Global Market Report - The Ciatti · PDF fileCiatti Global Market Report September 2017 2 The 2017 harvests are ongoing in California and Europe and it now looks certain that the respective

September 2017Volume 8, Issue No. 9

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Global Market Report

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2Ciatti Global Market Report | September 2017

The 2017 harvests are ongoing in California and Europe and it now looks

certain that the respective crops have been to varying extents reduced in size

by intense – and in some cases unprecedented – heat spells. California is

well fortified with good water levels following a wet winter and likely still on

course for an average-sized crop, at around the 4 million ton mark. France,

Spain and Italy, however, have had to cope with the heat amid prolonged

drought: the Languedoc could see a harvest 8% smaller than 2016’s, La

Mancha anywhere from 11-25% smaller, and Italy as much as 26% smaller.

These restricted harvests would follow a 2017 Argentine harvest 25% down

on the five-year average, two successive below-average Chilean crops (which,

combined, equate to a supply shortfall of 600 million litres), and an average-

sized 2017 crop in South Africa. It is hard to see where a meaningful alleviation

of the growing pressure on supply will come: 2016 varietal bulk in Spain is

running low (and/or at the same price levels as French equivalents); South

Africa’s supply of 2017 varietals, generic red and rosé is now very tight; Chile’s

2017 wines, meanwhile, are close to being sold, and 2018 grapes are already in

very strong demand.

The international market is thus currently characterised by rising prices. The

current Northern Hemisphere harvests would need to be considerable in order

for there to be any dampening effects on Chile’s prices, for example, especially

as Chilean inventory is very low. This month’s Chile page probably serves as a

salutary tale for bulk wine buyers the world over, currently. Many buyers out of

Chile were slow to adjust to the new realities of the market situation both there

and internationally, and now must pay prices for wine much higher than they

ever comprehended – that’s if they can first locate the wine in the quantities

they need. In short: it can no longer be assumed that buying campaigns will

follow the same pattern as those of recent years, in which prices soften through

the course of the campaign or at least do not rise meaningfully. The reality of

the situation now is that the global market is in supply-demand balance and

there is little if any incentive for suppliers not to let prices creep up.

Finally, an issue likely to be heard more and more as the Southern

Hemisphere’s 2018 harvests come round is South Africa’s drought. As of 4

September, after the passing of what should have been some of the rainiest

weeks of the year in the Western Cape, water levels in Cape Town’s catchment

dams stood at an aggregate level of 35.1%. For context, the level at the

equivalent stage of 2016 was 60.6%, 73.8% in 2015, and 102.4% in 2014.

3 California

5 Argentina

6 Chile

8 France

10 Spain

11 Italy

13 South Africa

14 Australia

15 New Zealand

16 Craft Beer Update

17 John Fearless

18 USD Pricing

20 Contacts

Volume 8, Issue No. 9

September 2017

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

Reading online? Use the links above

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Robert Selby


Some intense and prolonged heat spells in August and

early September have served to quicken California’s

2017 harvest, bringing the timing of its start into line

with previous years and compacting the picking

window. Harvest in some areas of the North Coast

moved into immediate high gear well ahead of Labor

Day on September 4 – normally it commences after.

The North Coast is approximately 20% through

its harvest, the Central Coast 15%, and the Central

Valley halfway through. It is expected that the heat –

including record triple-digit temperatures in northern

California over the Labor Day weekend thanks to a

high pressure system flowing across from Nevada –

will impact on California’s overall harvest size, though

it’s unclear to what extent.

Very high temperatures have made a lot of grapes

ripen quicker and a lot of varieties have been coming

into the wineries all at once, potentially placing a strain

on logistics and resource allocation. Availability of

labor, already a pre-existing issue, has become more

problematic because of the compacted schedule. Tank

space availability may also become hard to come by,

though this could be negated somewhat if the harvest

size is reduced. Mildew – far less of a problem than the

heat levels – has been in evidence in the Central Valley

and there have been some rejections.

Overall, the picture remains mixed and unclear as to

percentage reductions on yields in individual areas and

on individual varietals: Chardonnay, Pinot Noir and

Zinfandel will likely be down in size from last year to

varying percentages; Cabernet, more heat-resistant

and with a lot of younger vines, is holding up. Ciatti

is still of a view that, with new acres coming on line

to offset some of the heat’s impact, California’s 2017

harvest will likely be average-sized, at around 4 million

tons. This is perhaps at the lower end of expectations

from a few weeks ago, but still in the same ballpark.

Up in Washington State, the 2017 crop will be down in

size on last year’s record, and there have been some

disease problems with Riesling. Oregon’s crop is looking

average-sized.

As per usual, the market in California is quieter at this

time of year as all eyes turn to the harvest – California’s

but also those in Europe. Ciatti has seen little if any

reaction on the Californian wine market to the news

that the state’s 2017 crop will be slightly smaller than

originally expected. Some extra grapes have come onto

the market in recent weeks but there has been little

buying activity, with some wineries backing off from

the need for more fruit, suggesting a balanced supply-

demand situation right now. The market may simply

be waiting for someone to jump in first, or it may be a

manifestation of what some analyst commentary has

been recently saying about a slowing of the US wine

retail market. For instance, wine banker Rob McMillan,

writing for Silicon Valley Bank’s wine blog, has written

that the growth rate in premium wine sales on the

US consumer market has been decelerating since late

2015 and – if the trend continues – would disappear

altogether by mid-2018 or early 2019. He notes this

dovetails with other stories out there of slowing growth

in craft beer sales and a reported slump in restaurant

sales for small wineries.

At the same time, Ciatti has heard about tougher sales

figures experienced by some payers in the first half

of the year, understands there has been a decrease in

California’s case good sales in that time, and is aware

that California’s bulk export sales are sluggish, hindered

by the strong dollar and Brexit. The strong dollar has

CaliforniaTime on target

HARVEST WATCH: Crop impacted by intense

heat but average tonnage still expected

See next page for more on California.

http://svbwine.blogspot.com/2017/09/premium-wine-sales-decelerating.html


in turn made the importing of wine more attractive, as

shown by the growth in imports of, for example, Italian

sparkling and New Zealand Sauvignon Blanc. So, it may

be the case that although less fruit is harvested this year

than initially expected, less may be needed anyway, with

a few less tons in the Valley less of a concern considering

the slowdown in export sales.

Unprecedented heat means harvest 2017 is a

race to the finish, placing a strain on logistics

and resource allocation. The crop size still looks

average, with varietals heat-impacted to varying

extents. The market is quiet, as per normal this

time of the year.

Key Takeaways

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]

That said, there remain good news stories out there,

and new brands launched in the past year or two are

still gaining share, perhaps at the expense of established

brands in the same price category. It’s a mixed picture

at the moment: the supply-demand dynamic will be

something to keep an eye on in the coming weeks and

months.

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 0.80 – 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 ↔

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


ArgentinaTime on target

HARVEST WATCH: Mendoza’s vines

are waking up; the frost risk season is

underway

Argentina is moving into springtime, which

officially starts on 21 September. The winter season

has progressed normally, with Mendoza currently

experiencing a period of cool, sunny days and

intermittent hot ‘Sonda’ winds blowing in from the

Andes. The vines are starting to wake up and the

frost risk season, now underway, will continue into

November.

With its high prices, Argentina’s bulk wine market

is quiet. However, Ciatti is starting to see signs of

international business returning to Argentina as the

bulk Malbec price gradually softens from its USD2.0/

litre high. The price is trending downward very slowly

but surely, and currently stands at around USD1.80/

litre with USD1.70 possible: this is a reduction from

USD1.80-1.90/litre last month. The trend suggests

USD1.50/litre could be possible by the end of 2017, but

it depends on how the frost season goes and the impact

of any currency devaluation implemented by the

government, should one be made. The peso is currently

at around 17.50 to the dollar.

Traditionally a non-customer of Chilean bulk wine,

Argentina became the second biggest destination

behind the US for Chilean bulk in the January-July

2017 period, as the supply Argentina’s domestic players

secured at the end of 2016/early 2017 began to ship (see

the Chile page). Chile’s exports to Argentina thus grew

100% in the period to 54.3 million litres, worth USD32.7

million. This knocked China into third place (by both

volume and value) as a customer of Chile, showing that

proximity can trump trade deals in an emergency.

There is increasing evidence that Argentina’s economy

is moving in the right direction, boosting confidence

that the Macri government will come out on top in the

country’s midterm elections on 22 October. According

to Merco Press, Argentina’s economy grew a cumulative

1.6% in the first half of 2017 against a 2.2% contraction

in 2016. Economic activity in June was 4% higher than

in the same month of 2016 (powered by construction

+13.2%, manufacturing +6.2%, and agriculture +4%), the

fourth straight month of year-on-year gains.

Confidence in the government – and its chances of

success in the midterms – should serve to strengthen

the peso. But the government also needs to make

Argentine products more competitive: the country’s

exporters hope the Macri administration devalues

the peso after the midterms if in a position to do so,

pushing the 17.50 exchange rate closer to 20. The

country of Argentina’s total exports in July reached

USD5.2 billion in value, 5.2% up on the same month of

2016.

See next page for more on Argentina.

Key TakeawaysThe bulk Malbec price is softening slowly but surely

from its USD2/litre high; the price is at USD1.80/litre,

with USD1.70/litre a possibility. It is hoped the price

will be closer to USD1.50/litre by the end of 2017,

depending on the impact of frost from now until the

end of November, and any currency devaluation.

Ciatti ContactEduardo Conill

T. +54 261 420 3434



ChileTime on targetHARVEST WATCH: Variable winter/early

spring weather; frost season underway

The market situation in Chile is clear: 2017 wines are

high in price, appreciating week-on-week, and close to

being sold out; 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. Buyers who held off and waited are now finding

that most 2017 wines in the quantities they need are

very difficult to come by, while prices are certainly

above what they’d like. In general, 2017 varietal bulk

Chardonnay, Carmenere and Pinot Noir are sold out,

while Malbec is close to being so.

This situation is the result of two successive below-

average harvests in Chile combined with the present,

ongoing international situation of high prices and

tighter supply. If the average harvest size in Chile

is now 1.3 billion litres, 2016’s harvest came in 250

million litres below that level and 2017’s harvest 350

million litres below – equating to a Chilean inventory

shortfall of 600 million litres. Many buyers, rightly,

reacted quickly to this reality – but many others did

not. Ciatti is receiving requests from all around the

world, from Europe, the UK (mainly for Malbec),

North America, Australia, China and Asia. Chilean

suppliers are often honouring contracts to preserve

longstanding relationships when they could be making

a hefty profit.

The price of 2018 grapes is increasing day-by-day,

demand is very strong and there is no chance of the

grape price falling. The buying campaign for 2018

wines will definitely commence with prices higher

than at the start of the 2017 campaign. What will

happen to the prices as the 2018 campaign moves

forward is impossible to tell at the moment, as it will

depend on the size of Chile’s harvest and the harvests

elsewhere around the world. The current Northern

Hemisphere harvests would need to be considerable in

order for there to be any dampening effect on Chilean

prices.

The Chilean market is further intensified by a very

active domestic market, in which some domestic

players are seeking to out-compete each other on

price and pay whatever it takes to cover their needs,

thus attracting bulk suppliers to the domestic market

who would otherwise export. Another disincentive

for Chilean suppliers to price-drop is the exchange

rate, with the copper price having risen rapidly again

since June (reaching USD3.11/lb so far in September,

its highest price for at least two years), boosting Chile’s

economy and day-by-day strengthening the peso

against the dollar. The peso has stood at an average of

625 to the dollar so far in September, up from 671 in

May and at its strongest since May 2015.

See next page for more on Chile.

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 1.90 – 2.20 ↑

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


Key TakeawaysThe remaining 2017 wines are high in price,

appreciating week-on-week, and close to being sold

out. Chardonnay, Carmenere and Pinot Noir are sold

out, while Malbec is close to being so. 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


Heading into early spring, the weather in Chile’s wine

regions has been changeable, with warm and sunny

weather one day and rain/snow the next. Frosts have

occurred intermittently, but it’s still too early for the

vines to be affected by this, particularly as the growing

areas experienced more cold hours this winter than

normal and spring has been slow getting underway.

The Chilean wine industry will likely have to crush

some grapes earlier, and ship quickly, in order to fill

the gap in supply between the 2017 inventory running

out and the 2018 wines coming on line.

Chile exported 225.6 million litres of bulk wine in

the January-July 2017 period, marginally down –

2.5% - on 231.5 million litres in the first six months of

2016. The FOB value of the exports reached USD183

million, some 23.2% up on USD148.5 million in 2016.

Bulk exports to the leading destination, the US, were

down 24.4% in volume to 46.9 million litres, but up 9%

in value to USD40.2 million. Argentina, traditionally

not a customer for Chilean bulk, became its second

biggest buyer in the first seven months of 2017, taking

54.3 million litres out of Chile, worth USD32.7 million.

Argentina contracted these big volumes late last year

and early this year, and it is now being shipped.

The surge in Argentine shipments such as the Chinese

(-47% to 28.9 million litres; -2% to USD30.8 million),

the UK (+7.4% to 29.1 million litres; +7.7% to USD24.3

million) and Germany (-4.8% to 17.9 million litres;

+16.7% to USD14 million). Bulk wine exports to Canada

more than halved, meanwhile, from 19.4 million litres

(worth USD10.5 million) in January-July 2016, to 7.4

million litres (worth USD4.6 million) this time.

Chile’s bottled wine exports for the January-July 2017

period reached 31.5 million cases, up 4.4% on 30.1

million cases in the same period of 2016. FOB value

was up 3.8% from USD836.3 million to USD868.6

million. China’s lead widened over the US as the

number one destination for Chilean case goods, with

Chile’s case good volumes to China up 22% to 4.4

million cases from 3.6 million cases last time, while

volumes to the US contracted 2.6% to 3.4 million cases.

In fact, in the January-July 2017 period Japan overtook

the US to become the number two destination for

Chilean case goods in terms of volume, taking 3.6

million cases, 4.3% more than in the same period

of 2016. The US remained in second place in terms

of FOB value, however: USD97.7 million to Japan’s

USD89.5 million. Case good volumes to the UK fell

back 15% to 3.1 million cases, with FOB value from case

good exports to the UK slashed 20% from USD89.1

million to USD71.2 million.

See next page for prices.

Chilean Export Figures

Wine Export Figures

January - July 2016 January - July 2017 Volume

Million Liters

Million US$ FOB

Average Price

Million Liters

Million US$ FOB

Average Price Variance %

Bottled 271,43 836,34 3,08 283,56 868,63 3,06 4,47

Bulk 231,53 148,57 0,64 225,63 183,07 0,81 -2,55

Sparkling Wines 2,10 8,44 4,01 2,43 9,97 4,10 15,56

Packed Wines 18,69 31,74 1,70 15,59 26,82 1,72 -16,60

Total 523,75 1.025,09 2,36 527,21 1.008,49 2,42 0,66


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


NV Generic White 0.68 – 0.75 ↑ NV Generic Red 0.72 – 0.78 ↑

2017 Chardonnay (Basic) 1.10 – 1.15 ↑ 2017 Cabernet Sauvignon (Basic) 1.05 – 1.15 ↑

2017 Sauvignon Blanc (Basic) 1.10 – 1.15 ↑ 2017 Cabernet Sauvignon VDF 1.25 – 1.40 ↑

2017 Sauvignon Blanc VDF 1.25 – 1.35 ↑ 2017 Merlot (Basic) 1.10 – 1.15 ↑

2017 Syrah (Basic) 1.10 – 1.15 ↑ 2017 Merlot VDF 1.25 – 1.40 ↑

2017 Syrah VDF 1.15 – 1.25 ↑ 2017 Malbec (Basic) 1.30 – 1.50 ↑

2017 Malbec VDF 1.60 – 2.00 ↑

FranceTime on target

See next page for more on France.

HARVEST WATCH: Forecast to be 17% below

the five-year average; 12% down in the

Languedoc

On 21 August AGRESTE released a French harvest

estimate of 37.2 million hectolitres: this would be 18%

down on the 2016 harvest, 17% below the five-year

average, and the smallest harvest recorded in France.

This is due to the impact of April’s severe frost episode

(of the big volume areas, this was particularly felt in

Bordeaux and Charente) and the summer’s heat levels

and worsening drought (particularly felt along the

Mediterranean coast, in Languedoc, Provence and the

Côtes du Rhône). See the table below for a breakdown

of the 2017 harvest estimate by area.

Late August and the start of September brought no

rainfall to slow the ripening process in the Languedoc,

only drying winds, so the harvest there is two weeks’

ahead of schedule: AGRESTE forecasts the Langued-

oc-Roussillon harvest at 11.4 million hectolitres, down

8% on 2016 and 12% on the five-year average. Harvesting

in the Languedoc’s coastal and flatland regions is ap-

proximately 75-80% complete, with the whites and reds

for rosés already in, and harvesting of Carignan, Caber-

net and some Shiraz to be completed by approximately

mid-September. In the Languedoc’s foothills and north,

harvesting is 40-50% complete and should draw to a

close by the end of this month. Quality looks very good

throughout the region, with the hot and dry conditions

having kept disease out of the vineyards.

On the French market, there are still good deals to be

made – with quick loading terms – on 2016 interna-

tional varietal bulk wines such as Cabernet, Merlot,

Chardonnay and Sauvignon Blanc. However, prices in

the past 2-3 weeks have started to climb in light of the

2017 harvest situation (and the balanced global sup-

ply-demand picture). Suppliers are becoming increas-

ingly more prepared to hold onto their 2016 wines and

withdrawing offers, understanding that it is probable

the prices for their wines will be higher later on. The

window for excellent value deals is thus closing, and

once closed buyers will be quoted the general market

price and that’s it. Give Ciatti a call.


Key TakeawaysThere remain good deals to be made on 2016

international varietal bulk wines but the window for

these is closing. Ciatti encourages buyers to look at

the opportunities on 2016 wines now. The buying

campaign for the 2017 vintage could start quickly as

– due to a harvest expected to be 17% down on the

average – there will be a more limited quantity of

quality wines available.

Ciatti ContactFlorian Ceschi

T. +33 4 67 913532


Although the big negociants and big buyers – such as

the supermarkets – may have their needs covered for

the next few months, Ciatti recommends that an eye is

kept on the start of the 2017 vintage’s buying campaign:

while the pricing on 2017 wines remains uncertain, what

is certain is there will be a more limited volume of good

quality wine to go around and the market could be

active with buyers reserving what they need quite early.

Pricing on 2017 wines will be clearer once the harvest is

completed at the end of September.

2017 French Harvest Estimate by Acre (AGRESTE, 21 AUGUST 2017, UNIT : 1,000 HECTOLITRES)

REGION 5-YEAR AVERAGE 2016 2017 2017/16 2017/AVERAGE

Champagne 2,463 2,077 2,242 8% -9%

Bourgogne-Beaujolais 2,150 2,066 2,305 12% 7%

Alsace 1,088 1,230 904 -27% -17%

Savoie 110 119 109 -8% 0%

Jura 77 94 43 -9% -1%

Val de Loire 2,455 2,113 2,289 8% -7%

Charentes 8,321 7,830 5,445 -30% -35%

Sud-Ouest 3,409 4,064 3,325 -18% -2%

Bordelais 5,519 6,078 3,261 -51% -41%

Languedoc-Rousillon 12,900 12,362 11,400 -8% -12%

Corse 338 350 320 -9% -5%

Sud-Est 5,448 5,799 4,988 -14% -8%

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


2016 Generic White 0.50 – 0.65 ↑ 2016 Varietal Rosé IGP 0.80 – 0.95 ↔

2016 Chardonnay IGP 0.90 – 1.00 ↔ 2016 Generic Red 0.45 – 0.55 ↔

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

2016 Sauvignon Blanc IGP 0.85 – 1.00 ↔ 2016 Cabernet Sauvignon VDF 0.70 – 0.80 ↔

2016 Sauvignon Blanc VDF 0.80 – 0.95 ↔ 2016 Merlot IGP 0.80 – 1.00 ↔

2016 Generic Rosé IGP 0.75 – 0.85 ↔ 2016 Merlot VDF 0.70 – 0.80 ↔

2016 Generic Rosé VDF 0.70 – 0.80 ↔ 2016 Syrah / Grenache 0.80 – 1.00 ↔


The summer’s very hot, dry conditions continued in

Spain throughout August and into early September. As

a result, the harvest in Castilla-La Mancha commenced

10 days earlier than normal. In July the Cooperative

Agro-Alimentarias forecast a La Mancha harvest

of 21.5 million hectolitres, down over 11% from 24.2

million hectolitres in 2016. Since then, with the heat

continuing, there has been talk of a La Mancha harvest

as small as 18-20 million hectolitres, down 25%. The

non-irrigated vineyards will bear the brunt of the

adverse meteorology: some of these could see crop

losses of up to 40-50%.

The harvest in La Mancha is approximately at its

midpoint. International varietals such as Sauvignon Blanc,

Chardonnay, Merlot and Syrah – as well as Muscat and

Grenache – are mostly in. The Tempranillo harvest is now

in full swing, while harvesting of the late-ripening Airén

– usually harvested mid to late September – is already

underway.

Varietal 2016 bulk wines are running out. Overall, Spain

remains probably the cheapest place to source wine in the

world, but prices for Spanish varietal whites – for example

– are currently as expensive as they are for their French

equivalent and the prices on all remaining 2016 generic

and varietal wines are nudging up week-on-week: the

market price for these is now at the same level as for the

new 2017 wines based on sample approval or pre-harvest

sales. Lending weight to the claims of a reduced harvest,

some big players have paid 15-20% more for grapes this

year than last, a price hike that will translate through to

the price for 2017 wines.

All buyers in need of 2017 international varietals out of

Spain – such as Cabernet, Merlot, Shiraz and Sauvignon

Blanc – must take into account the global picture (a

balanced supply-demand situation and 2018 wines in

Chile not being ready until May onward), look at their

needs as soon as possible, and be in the starting blocks

ready for the new buying campaign. Buying will take

place quickly, and inventory will go fast: for instance, it is

very likely that 2017 varietal Chardonnay and Sauvignon

Blanc will be sold out by the end of the year.

On the generic wine front, buyers will have a little more

scope to wait and see if the market softens. However,

they must still be prepared to act quickly and make

reservations. Again, take into consideration the global

picture, and do no assume because in previous years the

prices declined through the campaign that the same will

happen this time.

With regards to rosé, year after year Spain’s production

of rosé is stable or declining, and this year due to the

expected smaller overall harvest more material will be

directed into red production. Buyers of good quality

rosé should thus be ready to act as soon as the buying

campaign gets underway because the good quality in

good volumes will be quickly sold.

In short: be prepared, know that it will be a more

complicated picture than in previous years, and don’t

arrive on the market surprised. Everyone will be buying;

there’s a good chance those who hesitate will end up

buying high-priced, lower quality wines.

Finally, Spain’s grape juice concentrate market is going

to be under big pressure. Concentrate production

from the 2017 harvest will definitely be smaller as

more juice is redirected towards more lucrative wine

production. Severe frost, hailstorms and drought in

the GJC powerhouse of La Manchuela, one of the best

Bobal regions producing high-proof colour red grape

concentrate, will impact the 2017 crop severely there.

HARVEST WATCH: La Mancha’s harvest

likely significantly reduced by intense heat

and drought

See next page for pricing.

SpainTime on target


Key TakeawaysPrices on all remaining 2016 generic and varietal wines are nudging up

week-on-week. Taking into account the tightening global situation and

the expected reduced 2017 harvest in Spain, buyers in need of 2017

international varietals out of Spain must be ready to act quickly once the

buying campaign starts. Ditto buyers of good quality rosé. There’s slightly

less urgency on generics, but, again, do no assume because in previous

years the prices declined through the campaign that the same will

happen this time. The global market is now more complex. Be prepared.

Ciatti ContactNicolas Pacouil

T. +33 4 67 913531


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


2016 Generic White 0.40 - 0.45 ↑ 2016 Moscatel 0.50 - 0.65 ↔

2016 White Blends (Higher Quality) 0.50 - 0.60 ↑ 2016 Generic Red 0.45 - 0.55 ↑

2016 Sauvignon Blanc 0.65 - 0.85 ↑ 2016 Generic Red (Higher Quality) 0.55 - 0.70 ↑

2016 Chardonnay 0.75 - 0.85 ↑ 2016 Cabernet Sauvignon 0.65 - 0.85 ↑

2016 Generic Rosé 0.45 - 0.50 ↑ 2016 Merlot 0.70 - 0.90 ↑

2016 Varietal Rosé 0.50 - 0.65 ↑ 2016 Syrah 0.65 - 0.80 ↑

ItalyTime on target

HARVEST WATCH: Forecast to be as much as

26% down in size on last year

Due to April’s frosts, June’s hail and the intense

heat and prolonged drought since, the Italian wine

industry is amid finishing what some have called

its most challenging harvest in more than 20 years.

It is expected that every producer region will see a

significant reduction in production: on 22 August the

Assoenologi (Italy’s enologist association) forecasted

an Italy crop of 41.1 million hectolitres, down 25%

from 54.1 hectolitres in 2016. Il Corriere Vinicolo

subsequently headlined with a 3 September estimate

from research firm Ismea and UIV (Italy’s wine

producer union) of 40 million hectolitres, down 26%.

The heat and drought made Italy’s harvest a race to

the finish: it is already almost over, even on the reds,

two weeks ahead of schedule. The compressed nature

of the harvest meant the normal schedule of varietal

readiness did not apply, with wines ready for picking

at overlapping times. The Ismea-UIV forecast finds

all wine regions with shorter crops than last year:

the smallest drops come in Friuli V.G. (-11.5%) and

Trentino A.A (-12.5%) in the country’s northeast, plus

in Campania; the biggest drops come in Abruzzo and

Puglia (both -30%), Basilicata (-32%), Lazio, Toscana

and Valle D’Aosta (all -32.5%) and Sicily, Umbria and

Sardinia (all -35%).See next page for more on Italy.


This expected harvest shortfall, combined with the

tightening supply-demand situation globally, means

the market in Italy is very active. Offer prices are only

valid for two days or so before being revised upward

again. As such, it should be noted that any pricing data

on this Italy page is merely indicative, given to provide

a sense of the market only; prices are subject to change

– rapidly. Give Ciatti a call.

International buyers on the Italian market must deal

with low 2016 inventory, a projected low stock of

2017 wine coming on line and rising prices, but also

competition from the local market, whose players can

offer quicker loading and payment terms. International

buyers requiring Italian volume should be ready to

move quickly to reserve their needs. Rising prices are a

problem for buyers, but the bigger concern is that there

will not be enough volume to cover everybody’s needs.

There will also likely be a significant gap between this

vintage and 2018’s.

Production of Pinot Grigio DOC delle Venezie is

forecast to be at least 20% down. If the new DOC rules

regarding 70% of yield from grape to wine are taken

into account, the total loss of production could be

around 30%. IGT Pinot Grigio from Terre Siciliane,

Puglia, Terre di Chieti and Oltrepò Pavese is sold

out. No Prosecco prices have been released at the

moment. From being the cheapest Italian red DOC,

Montepulciano DOC Abruzzo is expected to rise by

20-30% in price. The price for remaining 2016 stock is

at EUR75/hectolitre. Sicilian Nero d’Avola will be DOC-

only (Nero d’Avola DOC Sicilia) from the 2017 vintage

onward, meaning a reduction in the yield even before

the adverse weather which is expected to reduce Sicily’s

overall harvest by as much as 35%. The price is currently

at EUR100/hectolitre.

Chardonnay will be one of the varietals most affected by

the weather, with entry level material currently starting

from EUR80-85/hectolitre. Merlot, meanwhile, is at

EUR65-70/hectolitre, with top quality Sicilian Merlot at

EUR130/hectolitre. Cabernet will be in the same price

bracket as Merlot, but with less available quantities. The

Moscato area in Piemonte was strongly affected by the

frost, hailstorms and very hot temperatures: this will

increase prices on varietal Moscato and likely suppress

volumes of excess material that could have been used

by bottlers of generic sparkling Moscato.

On generic reds, Sangiovese from Puglia has been

harvested and will start at much higher prices than

in 2016, but should remain favourable in price to

Spain’s offer. Prices are close to EUR5/hectodegree.

It’s too early for price indications on Montepulciano

and Lambrusco. On the generic whites, producers are

currently reluctant to sell because prices are increasing

day-by-day as 2016 inventory is low and both internal

and international demand is strong. Generic white is

priced almost at EUR5/hectodegree.

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



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

The 2017 harvest is likely to be significantly reduced

in size. Prices will rise on each variety to varying

extents, including on generics. As in Spain, potential

buyers must be ready to act quickly once the buying

campaign starts. Be prepared.

Key Takeaways

Ciatti ContactFlorian Ceschi

T. +33 4 67 913532



South AfricaTime on target

HARVEST WATCH: The ongoing severe

drought is causing big concern for the 2018

harvest

Spring has officially commenced in the Western Cape

and, following a very dry winter on top of two years

of below-average rainfall, water usage restrictions are

already in place. The aggregated water level in Cape

Town’s catchment dams as of 4 September stood at

35.1%: this compares to 60.6% on the same date of 2016,

73.8% in 2015 and 102.4% in 2014. In years past, the

Western Cape has received good rainfall in October

and November, but the rainfall this time would need

to be very considerable for the drought situation to be

alleviated in any meaningful way. Naturally, there is

big concern among growers.

Due to the high pricing on the international market and

now concerns regarding Spain and Italy’s 2017 harvests,

the market in South Africa is very active on the request

side, with a lot of new potential buyers from China,

Russia, Europe and North America. But the supply

side is quiet: there does not seem to be much wine left

available on the open market in South Africa.

Supply of varietal bulk Sauvignon Blanc, Chardonnay,

Cabernet and Merlot has been, and remains, very

tight; now Shiraz and Pinotage is tight, so too even

generic red, generic rosé and Cinsault rosé. There

remain some pockets of generic white available. Most

of what becomes available on the open market is wine

previously reserved that went unshipped. Buyers should

respect loading terms or risk losing their reservations.

Producers had been happier due to the price increases

this buying campaign – on average by 5-8% across

all varieties – and the quick and early nature of

contracting. However, the ongoing drought is now

causing real concern as thoughts turn to the 2018

harvest.

Key TakeawaysVarietal bulk, generic red, generic rosé and Cinsault

rosé are all now tight in supply. Pockets of generic

white are available. August and the start of

September did not bring much replenishment to

the catchment dams: drought is a big concern for

the 2018 harvest.

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 Chardonnay 7.20 – 8.50 ↑ 2017 Cabernet Sauvignon 8.00 – 9.50 ↑

2017 Sauvignon Blanc 8.00 – 10.50 ↑ 2017 Ruby Cabernet 6.50 – 7.00 ↑

2017 Chenin Blanc 6.00 – 6.70 ↑ 2017 Merlot 8.20 – 9.30 ↑

2017 Muscat 6.50 – 6.80 ↑ 2017 Pinotage 7.00 – 8.30 ↑

2017 Generic Rosé 5.20 – 5.65 ↑ 2017 Shiraz 7.50 – 8.80 ↑

2017 Cultivar Rosé 6.50 – 6.90 ↑ 2017 Cinsaut Rose 6.50 – 6.90 ↑


AustraliaTime on target

HARVEST WATCH: 2017 harvest came in at

an estimated 1.93 million tonnes, up 5% on

2016

Australia’s grape and wine sector has welcomed an

AUD50 million (USD40.2 million) Export & Regional

Wine Support package from the federal government.

This package entails a three-year plan to increase the

value of Australia’s wine exports up to a record AUD3.5

billion and support increased international wine

tourism in regional communities. The package was

launched in Adelaide by Deputy Prime Minister (and

Minister for Agriculture) Barnaby Joyce, and Assistant

Minister for Agriculture, Senator Anne Ruston.

Minister Joyce said the Export & Regional Wine

Support package aims to build on the Australian wine

industry’s significant growth in recent years at a time

when its exports are forecast to exceed 800 million

litres and AUD2.5 billion in 2017–18. The package would

aim to deliver “up to 8% per annum value growth across

all export markets to 2021–22, including 15-17% in China

and 6% in the US”. He added that the package “will help

to attract up to 40,000 more international tourists to

visit our world-renowned wine regions, and take the

great Australian wine tour, by 2019–20, delivering an

estimated AUD170 million to the economy”.

New legislation to reform the Wine Equalisation

Tax (WET) rebate – in order to rid the system of

rorting (sharp practices), enhance integrity and help

it deliver on its original purpose – has passed through

parliament. From July 1 2018, the WET rebate cap will

be reduced from AUD500,000 to AUD350,000 and its

eligibility criteria has also changed: a wine producer will

now be required to own at least 85% of the grapes used

to make the wine throughout the winemaking process.

The altered eligibility standard is designed to address

“virtual” winemaking schemes where the WET rebate

is being claimed multiple times on the same parcel

of wine. Under the new changes, wine producers will

now be required to sell wine packaged in a container

not exceeding five litres and branded with a registered

trademark.

Treasury Wine Estates (TWE) has posted a 55.3% jump

in full-year net profit to AUD269.1 million, mainly

boosted by strong earnings growth in the Americas

and Asia regions, and cost savings. Revenue for the

year to June 30 was up 8.1% to AUD2.53 billion, and

the company declared a 50%-franked final dividend

of 13 cents a share, a one cent increase over last year’s

corresponding unfranked payout. The company has

also settled a shareholder class action brought against

it for allegedly engaging in misleading and deceptive

conduct, for AUD49 million. TWE said the settlement

– which is without admission of liability – includes

interest and costs, and is fully insured so it will not

affect the company’s financial results.

See next page for pricing.

Key TakeawaysThe grape and wine sector has received an AUD50

million support package from the federal government

that is partially aimed at boosting wine exports. From

July 1 2018, the WET rebate cap will be reduced from

AUD500,000 to AUD350,000 and its eligibility criteria has

been tightened to minimise the opportunity for sharp

practice.

Ciatti ContactsMatt Tydeman

T. +61 8 8361 9600


Simone George

T. +61 8 8361 9600



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


NV Dry White 0.60 – 0.75 ↔ NV Dry Red 0.85 – 0.95 ↑

2017 Chardonnay 0.80 – 0.95 ↔ 2017 Cabernet Sauvignon 1.15 – 1.40 ↑

201 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

New ZealandTime on target

HARVEST WATCH: At an estimated 396,000

tonnes, a smaller 2017 crop than expected

The export value of New Zealand wine has reached

a record high, according to the 2017 annual report

from New Zealand Winegrowers (NZW). Now valued

at NZD1.66 billion (USD1.20 billion), up 6% in the 12

months to 30 June 2017, wine is now New Zealand’s

fifth-largest export good. Exports to the US have led

such strong growth, passing NZD500 million for the

first time (up 12%). New Zealand wine became the third

most valuable wine import into the US, behind only

France and Italy.

NZW’s report adds that, over the past two decades, New

Zealand’s wine industry has achieved average annual

export growth of 17% per year. “With diversified markets

and a strong upward trajectory, the industry is in good

shape to achieve NZD2 billion of exports by 2020,” said

Steve Green, NZW’s chairman.

Meanwhile, NZW has made it easier for tourists to New

Zealand to explore the country’s wineries by adding a

wine tourism section to its website – nzwine.com/visit

– showcasing over 450 wine experiences. According to

NZW, touring New Zealand’s wineries and vineyards

has become a significant drawcard for visitors, with

24% of international holidaymakers making it part of

their itinerary (up from 13% four years ago). The new

‘Visit’ section of nzwine.com allows tourists to search

wine regions using a Google map tool, or filter listings

by region and four experience types: ‘Sip’ (enjoy

cellar door tastings); ‘Dine’ (dine in a winery setting);

‘Stay’ (overnight in vineyard accommodation); ‘Play’

(partake in on-site activities, such as tours and other

experiences).

See next page for more on New Zealand.


Key TakeawaysNew Zealand’s wine exports rose 6% in the 12

months to 30 June 2017 to reach NZD1.66 billion, with

exports to the US an area of particular growth. NZW

expects the industry to achieve NZD2 billion by 2020.

Ciatti ContactsMatt Tydeman

T. +61 8 8361 9600


Simone George

T. +61 8 8361 9600


Craft Beer UpdateAs previously reported, the John Fearless Co now has available a selection of New Zealand hop varietals

for sale in the US, South America and southern Africa. New Zealand hop varietals are sought-after

across the craft beer world for their unique Southern Hemisphere aroma and performance in many

beer styles. The varietals John Fearless has available are:

New Zealand Hops Offered by John FearlessAroma Varietals Motueka, Taiheke, Pacifica

Dual Purpose Varietals Southern Cross, Dr. Rudi, Pacific Jade

Experimental Varietals Orbit

For more information, please view our range of hops via the John Fearless website at http://www.

johnfearless.com/ or contact Rob Bolch, CEO and partner, via [email protected].


http://www.johnfearless.com


Export Pricing: USD per liter Currency Conversion Rates as of September 12, 2017

California (Pricing in bulk; FCA)


2016 Generic White 0.79 - 0.99 ↔ 2016 Generic Red 0.80 - 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 ↔

Argentina (Pricing in bulk; FCA)


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


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

2016 Muscat 0.70 - 0.80 ↑ 2016 Malbec Entry-Level 1.90 - 2.20 ↑

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

Australia & New Zealand AUD Rate: 0.802118 / NZD Rate: 0.728673


NV Dry White 0.48 - 0.60 ↔ NV Dry Red 0.68 - 0.76 ↑

2017 Chardonnay 0.64 - 0.76 ↔ 2017 Cabernet Sauvignon 0.92 - 1.12 ↑

2017 Sauvignon Blanc 0.72 - 0.92 ↔ 2017 Merlot 0.88 - 1.08 ↑

2017 NZ Marlborough SB 2.55 - 3.13 ↔ 2017 Shiraz 0.92 - 1.12 ↑

2017 Pinot Gris 1.04 - 1.20 ↑ 2017 Muscat 0.58 - 0.69 ↔

Chile (Pricing in bulk; FOB Chilean Port)


NV Generic White 0.68 - 0.75 ↑ NV Generic Red 0.72 - 0.78 ↑

2017 Chardonnay IGP 1.10 - 1.15 ↑ 2017 Cabernet Sauvignon IGP 1.05 - 1.15 ↑

2017 Sauvignon Blanc IGP 1.10 - 1.15 ↑ 2017 Cabernet Sauvignon VDF 1.25 - 1.40 ↑

2017 Sauvignon Blanc VDF 1.25 - 1.35 ↑ 2017 Merlot IGP 1.10 - 1.15 ↑

2017 Syrah IGP 1.10 - 1.15 ↑ 2017 Merlot VDF 1.25 - 1.40 ↑

2017 Syrah VDF 1.15 - 1.25 ↑ 2017 Malbec IGP 1.30 - 1.50 ↑

2017 Malbec VDF 1.60 - 2.00 ↑


France (Pricing in bulk; Ex-Winery) Rate: 1.196420


2016 Generic White 0.60 - 0.78 ↑ 2016 Generic Red 0.54 - 0.66 ↔

2016 Chardonnay IGP 1.08 - 1.20 ↔ 2016 Cabernet Sauvignon IGP 1.02 - 1.20 ↔

2016 Chardonnay VDF 1.02 - 1.14 ↔ 2016 Cabernet Sauvignon VDF 0.84 - 0.96 ↔

2016 Sauvignon Blanc IGP 1.02 - 1.20 ↔ 2016 Merlot IGP 0.96 - 1.20 ↔

2016 Sauvignon Blanc VDF 1.02 - 1.20 ↔ 2016 Merlot VDF 0.84 - 0.96 ↔

2016 Generic Rosé IGP 0.84 - 0.96 ↔ 2016 Red Syrah / Grenache IGP 0.96 - 1.20 ↔

2016 Generic Rosé VDF 0.84 - 0.96 ↔

2016 Varietal Rosé IGP 0.96 - 1.14 ↔

Italy (Pricing in bulk; Ex-Winery) Rate: 1.196420



2016 Chardonnay 1.02 - 1.20 ↔ 2016 Cabernet Sauvignon 0.90 - 1.20 ↑

2016 Pinot Grigio 1.26 - 1.44 ↑ 2016 Merlot 0.90 - 1.20 ↑

2016 Prosecco 2.99 - 3.59 ↔ 2016 Primitivo / Zinfandel 1.44 - 1.67 ↔

2016 Chianti 1.91 - 2.39 ↔

South Africa (Pricing in bulk; FOB Cape Town) Rate: 0.076877




2017 Sauvignon Blanc 0.62 - 0.81 ↑ 2017 Ruby Cabernet 0.50 - 0.54 ↑

2017 Chenin Blanc 0.46 - 0.52 ↑ 2017 Merlot 0.63 - 0.71 ↑

2017 Muscat 0.50 - 0.52 ↑ 2017 Pinotage 0.54 - 0.64 ↑

2017 Generic Rosé 0.40 - 0.43 ↑ 2017 Shiraz 0.58 - 0.68 ↑

2017 Cultivar Rosé 0.48 - 0.52 ↑ 2017 Cinsaut 0.50 - 0.53 ↑

Spain (Pricing in bulk; Ex-Winery) Rate: 1.196420



2016 White Blends (Higher Quality) 0.60 - 0.72 ↑ 2016 Generic Red (Higher Quality) 0.66 - 0.84 ↑

2016 Sauvignon Blanc 0.78 - 1.02 ↑ 2016 Cabernet Sauvignon 0.78 - 1.02 ↑

2016 Chardonnay 0.90 - 1.02 ↑ 2016 Merlot 0.84 - 1.08 ↑

2016 Generic Rosé 0.54 - 0.60 ↑ 2016 Syrah 0.78 - 0.96 ↑

2016 Varietal Rosé 0.60 - 0.78 ↑

2016 Moscatel 0.60 - 0.78 ↔


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/

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Documents

Global Market Report - The Ciatti · PDF fileCiatti Global Market Report September 2017 2 The 2017 harvests are ongoing in California and Europe and it now looks certain that the respective