Global Market Report - The Ciatti · PDF file2 4 Ciatti Contacts Import/Export CEO – Greg Livengood Steve Dorfman T. +415 458-5150 E. [email protected] E. [email protected] Domestic

October 2017Volume 8, Issue No. 10

Ciatti Global Wine & Grape Brokers1101 Fifth Avenue #170

San Rafael, CA 94901

Phone (415) 458-5150

Global Market Report

Photo: Ciatti.com

Photo: Ciatti.comPhoto: Ciatti.com

2Ciatti Global Market Report | October 2017

We continue to experience horrific wildfires in many parts of California. The

North Coast grape growing regions have seen tremendous destruction over the

past several days. While it seems that many of the wineries of the region have

escaped total destruction, the impact on individuals’ lives and property has been

immense. We have heard stories of friends and colleagues that have lost homes

and more. Our thoughts and support are with them, and we continue to hope

that these fires will be controlled in the very near future. More will be known in

the coming days, with regards to vineyard and property damage, but for now we

all focus on supporting those in need, and stopping the destruction.

*

Harvests in Europe are concluding and volumes in the Languedoc, La Mancha

and Italy appear to be between 20-30% down on the average. This has placed an

upward pressure on wine prices in these countries and also in Chile and South

Africa, where there was already an acute scarcity of supply. In South Africa, most

wines are not currently available, while Chile’s varietal bulk is almost sold out. The

shortage of alternative sources of supply has created a kind of ‘cycle of acceptance’

among bulk wine buyers: having failed to receive an offer price they like from

their usual source – say, Spain – they seek offers in their back-up source – say,

Chile – only to discover prices there also far exceed what they would prefer to pay,

while South Africa simply cannot provide the volumes. The buyer, accepting the

situation, returns to their original port of call only to discover the offer price has

risen another EUR0.10/litre in the meantime.

The smaller harvests in France and Spain will polarise the nature of their offers: in

France, production of Vin de France, Vin De Pays and IGP wines will be prioritised,

significantly reducing the available quantities of French generics; in Spain, varietal

wines will be sold out by January, leaving the Spanish market to focus even more

on generics. The prices in both markets will be higher than they were at the

equivalent stages of the previous buying campaign, sometimes significantly so.

They will remain relatively attractive, however, because prices are rising globally

and will continue to do so at least until the Southern Hemisphere’s 2018 harvests

come in.

Spring is underway in Argentina, Chile and Australia without any severe frost

episodes so far. Australia and South Africa have experienced dry winters. The

Western Cape is receiving some rain but only enough to maintain water reserves

at their current, greatly reduced level: Cape Town’s catchment dams are at

37.6% of capacity as of 2 October, compared to 62.5% at the same stage of 2016.

International buyers will be keeping their fingers crossed that the Southern

Hemisphere experiences a boring growing season conditions-wise so that good-

sized harvests ensue, and also that California’s current, ongoing harvest is sized

reasonably enough that US buyers – with their strong dollars – do not need to dip

into the already pressurised international market.

3 California

4 Argentina

6 Chile

7 France

9 Spain

11 Italy

12 South Africa

14 Australia

15 New Zealand

16 John Fearless

18 USD Pricing

20 Contacts

Volume 8, Issue No. 10

October 2017

No part of this publication may be reproduced or transmitted in any form by any means without the written permission of Ciatti Company.

Robert Selby

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Mid-September brought 7-10 days of cooler

temperatures to California, which state-wide has

helped slow and stretch-out the grape harvest,

allowing the physiological maturity of the grapes to

rise up to match brix/sugar maturity. The summer’s

prolonged and intense heat had started to condense

the harvest window, potentially placing a strain on

logistics and labor: the subsequent cooler weather in

September has allowed growers to be more selective

about when to pick.

At the moment the harvest looks like being reasonably

sized, at around 3.9-4.0 million tons. In general,

the whites were most hurt by the heat, especially

Chardonnay. The reds have fared better, and it could

be a good year volume-wise for Cabernet, with the

exception of the North Coast which could be severely

impacted by the ongoing fires.

In the Central Valley, which contributes 75% of

California’s crush, on an existing vineyard basis the

harvest looks like being slightly lighter than the average.

There are fewer new vines coming on-line but some in

the Lodi area might help partially offset the shortfall.

Things in the lower Central Valley seem to have sized-

up a little. Ciatti has heard of Zinfandel in particular

being adversely affected by the heat, suffering from

botrytis and sour rot, but minimal volume is affected.

The Central Coast, like the Central Valley, experienced

September’s cooling temperature trend and parts of

the southern Central Coast, such as Paso Robles and

Santa Barbara, received drizzly rain. The Central Coast

harvest is proceeding on a normal schedule and, it

seems, coming in at estimate on Chardonnay and Pinot

Noir. In Monterey, Pinot Noir has been coming in 15%

above estimate, and Chardonnay at estimate. Overall,

the Central Coast is looking at an average-sized harvest

or slightly better.

In the North Coast, the harvest schedule had been

running normally, with the Chardonnay harvest

completed and the reds starting to coming in. We will

have to see what transpires, but for now all are focused

on fighting through the ongoing crisis.

There is likely to be market activity on Chardonnay,

as it’s been a tough growing season for that varietal.

Sauvignon Blanc will be in demand simply because

Californian supply is limited. The Cabernet harvest

should come in very well, potentially stabilizing

Cabernet prices (Ciatti is seeing some Cabernet available

late in the season on the Central Coast). There will also

be an ample supply of Malbec for those US buyers

struggling to source the varietal out of South America.

In short, California can provide the buyer with pretty

much any varietal.

CaliforniaTime on target

HARVEST WATCH: Cooler September helped

slow harvest, boost physiological maturity

See next page for more on California.

http://www.transolve.com.au/


Ciatti ContactsImport/ExportCEO – Greg Livengood

Steve Dorfman

T. +415 458-5150

E. [email protected]


DomesticT. +415 458-5150

John Ciatti – [email protected]

Glenn Proctor – [email protected]

John White – [email protected]

Chris Welch – [email protected]

California: Current Market Pricing (USD per liter)

Vintage Variety Price Trend Vintage Variety Price Trend

2016 Generic White 0.79 – 0.99 ↔ 2015 Generic Red 0.85 – 1.05 ↔

2016 Chardonnay 1.52 – 1.85 ↑ 2014/15 Cabernet Sauvignon 1.59 – 2.11 ↔

2016 Pinot Grigio 1.39 – 1.72 ↔ 2015 Merlot 1.32 – 1.58 ↔

2016 Muscat 1.19 – 1.32 ↔ 2015 Pinot Noir 1.85 – 2.25 ↑

2016 White Zinfandel 0.85 – 0.99 ↔ 2015 Syrah 1.32 – 1.58 ↔

2016 Colombard 0.86 – 1.12 ↔ 2014/15 Zinfandel 1.72– 2.11 ↔

The harvest looks like being around 3.9-4.0

million tons. The whites were most hurt by the

heat, especially Chardonnay: the market on that

varietal could become tight. Cabernet pricing

could be stabilized by a good year for the varietal,

volume-wise, with the exception of the North

Coast, California can provide the buyer with

pretty much any varietal, including a good supply

of Malbec.

Key Takeaways

All the signs are that Argentina’s economy is on the

mend and the governing party led by President

Mauricio Macri will come out on top in the midterm

congressional elections, held 22 October. There is

genuine hope, perhaps for the first time in 15 years,

that Argentina is on the road to a sound economy and

reintegration into the international community. The

exchange rate is currently at 17.5 pesos to the dollar;

there is hope that, following the elections, the Macro

government will devalue the peso, perhaps to 19.

ArgentinaTime on target

HARVEST WATCH: Spring is proceeding

without incident

A devaluation would boost the attractiveness of

Argentina’s Malbec price, which remains paused at last

month’s quoted USD1.80/litre level (with USD1.70/

litre possible) while suppliers see how the frost season

– now underway – pans out. Springtime in Mendoza is

currently proceeding normally, with some cooler days

but also warming ‘Sonda’ winds blowing in from the

Andes.

Despite the paused Malbec price, market activity in

Argentina has picked-up a little, with some purchases

being made here and there. Price increases around

the world, as well as reports of big shortfalls in the

European harvests and an average-sized California

crop, have helped make USD1.80/litre for Malbec

seem less unattractive to buyers than previously. Will

See next page for more on Argentina.


Key TakeawaysBulk Malbec remains at USD1.80/litre with USD1.70/

possible. This will hold during the frost season, after

which a reassessment will be made. A softening

of the Malbec price could be assisted by a peso

devaluation, should one occur after the country’s

midterm elections on 22 October.

Ciatti ContactEduardo Conill

T. +54 261 420 3434


USD1.50/litre be possible by the end of 2017? It will

mainly depend on the frost season and if there is a peso

devaluation.

Argentina’s total wine trade – including bulk and

bottled, and for domestic or export – was 5% smaller

in the January-August 2017 period than it was in the

equivalent period of 2016. Domestic wine consumption

has been significantly dampened by inflation and the

high price of wines following successive disappointing

harvests. A 750ml bottle of Malbec is priced in the

region of 100 pesos; for the same outlay, consumer can

buy many more beers. Consumption of high-end wine

– bought once a week and/or for special occasions – is

still growing, but the budget and midmarket has lost

market share to beer. The beer market is more dynamic

anyway due to the presence in Argentina, as in many

countries now, of a trend for craft beer.

Export of wine grape juice concentrate out of Argentina

in the January-August 2017 period was down 47.6% on

the equivalent period of 2016. There were less volumes

of grapes being channelled into the GJC category, and

little demand anyway – but now, with the shortfall in

European harvests, Argentina is fielding requests for

GJC and wine alcohol.

According to Bloomberg, Argentina’s gross domestic

product is on the rise, poverty is ticking downward, and

inflation is declining: it should be at around 15% in 2018

and on course to be in single digits in 2019.

Argentina: Current Market Pricing (USD per liter; FCA Winery)


2016 Generic White 0.55 – 0.65 ↔ 2016 Generic Red 0.90 – 1.10 ↔

2016 Chardonnay 1.20 – 1.40 ↔ 2016 Cabernet Sauvignon 1.80 – 2.00 ↔

2016 Muscat 0.70 – 0.80 ↔ 2016 Syrah / Merlot 1.50 – 1.60 ↔

2016 Torrontes 0.60 – 0.80 ↔ 2016 Malbec Entry-Level 1.80 – 2.00 ↔

2016 Bonarda 1.50 – 1.60 ↔ 2016 Malbec Premium 2.50 – 3.50 ↔


ChileTime on target

HARVEST WATCH: No frost pressure in

spring as yet

Early spring in Chile’s growing areas has so far

been intermittently rainy and sunny, with no frost

pressure. Meteorologists are not forecasting any

severe frosts. It is early days but the consensus seems

to be that if conditions continue as they have been, a

normal-sized crop will result. This has not, however,

softened prices on Chile’s 2017 wines, which continue

to rise week-on-week, nor the price of – and demand

for – 2018 grapes.

Chilean wineries are taking the risk and buying high-

priced grapes because the current global supply-

demand situation – together with the 2017 harvest

forecasts coming out of Europe and California – would

indicate that the big demand pressure on Chile’s wines

will continue. Prices at the start of Chile’s 2018 wine

buying campaign will definitely be higher than they

were at the start of its 2017 campaign.

The market has been active but not feverish, and

international demand has slowed a little in recent

weeks: buyers are taking a little longer to make

decisions; before acting, some buyers are waiting

to see how the growing season goes for Chile’s 2018

vintage, and its eventual yield. Many international

buyers hesitated to commit in Chile earlier in the

year, and held off, only to see prices escalate through

the course of 2017 instead of decline. Where the

Chilean market’s remained feverish in recent weeks

is domestically, in particular the case goods market,

where players are buying at a loss to maintain brands.

Prices on 2017 wines continue to rise and their

availability becomes increasingly scarce. Varietal bulk

Chardonnay, Carmenere, Pinot Noir and Malbec are

sold out or close to being so. There has been feverish

activity on Chardonnay especially, particularly from

domestic buyers seeking to cover their needs. Ciatti

is working hard to bring volume to the table. Buyers,

paying heed of the warning that prices will only rise,

are ensuring they respect loading terms.

See next page for pricing.

Key TakeawaysThe remaining 2017 wines are high in price,

appreciating week-on-week, and close to being

sold out. The 2018 grapes are in very strong

demand and wine prices at the start of the 2018

wine buying campaign will be higher than they

were at the start of 2017’s.

Ciatti ContactMarco Adam

T. +56 2 2363 9206 – or – T. +56 2 2363 9207


Chilean Export Figures

Wine Export Figures

January - August 2016 January - August 2017 Volume

Million Liters

Million US$ FOB

Average Price

Million Liters

Million US$ FOB

Average Price Variance %

Bottled 316,14 979,12 3,10 332,39 1.028,52 3,09 5,14

Bulk 258,90 167,55 0,65 253,17 206,40 0,82 -2,22

Sparkling Wines 2,75 10,96 3,99 2,78 11,53 4,14 1,29

Packed Wines 21,20 35,98 1,70 17,58 30,33 1,73 -17,07

Total 598,98 1.193,61 2,36 605,92 1.276,78 2,45 1,16


FranceTime on target

HARVEST WATCH: More unfavourable

conditions restrict volumes further

The 2017 harvest in France has finished: AGRESTE

on 1 October once more revised down the estimated

volume figure, from 37.2 million to 36.9 million

hectolitres – 19% lower than 2016’s crush and 18%

lower than the five-year average – as September

brought 2-3 weeks of very dry, windy conditions in

the growing areas adjacent to the Mediterranean and

three weeks of non-stop rainfall in Bordeaux.

A crush of 36.9 million hectolitres would be France’s

lowest in recorded history, coming in smaller than the

previous record low seen in 1991. The end of August and

the start of September were very busy with purchasing

of what remained of the 2016 carryover stock. Prices on

2018 wines are to be agreed by the co-ops any day now.

The three extra weeks of dry weather and wind in the

Languedoc, Provence and the Côtes du Rhône are

expected to have further decreased the juice yields in

those areas. Languedoc’s overall harvest volume is now

expected to come in at 20-30% below average, with

the most affected being the late-ripening red grapes

such as Cabernet and Carignan: whites could be down

15-20% and reds down 30%. Upcountry, in Bordeaux,

September was very wet, harvesting took place in the

rain, and there were ripening and fungus disease issues.

This has compounded the impact – felt across most if

not all France’s growing areas – of a very tough growing

season with spring frosts, hailstorms, drought and

intense heat. Bordeaux’s harvest could be as much as

40% smaller than last year’s.

The Loire Valley and Burgundy have fared better: if

there’s a fall from the average in these areas, it will be

relatively minor; in general, growers there are happy

with their results. In South West and the white wine-

producing powerhouses like Charente and Gers, the

crop will be slightly down but volumes will remain

significant, so that France will be able to offer – from

this area – quality white wine at better pricing than in

Spain.

In terms of quality, white wines out of France will be

of good quality, but the harvest was more challenging

for red and rosé production: the hot weather brought

a good concentration of sugar to the red grapes, but

phenolic ripeness was potentially lacking in some

See next page for more on France.

Chile: Current Market Pricing (Pricing in bulk; FOB Chilean Port)


NV Generic White 0.66 – 0.75 ↔ NV Generic Red 0.72 – 0.85 ↑

2017 Chardonnay (Basic) 1.10 – 1.20 ↔ 2017 Cabernet Sauvignon (Basic) 1.05 – 1.15 ↔

2017 Sauvignon Blanc 1.15 – 1.25 ↑ 2017 Cabernet Sauvignon (Varietal Plus) 1.25 – 1.40 ↔

2017 Syrah 1.05 – 1.15 ↔ 2017 Merlot (Basic) 1.10 – 1.15 ↔

2017 Carmenere 1.30 – 1.40 ↑ 2017 Merlot (Varietal Plus) 1.25 – 1.40 ↔

2017 Pinot Noir 1.30 – 1.40 ↑ 2017 Malbec (Basic) 1.45 – 1.55 ↔

2017 Malbec (Varietal Plus) 1.60 – 2.00 ↔


Key TakeawaysThe 2017 harvest looks like being the smallest in history. It will be difficult to

source generics from France in big volumes, apart perhaps from generic white

from Gers/South West. On the flip-side, France will be the most attractive

producer country in Europe from which to source good quality varietal wines

in good volumes at decent pricing, so buyers of these should move quickly.

Ciatti Contact

Florian Ceschi

T. +33 4 67 913532


areas. More red grapes will be channelled into red wine

production to ensure red wine standards are upheld,

restricting rosé output. Buyers seeking value for money

on reds and rosés should move quickly.

Because of the crop shortfall, French producers will

focus on maximising output of Vin de France, Vin De

Pays and IGP red and white varietal wines, putting a

further squeeze on the availability of generics. It will

be difficult to source red, white and rosé generics from

France in big volumes, apart perhaps from generic

white from Gers/South West. It means France will be

the most attractive producer country in Europe from

which to source good quality varietal wines and dry

table wines in good volumes at decent pricing, but also

that any initiative on generics will be handed to Spain

(whose own varietal wines will be sold out by January).

On the current market, there is some unsold

inventory of 2016 Chardonnay and Sauvignon Blanc

intermittently available on the spot market (these have

been the slowest-moving wines across the year), ditto

some remaining 2016 Merlot. Prices on these three

2016 varietals remain more attractive than the price

expected on their 2017 equivalents. The new vintage

pricing has yet to be settled but it can be assumed it will

higher than 2016’s; the extent of the rise is uncertain

and contact Ciatti for the latest indication. In order to

fulfil their brands, the big buyers in France will enter

into a battle to secure the largest volumes that they can

capture, so prices on specific wine categories could rise

quickly from the start of the buying campaign.

With inventory of varietal bulk wine in Chile, South

Africa and – moving forward – Spain and Italy highly

limited, France will become a very popular destination

for varietal buyers in Europe, at least until 2018 Chilean

material is available from May/June next year. So

buyers prospecting France need to move quickly.

For the first time in many years, during the latest

reunion hold by the French Cooperative Cellars

Federation (held on the 10/12/17) , the idea of

contractualizing on a pluri-annual basis with a

guarantee on price, volume and quality has been

put back on the discussion table. The Coops - and

also the Independant growers syndicates - are now

encourageing their partners and clients to opt for this

multi-benefit contracts in an attempt to guarantee

stable pricing over longer period for brand building

purpose and ensure at the same time that the growers

are getting fair revenues.

France: Current Market Pricing (EUR per liter; Ex-Winery)


2016 Generic White 0.55 – 0.60 ↑ 2016 Varietal Rosé IGP 0.85 – 0.90 ↔

2016 Chardonnay IGP 0.90 – 1.00 ↔ 2016 Generic Red 0.60 – 0.65 ↑

2016 Chardonnay VDF 0.85 – 0.95 ↔ 2016 Cabernet Sauvignon IGP 0.90 – 1.00 ↑

2016 Sauvignon Blanc IGP 0.85 – 1.00 ↔ 2016 Cabernet Sauvignon VDF 0.85 – 0.95 ↑

2016 Sauvignon Blanc VDF 0.80 – 0.95 ↔ 2016 Merlot IGP 0.85 – 0.95 ↑

2016 Generic Rosé IGP 0.80 – 0.85 ↔ 2016 Merlot VDF 0.80 – 0.85 ↑

2016 Generic Rosé VDF 0.70 – 0.80 ↔ 2016 Syrah / Grenache 0.85 – 0.95 ↑


SpainTime on target

HARVEST WATCH: La Mancha’s harvest

significantly reduced; extent unconfirmed

If reports are to be believed, La Mancha’s 2017 harvest

could come in at roughly 18-20 million hectolitres,

down 25-30% from 24-25 million hectolitres in 2016.

This is due to the intensely hot and dry growing

conditions. The international varietals – the least

adapted to the La Mancha terroir – suffered most

from the drought with production losses between

30% (on Merlot and Cabernet Sauvignon) and 50% (on

Chardonnay and Sauvignon Blanc, in extreme cases).

As it had to endure these conditions longest, late-

ripening Airén will suffer a big shortfall.

Ciatti is assisting with more contracts based on sam-

ple-approval out of Spain than perhaps ever before, and

each offer is only on the table for a couple of days max.

Pricing on any wine – varietal or generic – is approxi-

mately EUR0.20/litre dearer than it was at the same date

of 2016 and, with little prospect of prices falling, Ciatti

encourages all buyers to secure their needs as soon as

possible.

The buying campaign for Spain’s 2017 wines started in

mid-September – with the white sulfured juices sold to

Italians clients – and has snowballed since then. Some

wineries are already almost sold out on categories such

as traditional fermentation white wines (the cheapest

categories) or international varietal wines. Inventory in

big volumes of these latest wines (varietal reds, whites and

See next page for more on Spain.

France: Estimated Market Pricing (EUR per liter; Ex-Winery)


2017 Generic White 0.60 – 0.65 ↑ 2017 Varietal Rosé IGP 0.90 – 0.95 ↑

2017 Chardonnay IGP 1.00 – 1.15 ↑ 2017 Generic Red UNKNOWN ↑

2017 Chardonnay VDF 0.95 – 1.05 ↑ 2017 Cabernet Sauvignon IGP 0.90 – 1.00 ↑

2017 Sauvignon Blanc IGP 0.95 – 1.05 ↑ 2017 Cabernet Sauvignon VDF UNKNOWN ↑

2017 Sauvignon Blanc VDF 0.90 – 1.00 ↑ 2017 Merlot IGP 0.85 – 0.95 ↑

2017 Generic Rosé IGP 0.85 – 0.90 ↑ 2017 Merlot VDF UNKNOWN ↑

2017 Generic Rosé VDF 0.80 – 0.85 ↑ 2017 Syrah / Grenache 0.85 – 0.95 ↑


Key TakeawaysCiatti encourages all buyers of Spanish material

to secure their needs as soon as possible. Volume

of 2017 wine will be significantly lower than that

of 2016. Prices are up EUR0.20/litre on last year,

but still the world’s most competitive. Inventory

of 2017 varietal reds, whites and rosés will be sold

out by Christmas. All rosé categories will be very

hot. Inventory of 2016 reds and whites is priced

the same as on the new vintage. Spain’s GJC

output will be significantly diminished.

Ciatti ContactNicolas Pacouil

T. +33 4 67 913531


rosés) are expected to be sold out by December. Generic

rosé will also be running low; rosé is a hot category this

buying campaign as volumes will be greatly reduced –

not only due to the tough harvest but more grapes being

channelled into red wine production.

There is no remaining 2016 carryover stock of white and

rosé left, while carryover reds are priced the same as the

new 2017 wines. Once the 2017 varietals are sold out by

January, the focus of the market in Spain will be on the

generic table reds and whites. The traditionally-fermented

generic whites or second class press wines, often used in

the food and distilling industries or for aromatized wine

beverages, are in strong demand.

Predictably, with the harvest shortfall, wine production is

being maximised at the expense of grape juice concen-

trate production. Some wineries traditionally producing

significant volumes of high-proof, high colour red GJC

have said that, given the situation, they will be producing

much less – or in some cases zero – GJC this year. There

is going to be less GJC, alcohol and vinegar coming out

of Spain for the foreseeable. The juice supply from the

key GJC-producing area of La Manchuela – significant-

ly depleted this year due to severe frost, hailstorms and

drought – has been concertedly bought-up by Italian

buyers to vinify with back in Italy.

Although its prices are significantly higher this year than

last, Spain remains the cheapest supply country in the

world for generic wines – and buyers know it: the market

is thus very active and Ciatti urges all potential custom-

ers of Spanish material to secure their needs now. As the

worldwide production is much smaller this year with

increased demand and small carryover stock, the Span-

ish market price evolution in the future is unlikely to go

down throughout the year as it did during the 2012-2013

campaign.

Although it’s very early to say, this summer’s drought

has potentially greatly harmed the health of the vines.

The 2018 harvest is thus not expected to be big, and

average-sized in the best case scenario if much-needed

autumn/winter rains come.

Spain: Current Market Pricing (EUR per liter; Ex-Winery)


2017 Generic White 0.50 - 0.55 ↑ 2017 Moscatel 0.70 - 0.75 ↔

2017 White Blends (Higher Quality) 0.60 - 0.65 ↑ 2017 Generic Red 0.57 - 0.65 ↑

2017 Sauvignon Blanc 0.80 - 1.00 ↑ 2017 Generic Red (Higher Quality) 0.65 - 0.80 ↑

2017 Chardonnay 0.85 - 1.00 ↑ 2017 Cabernet Sauvignon 0.75 - 0.85 ↑

2017 Generic Rosé 0.56 - 0.60 ↑ 2017 Merlot 0.80 - 0.90 ↑

2017 Varietal Rosé 0.70 - 0.80 ↑ 2017 Syrah 0.75 - 0.85 ↑


ItalyTime on target

HARVEST WATCH: As much as 25-30%

down on an average year

It is unlikely Italy’s 2017 crush will surpass the 40

million hectolitre mark. This significantly reduced

harvest – 25-30% down on the average – has placed

intense pressure on prices in Italy, especially on

generic reds and whites, which have in some cases

passed EUR5.0/hectodegree. The main bottling

companies are struggling to absorb the rising prices,

and in turn seeking to increase their prices to the main

retail chains – not an easy task – in order to achieve

some margin.

Bulk wine suppliers do not want to make offers valid

for more than a few days, and for the bottlers it is

becoming a risk to participate in tenders without

having first secured the material. There is a chance

supermarkets will receive very few offers for their big

international tenders. This very difficult situation will

continue at least until the end of December, when the

industry will start to discover if the current price level is

sustainable.

Entry-level generic red has been at EUR5.0/

hectodegree, meaning that wine at 12% alcohol worth

EUR60/hectolitre has been very difficult to find.

There are very few low degree wines. Like for the reds,

generic white prices start from EUR5/hectodegree.

Cold fermentation wines from Puglia are at EUR5.50/

hectodegree: there is availability for now but some

big producers are already sold out. Puglia, the region

with the cheapest prices on red and white generics, is

selling to the north of Italy and Germany and France.

Abruzzo’s generic white will start from EUR6.0/

hectodegree, and the further north the higher the price.

The harvest has finished in the Pinot Grigio delle

Venezie DOC and contracts closed until now have been

at EUR1.30-1.50/litre. All Pinot Grigio IGT is sold out.

The situation in the Prosecco DOC remains unclear,

with some suppliers asking for three-year contracts at

EUR2.10/litre and those customers unable to commit

to three years having to pay EUR2.50/litre. The DOCG

Valdobbiadene is traded at more than EUR3.00/litre.

Chardonnay is one of the most requested varietals both

from the domestic and international markets: prices

are rising towards EUR0.90-1.00/litre, and only small

quantities are available. Montepulciano d’Abruzzo DOC

from the 2016 vintage is almost sold out and prices for

the 2017 vintage are not yet defined but almost certain

to be higher. Prices for the Nero d’Avola DOC Sicilia

are higher than they were on the 2016 IGT, trading at

around EUR110/hectolitre and running short. Primitivo

IGT from Puglia/Salento is priced at EUR115-150/

hectolitre.

Given the short production of varietal Merlot in the

north (where the IGT is at EUR1.00/litre), all the main

companies are switching to varietal Merlot from across

the country, causing a strong increase in demand: prices

start at EUR80/hectolitre. Varietal Cabernet is in very

short supply and prices are starting from EUR0.80/

hectolitre for entry-level material. Varietal Moscato is

almost sold out, with prices passing EUR1.0/kg for the

must.

A significantly reduced harvest has pushed prices

up across Italy, with entry-level generics starting at

EUR5.0/hectograde. There is a short supply on most

wines and the picture is complex Give Ciatti a call.

Key Takeaways

Ciatti ContactFlorian Ceschi

T. +33 4 67 913532


See next page for pricing.


South AfricaTime on target

HARVEST WATCH: 2018 harvest could be

below average-sized due to drought

It is becoming extremely difficult to source wine out

of South Africa in the volumes demanded. The size

– in terms of litres – of many requests South Africa

is receiving would be incredibly difficult to fulfil at

this time in a normal year, let alone in a year in which

the global supply-demand situation has tightened

considerably and caused immense demand pressure

on South African inventory. Prices in South Africa

are rising week-on-week on all wines, and subject to

availability. Due to the current short situation – most

wines are not available at the moment – prices can rise

without notice as and when parcels of wine become

available. The below pricing table should thus be taken

as indicative only.

As news has filtered through of what seems like

disappointing 2017 harvests in Europe, demand for

South African wine has risen further – to the extent

that 2017 vintage wine appears to be almost fully

contracted in South Africa. Wineries are insisting that

their wines are firmly contracted and moving, with no

extra stock paused in cellars, and there is no speculation

occurring. There are likely to be pockets of availability

in November, December and January as suppliers –

given the strong demand – put pressure on the loading

schedules: buyers should respect loading terms or risk

losing their contracts.

To reiterate: potential buyers should be aware that

all pricing is subject to availability, and can change

quickly. The below table provides approximate

guidance only.

Ciatti is already receiving requests regarding 2018

wines. Some pre-harvest negotiations are already

underway – a lot earlier than in ‘normal’ years, the

new harvest being still some months off. It is expected

that a better indication of where the 2018 harvest will

be volume-wise should be evident by the middle/end

of November. The general feeling at the moment is

that the harvest will be down on the average due to the

prolonged drought and the resulting low water reserves:

the aggregate water levels in Cape Town’s catchment

dams stood at 37.6% as of 2 October, compared to

62.5% at the same stage of 2016. The Western Cape

See next page for more on South Africa.

Italy: Current Market Pricing (EUR per liter; Ex-Winery)


2016 Generic White 0.40 – 0.60 ↑ 2016 Generic Red 0.40 – 0.50 ↑

2016 Chardonnay 0.85 – 1.00 ↔ 2016 Cabernet Sauvignon 0.75 – 1.00 ↑

2016 IGT Pinot Grigio 1.05 – 1.20 ↑ 2016 Merlot 0.75 – 1.00 ↑

2016 DOC Prosecco 2.50 – 3.00* ↔ 2016 Primitivo / Zinfandel 1.20 – 1.40 ↔

2016 Chianti 1.60 – 2.00* ↔

*Bottled Price


Looking back at the 2017 harvest, it came in at 1,434,328

tons, equating to approximately 1.112 billion litres. Of

this, an estimated 83% - 916.9 million litres – was sold

as wine, with the rest going towards grape juice, grape

juice concentrate, brandy and distilling. The 2016

harvest came in at 1,405,401 tons, or approximately

1.089 billion litres.

Carryover stock of wine on 1 January 2017 was 492.8

million litres, down from 531.8 million litres on the

same date of 2016. South Africa’s exports of packaged

and bulk wines jointly reached 450 million litres in the

September 2016 to August 2017 period, up 30 million

litres from 420 million litres in the prior 12-month

period. Local sales came in at 400 million litres, up

from 394 million litres.

is receiving intermittent rain, but this is only serving

to maintain the water level, rather than increase it

meaningfully.

Some growing areas will be more severely affected

by lack of water than others: the Olifants River area

could be one of the hardest hit. The cities get priority

with regard to water rationing, with water allocations

for agricultural use – including vineyards – as much

as halved in some areas. However, areas currently

receiving the intermittent rain, like Stellenbosch and

Paarl, will now not need to draw upon water reserves

until January, and things are not looking too bad in the

vineyards.

Key TakeawaysIt is now extremely hard to find any available 2017

wines in South Africa. Any wine that does become

available is contracted very quickly. Prices can rise

quickly; the below table is indicative only. Buyers

are enquiring about 2018 wines but it’s too early

for growers to know how the 2018 harvest will

go and set offer prices. Low water reserves are a

concern in all growing areas, to varying extents.

Ciatti ContactsVic Gentis

T. +27 21 880 2515


Petré Morkel

T. +27 82 33 88 123


South Africa: Current Market Pricing (SA Rand per liter, FOB Cape Town)


2017 Generic White 5.60 – 6.00 ↑ 2017 Generic Red 6.70 – 7.20 ↑

2017 Chardonnay 7.50 – 8.50 ↑ 2017 Cabernet Sauvignon 8.50 – 10.50 ↑

2017 Sauvignon Blanc 8.50 – 10.50 ↑ 2017 Ruby Cabernet 7.00 – 7.50 ↑

2017 Chenin Blanc 6.00 – 6.20 ↑ 2017 Merlot 8.50 – 9.50 ↑

2017 Muscat 7.00 – 7.50 ↑ 2017 Pinotage 7.50 – 8.50 ↑

2017 Generic Rosé 5.60 – 6.20 ↑ 2017 Shiraz 8.00 – 9.00 ↑

2017 Cultivar Rosé 6.80 – 7.20 ↑ 2017 Cinsaut Rose 6.80 – 7.20 ↑

NB: pricing is directly related to remaining available stock and - due to the current short situation - can change without notice


Reds from Australia’s 2017 vintage remain in high

demand as both domestic and Chinese interest

remains positive. There is low availability on red

wine inventory as enquiries for entry-level Shiraz,

Cabernet, Merlot and generic red continue to flood in.

The majority of white wine varietals remain readily

available.

Premium areas such as the Barossa Valley and McLaren

Vale continue to see good demand whilst mid-range

cool climates areas – such as Langhorne Creek and

Currency Creek – are experiencing more growth.

Looking ahead, the strong demand for Australian reds

is expected to continue in 2018, especially with the 2017

crops in Europe anticipated to be smaller.

Warm spring weather has commenced. There is

still some concern that a frost episode could occur

in October, or as late as November, due to the dry

conditions seen throughout winter. Each capital city

in Australia received rainfall below the long-term

average. Australia recorded its warmest winter on

record for maximum temperatures and – with global

warming – the trend is likely to continue.

Whilst the prospect of rainfall in the coming months

looks positive, the weather bureau predicts Australia

will receive warmer than average daytime and night-

time temperatures in the months leading up to

summer. Off the back of such weather, will Australia be

able to produce a large-sized harvest for the third year

in a row? Can the vines sustain another big harvest or

will output come in closer to an average year? Time

will tell.

AustraliaTime on target

Key TakeawaysThe demand pressure on Australian reds is expected to

continue, especially if Europe’s 2017 harvests come in as

short as forecast. Most white wine varietals remain readily

available. A warm, dry winter and a spring forecasted to

be warmer than average raises questions regarding the

final size of Australia’s 2018 harvest.

Ciatti ContactsMatt Tydeman

T. +61 8 8361 9600


Simone George

T. +61 8 8361 9600


HARVEST WATCH: Warm spring weather is

underway after a warm, dry winter

Australia: Current Market Pricing (AUD/litre unless otherwise stated)


NV Dry White 0.70 – 0.85 ↑ NV Dry Red 0.90 – 1.00 ↑

2017 Chardonnay 0.85 – 0.95 ↑ 2017 Cabernet Sauvignon 1.15 – 1.40 ↑

2017 Sauvignon Blanc 0.90 – 1.15 ↔ 2017 Merlot 1.10 – 1.35 ↑

2017 NZ Marlborough SB NZD3.50 – 4.30 ↔ 2017 Shiraz 1.15 – 1.40 ↑

2017 Pinot Gris 1.30 – 1.50 ↑ 2017 Muscat 0.75 – 0.90 ↔

Price stated are indicative only; all offers subject to prior sale and subject to volume, drawdown and terms


Key TakeawaysSauvignon Blanc production still dominates the

wine industry in New Zealand, with 285,862 tonnes

produced in 2017, more than eight times the

volume of the next biggest varietal, Pinot Noir.

Wine-Searcher notes an uptick in US consumer

interest in Sauvignon Blanc this year, with New

Zealand is well-placed to take advantage: New

Zealand wines, powered by Sauvignon Blanc, have

become the third-most imported wine into the US

by value.

Ciatti ContactsMatt Tydeman

T. +61 8 8361 9600


Simone George

T. +61 8 8361 9600


New ZealandTime on target

According to New Zealand Winegrowers’ annual

vintage survey, New Zealand’s total producing area

in 2017 was 37,129 hectares. Some 29,210 hectares

of this was given over to whites, of which the great

majority – 22,085 hectares – was Sauvignon Blanc.

The Marlborough region accounted for 67.7% of

total acreage and produced 302,396 tonnes in 2017,

followed by Hawkes Bay with 12.6% of total acreage,

producing 33,679 tonnes. Central Otago (5.1%),

Gisborne (3.7%), Waipara Valley (3.4%), and Nelson

(3.1%) made up the rest of the significant surface area.

Some 76% of the white wine produced in New Zealand

is Sauvignon Blanc: 285,862 tonnes was harvested in

2017, which, it being a smaller harvest in New Zealand

overall, was down from 303,711 tonnes in 2016.

Chardonnay (11% of the total whites; 26,843 tonnes) and

Pinot Gris (8%, 20,755 tonnes) were the other whites

grown in notable quantities. Pinot Noir, at 28,760

tonnes (down from 35,661 tonnes in 2016), made up

HARVEST WATCH: 396,000 tonnes, down

9% on 2016

72% of the reds. Merlot (15% of the reds at 7,714 tonnes)

and Shiraz (5% of the reds) are the other red varietals

produced in notable volumes.

New data from the New Zealand Institute of Economic

Research (NZIER) shows that Marlborough’s wine

sector has grown by 300% since 2000 and now employs

2,350 wine workers and 3,000 casual workers: one in

every ten people in the region. This has a flow-on effect

to other sectors such as packaging and freight, which

employ an additional 2,500 people. Marlborough’s wine

sector now contributes an average of NZD477 million

(USD338 million) to New Zealand’s economy each

year, and brings in further significant revenue through

tourism.

Meanwhile, according to data compiled by internet

search engine Wine-Searcher, although the focus of

most wine searches in the US is still red varietals, with

Cabernet Sauvignon taking 15% (seven million) of all

searches by consumers between July 2016 and July 2017,

by the latter date Sauvignon Blanc had seen the second

largest increase in searches, up 13% from the previous

year, with California and New York particular search

“hotspots”. US sales of Sauvignon Blanc (domestic and

imported) saw a steady increase over the spring and

summer months. New Zealand’s Sauvignon Blanc,

which accounts for 94% of the country’s wine sales to

the US, is meeting a demand among US wine drinkers

– especially millennial women – for lighter, elegant

premium wine styles.

Craft Beer Update

16Ciatti Global Market Report | March 2017

PROVIDER OF CRAFT HOPS AND PROVISIONS

In September John Fearless Co. visited Washington

State’s Yakima Valley – a hop-growing epicentre,

producing something like 85% of all US-grown hops

– to see how the hop harvest was coming in. During

the growing season Yakima Valley experienced similar

conditions to those seen in California’s vineyards, but

the hop crop was unaffected, quality looks good and

yield average, with the total harvest volume record-

breaking off the back of another increase in acreage.

According to the USDA, there was a 6.5% increase in

US hop area (to 54,135 acres) between this year and last,

though word on the ground in Yakima Valley was that

the actual increase was even bigger. Last year, the US

surpassed Germany to become the world’s leading hop

producer.

This big crop arrives at a time when growth in the US craft

beer market has slowed from double to single digits, and

with hop inventory in the US already at record levels: as of

1 September 2017, inventory was estimated at 98 million

lbs, up 15% from 85 million lbs the year before. The hop

market has thus tilted in the buyer’s favour: they can be

confident of securing the material they require on a spot

market basis, with multi-year contracts only necessary on

some of the rarer varietals. As varietals previously hard to

get become more available, brewers are able to commit

to their use on a longer-term basis, while simultaneously

seeing the cost of hops decline as a percentage of their

overall costs.

One of the Yakima Valley hop farms John Fearless visited

was CLS Farms, producer of some of the hop varietals

John Fearless can supply. CLS has spent ten years breeding

a hop – named Medusa – from the neomexicanus hop

plant indigenous to the Rocky Mountains and northern

Mexico, until it has arrived at a plant both hardy enough to

be grown in Washington state and interesting in its aroma

profile. Medusa is thus one of only two hop varietals on the

US hop market that can claim to be a 100% indigenous US

hop varietal, with no breeding from anywhere else, and the

only one to be 100% secure in this claim.

Medusa hops were available to touch and smell on the

John Fearless stand at the California Craft Beer Summit in

Sacramento, September 7-8, probably the best-attended

summit in the three years of Fearless’s presence (there are

now over 900 breweries operating in California). Medusa

hops were present also as an ingredient in a ‘northeast-

style’ cloudy IPA that John Fearless collaborated on with

Sonoma’s 101 North Brewing; in fact, this IPA was produced

from all Malteurop malts, five New Zealand hop varietals,

and two experimental Washington state hops (including

Medusa) – all of which was supplied by John Fearless. This

beer, with its tropical aroma profile of mango, pineapple,

and passionfruit, gained very wide appeal at the show.

The appeal of the hops John Fearless is able to offer also

transcends borders. Outside the US there is an increasing

interest in US hops: John Fearless is seeing interest from

Mexico, South America, South Africa and South Korea.

Mexico in particular is experiencing its own craft beer

movement, with a growing interest in IPAs, hoppy ales

and barrel-aged beers. Going forward, with the 2017 US

hop harvest a good one, John Fearless will be able to

offer customers both – international and domestic – the

innovative hop varietals they seek.

Fearless ContactsCEO - Rob Bolch

T. + 1 800 288 5056


Sales - Geoff Eiter

T. + 1 800 288 5056


Key TakeawaysJohn Fearless can provide: base and specialty malt;

aroma and bittering hops; fruit purées; fruit and

wine grape juice concentrate; fresh wine grapes

(during harvest); and oak barrels.www.johnfearless.com

http://www.johnfearless.com




Export Pricing: USD per liter Currency Conversion Rates as of October 13, 2017

Argentina (Pricing in bulk; FCA)


2016 Generic White 0.55 - 0.65 ↔ 2016 Generic Red 0.90 - 1.10 ↔

2016 Chardonnay 1.20 - 1.40 ↔ 2016 Cabernet Sauvignon 1.80 - 2.00 ↔

2016 Torrontes 0.60 - 0.80 ↔ 2016 Syrah / Merlot 1.50 - 1.60 ↔

2016 Muscat 0.70 - 0.80 ↔ 2016 Malbec Entry-Level 1.80 - 2.00 ↔

2016 Bonarda 1.50 - 1.60 ↔ 2016 Malbec Premium 2.50 - 3.50 ↔

Australia & New Zealand AUD Rate: 0.788767 / NZD Rate: 0.718962


NV Dry White 0.55 - 0.67 ↑ NV Dry Red 0.71 - 0.79 ↑


2017 Sauvignon Blanc 0.71 - 0.91 ↔ 2016 Merlot 0.87 - 1.06 ↑

2017 NZ Marlborough SB 2.52 - 3.09 ↔ 2016 Shiraz 0.91 - 1.10 ↑

2016 Pinot Gris 1.03 - 1.18 ↑ 2017 Muscat 0.59 - 0.71 ↔

California (Pricing in bulk; FCA)


2016 Generic White 0.79 - 0.99 ↔ 2016 Generic Red 0.85 - 1.05 ↔

2016 Chardonnay 1.52 - 1.85 ↑ 2015/2016 Cabernet Sauvignon 1.59 - 2.11 ↑

2016 Pinot Grigio 1.39 - 1.72 ↓ 2016 Merlot 1.32 - 1.58 ↔

2016 Muscat 1.19 - 1.32 ↔ 2016 Pinot Noir 1.85 - 2.25 ↑

2016 White Zinfandel 0.85 - 0.99 ↔ 2016 Syrah 1.32 - 1.58 ↔

2016 Colombard 0.86 - 1.12 ↔ 2015/2016 Zinfandel 1.72 - 2.11 ↔

Chile (Pricing in bulk; FOB Chilean Port)


NV Generic White 0.66 - 0.75 ↔ NV Generic Red 0.72 - 0.85 ↑

2017 Chardonnay (Basic) 1.10 - 1.20 ↔ 2017 Cabernet Sauvignon (Basic) 1.05 - 1.15 ↔

2017 Sauvignon Blanc 1.15 - 1.25 ↑ 2017 Cabernet Sauvignon (Varietal Plus) 1.25 - 1.40 ↔

2017 Syrah 1.05 - 1.15 ↔ 2017 Merlot (Basic) 1.10 - 1.15 ↔

2017 Carmenere 1.30 - 1.40 ↑ 2017 Merlot (Varietal Plus) 1.25 - 1.40 ↔

2017 Pinot Noir 1.30 - 1.40 ↑ 2017 Malbec (Basic) 1.45 - 1.55 ↔

2017 Malbec (Varietal Plus) 1.60 - 2.00 ↔


France (Pricing in bulk; Ex-Winery) Rate: 1.184340


2016 Generic White 0.65 - 0.71 ↑ 2016 Generic Red 0.71 - 0.77 ↑

2016 Chardonnay IGP 1.07 - 1.18 ↔ 2016 Cabernet Sauvignon IGP 1.07 - 1.18 ↑

2016 Chardonnay VDF 1.01 - 1.13 ↔ 2016 Cabernet Sauvignon VDF 1.01 - 1.13 ↑

2016 Sauvignon Blanc IGP 1.01 - 1.18 ↔ 2016 Merlot IGP 1.01 - 1.13 ↑

2016 Sauvignon Blanc VDF 1.01 - 1.18 ↔ 2016 Merlot VDF 0.95 - 1.01 ↑

2016 Generic Rosé IGP 0.83 - 0.95 ↔ 2016 Red Syrah / Grenache IGP 1.01 - 1.13 ↑

2016 Generic Rosé VDF 0.83 - 0.95 ↔ 2016 Varietal Rosé IGP 1.01 - 1.07 ↔

Italy (Pricing in bulk; Ex-Winery) Rate: 1.184340



2016 Chardonnay 1.01 - 1.18 ↔ 2016 Cabernet Sauvignon 0.89 - 1.18 ↑

2016 Pinot Grigio 1.24 - 1.42 ↑ 2016 Merlot 0.89 - 1.18 ↑

2016 Prosecco 2.96 - 3.55 ↔ 2016 Primitivo / Zinfandel 1.42 - 1.66 ↔

2016 Chianti 1.89 - 2.37 ↔

South Africa (Pricing in bulk; FOB Cape Town) Rate: 0.075287




2017 Sauvignon Blanc 0.64 - 0.79 ↑ 2017 Ruby Cabernet 0.53 - 0.56 ↑

2017 Chenin Blanc 0.45 - 0.54 ↑ 2017 Merlot 0.64 - 0.72 ↑

2017 Muscat 0.53 - 0.56 ↑ 2017 Pinotage 0.56 - 0.64 ↑

2017 Generic Rosé 0.42 - 0.47 ↑ 2017 Shiraz 0.60 - 0.68 ↑

2017 Cultivar Rosé 0.51 - 0.54 ↑ 2017 Cinsaut 0.51 - 0.54 ↑

Spain (Pricing in bulk; Ex-Winery) Rate: 1.184340



2017 White Blends (Higher Quality) 0.71 - 0.77 ↑ 2017 Generic Red (Higher Quality) 0.77 - 0.95 ↑

2017 Sauvignon Blanc 0.95 - 1.18 ↑ 2017 Cabernet Sauvignon 0.89 - 1.01 ↑

2017 Chardonnay 1.01 - 1.18 ↑ 2017 Merlot 0.95 - 1.07 ↑

2017 Generic Rosé 0.66 - 0.71 ↑ 2017 Syrah 0.89 - 1.01 ↑

2017 Varietal Rosé 0.83 - 0.95 ↑

2017 Moscatel 0.83 - 0.89 ↔


ArgentinaEduardo Conill

T. +54 261 420 3434


Australia / New ZealandMatt Tydeman

Simone George

T. +61 8 8361 9600



California – Import / ExportCEO – Greg Livengood

Steve Dorfman

T. +415 458-5150



California – DomesticT. +415 458-5150

John Ciatti – [email protected]

Glenn Proctor – [email protected]

John White – [email protected]

Chris Welch – [email protected]

ConcentrateJohn Ciatti

T. +415 458-5150


Canada & US clients outside of CaliforniaDennis Schrapp

T. 905/354-7878


ChileMarco Adam

T. +56 2 2363 9206 or

T. +56 2 2363 9207


China / Asia PacificSimone George

T. +61 8 8361 9600


France / ItalyFlorian Ceschi

T. +33 4 67 913532


GermanyChristian Jungbluth

T. +49 6531 9734 555


SpainNicolas Pacouil

T. +33 4 67 913531


UK / Scandinavia / HollandCatherine Mendoza

T. +33 4 67 913533


South AfricaVic Gentis

T. +27 21 880 2515

E: [email protected]

-or-

Petré Morkel

T. +27 82 33 88 123


John Fearless CO. Craft Hops & ProvisionsCEO - Rob Bolch

Sales - Geoff Eiter

T. + 1 800 288 5056



www.johnfearless.com

Contact Us

To sign up to receive the monthly

Global Market Report, please email

[email protected]

http://www.johnfearless.com/

mailto:info%40ciatti.com?subject=Sign%20me%20up%20for%20the%20Global%20Market%20Report

Documents

Global Market Report - The Ciatti · PDF file2 4 Ciatti Contacts Import/Export CEO – Greg Livengood Steve Dorfman T. +415 458-5150 E. [email protected] E. [email protected] Domestic