Wine Prices Fall 5% Mid-Year

The global wine trade has shown an unfavorable scenario in the first half of 2024, marked by a paradoxical evolution: an increase in volume but a decrease in value. According to the OEMV agency, based on customs and statistical institute data from various countries, the volume of wine exports rose 1.6% compared to the same period in 2023, reaching 49 million hectoliters. However, total value dropped 3.5%, standing at $17.973 billion. This indicates that more wine was sold but at lower prices, with the average price falling 5% from $3.85 per liter in early 2023 to $3.67 per liter in 2024.

The drop in export value is heavily influenced by France, the leading exporter by revenue, which recorded a significant decline. French exports lost $618 million, down 9.7% in value and 2.6% in volume, totaling $5.749 billion with 6.39 million hectoliters sold. The average price of French wine fell from $9.70 per liter in 2023 to $8.99 per liter in 2024, a 7.4% decrease. Although France remains the top revenue generator, the reduction in average prices has strongly impacted overall global wine trade value. This decline is attributed to an oversupply that accumulated during the post-pandemic recovery, when prices spiked due to strong demand and inflationary pressures in 2021 and 2022.

Italy and Spain, the other two major exporters, have shown more stable results. Italy saw a 3.2% increase in value, reaching $4.080 billion, and a 2.4% rise in volume, totaling 10.6 million hectoliters. The average export price for Italian wine edged up 0.8% to $3.85 per liter. Spain's exports rose 2.2% in value, reaching $1.588 billion, and 2.1% in volume, also totaling 10.6 million hectoliters, with a nearly unchanged average price of $1.50 per liter, showing only a 0.1% increase.

Wine trade performance has also varied by product category. Bottled wines, which account for 51.2% of total volume and over 68% of value, have struggled. Exports of non-sparkling bottled wines fell by 32 million liters, while the value of sparkling wines dropped $357 million, an 8.3% decline in six months. Even bag-in-box (BiB) wine, which had shown relative stability or slight growth in recent years, experienced a decline in the first half of 2024.

On the other hand, bulk wine sales rose 5.6% in volume, adding 88.6 million liters. Yet, the $118 million value gain in this category could not offset losses of over $315 million from bottled and sparkling wine exports. Grape must, a smaller export category, showed remarkable growth, doubling in volume and increasing by 30% in value, driven by significant Spanish must exports to Italy.

Analyzing the main exporting countries reveals that the top 11 nations account for 86.4% of global wine trade, in both volume and value. Besides France, Italy, and Spain, Australia stands out for strong growth. Australian exports increased 27.5% in value, reaching $794 million, surpassing Chile in the rankings, with 3.1 million hectoliters shipped. Chile saw a 14.1% volume increase but suffered from a 10.5% drop in average prices, negatively affecting revenue.

Other major exporters, including the United States, South Africa, and Portugal, posted moderate gains. The United States increased exports by 6.8% in value, while South Africa grew 5.3%. Portugal saw a 2.7% rise in volume and a 1.2% value increase. New Zealand, despite a slight volume uptick, faced a 7.7% drop in average prices, reducing its overall income.

The fall in average prices has been significant in some regions, with France and Chile suffering sharp decreases, while the United States, New Zealand, and Portugal also saw price declines. Germany maintained a stable price of $3.35 per liter, while Italy and Spain experienced modest price increases. Australia, in contrast, achieved a 21.8% increase in average prices in US dollars.

In absolute terms, France remains the highest revenue-generating exporter with $5.749 billion, followed by Italy with $4.080 billion and Spain with $1.588 billion. In volume, Italy and Spain are tied at 10.6 million hectoliters, far ahead of France's 6.39 million. Other notable volume exporters include Portugal, South Africa, New Zealand, Canada, and the United States, each surpassing one million hectoliters. Argentina rounds out the list with 0.8 million hectoliters.

France's export trajectory reflects distinct phases over recent years. Before the pandemic, French wine prices rose moderately. The COVID-19 crisis severely disrupted exports, notably impacting Champagne sales in the United States. Post-pandemic recovery saw a surge in demand and record-high prices, fueled by inflation and increased appetite for premium wines. During this period, French wine prices climbed almost $3 per liter, from $6.30 at the crisis low to over $9.70 by late 2023. The current situation reflects a correction, driven by slower demand, tighter monetary policies, and excess inventory.

Italy and Spain have shown steadier behavior. Both countries have enjoyed moderate positive trends, avoiding drastic fluctuations. Stable average prices have helped sustain this, with Italy at $3.85 per liter and Spain at $1.50. The price difference highlights market characteristics: Italy focuses on higher-value wines, while Spain's significant bulk wine exports contribute to its lower average price.

Overall, the global wine trade has seen volume stability but a notable loss in value, shaped by price fluctuations and post-pandemic dynamics. The correction in prices and influences such as inflation and monetary policies have played a role in this trend.