Small 2012 harvest sparks supply fears

PLB buying director Paul Meihuizen has warned that 2013 is set to be “one of the most challenging for the global wine industry”.

Pointing to “challenging” harvests this year in much of Europe, where some regions saw up to a 40% volume decline, Meihuizen noted the subsequent step up in demand for wine from less affected countries such as Chile and South Africa as he confirmed “a lot of uncertainty around pricing and availability.”

Meihuizen coupled this situation with longer term efforts across the global wine trade to tackle what has until now been a problem of wine oversupply, raising concern that future demand “will put more pressure on the UK sector where returns for wineries have always been less attractive.”

According to Nielsen MAT data to 21 July 2012, the average price growth rate for leading countries represented in UK multiple grocers has soared. Chilean wine saw the largest price hike of 9.7%, with Germany not far behind at 8.2%.

Other notable increases came from France at 6.6%, the US at 6.5% and Argentina at 6.0%. Even Spain, which has been regularly highlighted by UK buyers as a current source of good value, delivered an average price increase of 3.9%.

Summing up these present price hikes as “the highest percentage-wise that we have experienced in over 20 years”, Meihuizen urged buyers to “agree deals on the crucial pieces of business to ensure supply.”

His comments follow a similar warning outlined earlier this year by Greg Wilkins, director of First Cape owner, Brand Phoenix. At the time, Wilkins argued that UK buyers needed to adopt a “major mindset shift” in order to ensure ongoing supply of key wine brands in the face of growing global demand.