02/06/2012

SARL GWBS Global Wine Business Services

Newsletter January 2012

Happy New Year 2012…
To begin this year, we found this note on Vitisphere site which seams to be a good summary of the current situation.
 
The last note of the Agreste situation (Service of the Ministry of Agriculture Statistics) allows us to make a full point over the wine-growing year just ended and start looking at what is the beginning of the 2011/2012 commercial campaign.


AN INCREASE IN VOLUMES PRODUCED AND LOWER STOCKS

In 2011, the entire French harvest would represent 50.2 million hectoliters, according to the Department of Statistics and Prospective forecast. This vintage represents volumes well above last year (+11% compared to 2010, 7% from the average of the last 5 years), while remaining lower than 2005 and 2006 vintages that reached 53 million hectoliters.
In 2011, France was the largest producer of wine in the world, in front of Italy and Spain (respectively 42.2 and 35.4 million hectoliters according to the unconsolidated forecast of the International Vine and Wine Organization.
In terms of production potential, it is the “Indication Géographique Protégé” (IGP) wines and without geographical indication wines which show the largest increase in volume (respectively +16% and +19% compared to 2010 vintage). The potential volume of Appellation d’Origine Controlée (AOP) wines would increase by 7%.
According to customs, “French wine production stocks at the beginning of the season July 31st 2011 are around 32.8 million hectoliters, whether -2% over 2010”. In detail, the diminution of these stocks is mainly due to IGP wines (-9%) and AOP (-3%), while wines without indication have increased by 5%.


BULK SALES: GOING DOWN FOR IGP, UP FOR WINES WITHOUT IG

According to FranceAgriMer, the first 21 weeks of the 2011/2012 campaign are down about 30% of the wine sales contracts from the same period in 2010/2011. This slow start is marked by a strong decrease in IGP wines transaction.
However, the first commercial contracts (referred by FranceAgriMer) for wine without IG are strongly increasing. The increase is by 80% for white wines without IG. We notice as well the success of wines without IG and with mention on varietals.


EXPORTS: GROTH IN VOLUME AND VALUE THANKS TO THE THIRD COUNTRIES

Following the 2010 progression, exports of French wines are expecting to increase as well in 2011. From January to October 2011 period, exports of wine have increased in volume by 7% and in value by 16% compare to the previous year.
The upmarket of French wine exported is particularly visible concerning AOP still wines. These show an increase in value by 23% while volumes increased only by 9%.
In contrast with exports of wines without IG and with mention on varietals, average prices are going down. Exports have increased in volume by 46% and in value by29% compared to 2010. Sparking wines from Champagne have also experienced an overall increase, although less impressive (8% by volume, 13% in value). The export revival on Champagne, which was rather high in 2010, seams to go down in 2011.
If export growth is important, it should be noted this is mainly towards the third countries (Nations non-member of the European Union). For the third countries, the volumes currently exported increased by 26% compared to 2007, this is before the Depression. While shipments to the European Union, the volumes are 21% lower than in 2007. The recovery is mainly Asian, with China ahead. Thereby 677 000 HL of wine have been sent towards China between January and August 2011 (mainly red wines from Bordeaux), which is a higher volume that the one sent to the United States of America (652 000 HL over the same period).
The United Kingdom remains the largest importer of French AOP wines; Germany seems to follow an irreversible decline. Exports for the Benelux and Denmark follow a similar pattern.


AVERAGE PRICES: AN OVERALL INCREASE AT THE BEGINNING OF THE CAMPAIGN

AOP wine prices are increasing significantly in the August-November months 2011 (+8% compared to 2010). The price index for Cotes du Rhone AOP wines increased by 15% from 2010, the rise is of 10% for Burgundy wines and 4% for Bordeaux wines. In the last few months, however there is a gradual stabilization of the average prices of AOP wines, despite a persistent increase in price for Bordeaux and Burgundy wines.
Concerning all colours, the average price for IGP wines has increased by 5% from 2010; the price of wines without IG has increased by 8%. Price of white wines without IG has increased by 9% from 2010, exceeding the average price of red and rosé without IG stagnant since May 2011 at about 45 €/HL. The price of rosé and red wines is gradually rising (after a strong drop in the summer), remaining below the average price of IGP white wines which are currently going down.  


We will come back in the next month with a more detailed analysis of stocks and price levels, region by region.
 
A succesfull new year to all!

Best greetings
Yours GWBS-Team