumper crops and production, though miniscule from the point of view of world production, will be higher this year, despite pandemic. Incidentally, harvest takes place generally in January to March in India due to the monsoon cycle.

Southern Atmosphere

With 49 mhl, the Southern Hemisphere recorded the lowest volume produced in the last 15 years, 8% less than the 2019 volume, representing under 20% of the world wine production, thanks to unfavourable climate conditions. A strong decline in wine production is recorded among major producing countries, with a few exceptions. It is worth mentioning that the Covid-19 pandemic spread during the harvesting season, even though this difficulty does not seem to have much impacted the volumes of production.

South America registered a sharper decrease with respect to the production level of 2019. In Argentina, 2020 wine production drops significantly to 10.8 mhl (-17%) due to the unfavourable weather conditions caused by El Niño. Chile, with 10.3 mhl, recorded a 13% decline mainly due to drought. Brazil has an estimated wine production volume of 2.2 mhl in line with last year but nevertheless 15% lower than its five-year average.

Also Read : OIV: Lowest Global Wine Production in 2017 since 1961

In South Africa, where drought significantly impacted harvests in 2018 and 2019, wine production in 2020 is estimated at 10.4 mhl thus, levelling up, back to normality.

Australia registered a strong decline at 10.6 mhl (-11%), 16% less than its last five-year average. A combination of factors reduced the production volume: the drought reduced the yields, bushfires took place during the harvesting season, and some of the grapes were particularly affected by smoke taint. New Zealand shows an opposite trend with fourth year in its history producing more than 3 mhl; 3.3 mhl in 2020 (11%) shows a15% increase over its last five years’ average.

However, as Roca emphasised, these or only the initial estimates and subject to revision later. He is the Director General of the UN type of organisation. OIV is the intergovernmental organisation of a scientific and technical nature of recognised competence for its work concerning vines, wine, wine-based beverages, table grapes, raisins and other vine-based products. It comprises 47 Member States including India which is not a very active member though.

Subhash Arora

Table 1 : Historical Wine production in EU Countries

Table 2 : Wine production in major countries in the Northern Hemisphere outside EU

Table 3 : Wine production in major countries in the Southern Hemisphere

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