Global Market Report - ciatti.com Market R… · Ciatti Global Market Report August 2017 5 The winter weather in Mendoza has been proceeding normally, with cool, sunny days (4-6°C/39-42°F)

August 2017Volume 8, Issue No. 8

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San Rafael, CA 94901

Phone (415) 458-5150

Global Market Report

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2Ciatti Global Market Report | August 2017

The start of August brought intense heat to France, Spain and Italy.

Temperatures in some areas moved towards or even exceeded 40°C as an

anticyclone – nicknamed “Lucifer” by European press – brought in heat

from Africa. Drought is a concern in the growing areas of all three countries.

This latest heatwave could potentially compound any ill-effects felt from the

one in June, plus April’s heavy frost episode. Sicily has just started to harvest

and expectations are that the island’s yield will be down 20% on last year,

while forecasts for the harvests in France and Spain suggest they could be

down on the average; AGRESTE warned that the harvest in France could be

one of the lowest in history – and that was even before the latest heat episode.

Drought is also a big concern in South Africa: winter in the Western Cape

continues to be unusually dry, with the catchment dams receiving little

replenishment so far. Santiago and parts of the Valle Central in Chile,

meanwhile, have experienced an unusually snowy winter to date, raising fears

of a higher frost risk come the spring. This adverse meteorology and the

lowered harvest forecasts can only feed into the prevailing narrative of tighter

bulk wine supply and upward price pressure across the world. But in such

situations there always exists opportunities for those diligent enough to spot

them.

French and Californian wines are becoming more price-competitive as

prices in other countries rise up to meet them. In France, despite fears for

the 2017 harvest, prices remain fairly low and trending downward – to the

extent that in some instances France now works out cheaper than Spain even

before more favourable transport costs are entered into the equation; there

are opportunities to be had on generic and international varietal bulk wines

in France. Spain’s inventory of red wines is being sapped by North American,

Chinese and other international buyers put-off Chile by the high prices there.

California, meanwhile, has varietals and generics for buyers who need them, at

prices more attractive now they have risen in many other markets.

Argentina’s Malbec, too, should become a more attractive proposition as the

year moves towards its final trimester: the peso devalued at the end of July,

currently stands at 17.60+ to the dollar, and could be allowed to devalue further

after the country’s midterm elections on 22 October. As well as a more helpful

currency exchange, Argentine suppliers are seeing the lack of activity on the

country’s wine market and are becoming open to being talked down from the

USD2.00/litre high for Malbec that they have been offering. Lower prices by

November, December and January should coincide with low Malbec stocks in

Chile, bringing Malbec buyers back from across the Andes.

3 California

5 Argentina

6 Chile

8 France

10 Spain

11 Italy

12 South Africa

14 Australia

16 New Zealand

17 John Fearless

18 USD Pricing

20 Contacts

Volume 8, Issue No. 8

August 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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The harvest is just starting to get underway in some

areas of California. July and the start of August

were hot, with temperatures consistently over 100°F

(38°C) in some of the growing areas. Oregon, too, has

been hot, receiving the sort of temperatures usually

experienced in mid-California. The heat has perhaps

delayed – by a week or so – the respective harvest

starts in each of California’s growing areas, and

could potentially become an issue for berry sizing

and colour development. Good canopies and water

reserves, however, will have helped negate most if not

all the potential dangers for many growers.

California’s fire season is now in full swing; everyone’s

on alert but so far Ciatti has not heard of any growing

areas suffering deleterious effects. There’s talk of it

being a higher-pressure mildew year; so far this seems

to be more talk than actually in much evidence. The

rough consensus is that the harvest is looking like being

between 4 and 4.2 million tonnes and there would be

surprise if it finished up outside that band.

The market is stable. With a big 2016 crop and increased

acreage in the ground, Cabernet at the Valley end of

pricing has softened in price a little; Pinot Grigio pricing

has softened due to its own big 2016 crop; Zinfandel

has softened a little but not as much as perhaps

expected, with Cabernet available at a lower price than

Zinfandel in some areas. Pricing on Merlot, Syrah and

Chardonnay hasn’t necessarily weakened; inventories

are fairly tight across the board.

Ciatti is seeing fewer older bulk wines (from 2014 or

2015, say) coming onto the market at this time than at

the same stage of previous years. The suppliers see the

prices holding up on these older wines and are in no

rush to sell. Some of these wines have received interest

from domestic buyers seeking something in lieu of an

international purchase. California is more competitive

on varietal bulk than it was a year ago because of

increased prices across the world, especially when

transport costs are taken into account.

On the export front, the weakness of the post-Brexit

pound has dramatically slowed California’s shipments

to the UK in the past year, with generic red and white

wines and white Zinfandel backing up a bit. California

has availability of generics and – mainly – varietals

and these are increasingly reasonably-priced as prices

increase throughout the rest of the world. Aside from

Sauvignon Blanc, California can offer just about

anything.

On August 4 the members of the International

Longshore & Warehouse Union voted through a three-

year extension to the union’s existing labor deal with the

terminal operator employers. This extends the contract

– which applies to 29 West Coast ports – through to

July 1 2022, and should ensure the supply chain is (for

the foreseeable) spared the port strikes and resulting

bottlenecks it suffered in 2015.

On the domestic retail market the big four players

continue to take share. They now offer wines for every

segment and price point in the market, and are growing

at double-digit or high single-digit rates while the

overall wine market in the US grows at 1-3%.

The 1.5-liter category and the extreme value 5-liter

category really seem to have shrunk, while the 3-liter

is doing better. This could be down to the growing

impact of millennial preferences – as opposed to baby

boomer preferences – on the US wine market: the

1.5-liter category could be viewed by such consumers as

a no-man’s-land between a 3-liter good value (but also

CaliforniaTime on target

HARVEST WATCH: High temperatures have

delayed harvest start a little

See next page for more on California.


still good quality, perhaps varietal) wine, and the more

prestigious 750ml bottle in the USD9+categories that

are all seeing strong growth. In short, among younger

people extreme value categories are losing out to regular

value, while the USD6-8.99 category is losing out to the

USD9+ categories. Wine also faces stiffer competition

when vying for millennial custom than it does for baby

boomer custom: it must fight for attention against craft

beer, craft spirits and mixology, Sangria and other

wine-based punches, cocktails and mixers. In addition,

domestic wines must increasingly compete with

imported wines whose exotic varietal and/or appellation

appeals to millennials open to trying new things.

Cabernet, Pinot Grigio and Zinfandel pricing has softened a little. Aside from Sauvignon Blanc,

California can offer to both the domestic and international buyer just about any wine – generic

or varietal – at increasingly reasonable prices as prices throughout the rest of the world have

increased. The ongoing high temperatures could potentially become an issue for berry sizing and

colour development for the coming harvest, but it’s too early to say.

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]

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/


The winter weather in Mendoza has been proceeding

normally, with cool, sunny days (4-6°C/39-42°F) and

cold nights: the vines are getting a good rest before

bud-break from October onwards. The market is

very quiet due to the high Malbec prices, but the

devaluation of the Argentine peso – it fell to 17.80 to

the dollar on 28 July – should help soften up such

prices a little for international buyers.

In response to the low of 17.80 pesos to the dollar,

Argentina’s central bank sold USD305 million in

reserves, its first sale in foreign exchange markets since

June 2016. The peso thus rebounded slightly, but still

remains at 17.60+. This is good news for the country’s

exporters, who believed the previous, 16 peso to the

dollar level was unrealistic; even with the peso’s decline,

the dollar exchange rate is behind inflation. The peso at

18 to the dollar – or just under – is where most analysts

expect it to remain at least until after the country’s

midterm elections on 22 October because it’s at the

level the incumbent Macri government predicted it

would be. Most economists agree the dollar exchange

rate should be above 20 pesos, or even 22, but the

government will not allow that to happen at the present

time.

The peso devaluation and the lack of activity on the

market should see Argentine Malbec prices begin to

soften in the new few weeks, from around USD2.00/

litre to around USD1.80-1.90/litre and trending

downward to the end of the year (particularly if the

frost risk season, September until mid-November,

passes smoothly). Some suppliers are already willing

to sell for less than USD1.90/litre: they are open to

negotiation. Give Ciatti a call.

ArgentinaTime on target

HARVEST WATCH: At an estimated 1.957

million tons in 2017, up 10% on 2016

According to information from the Chilean side of the

Andes, Argentina shipped 52 million litres of wine out

of Chile between January and June this year. Currently

the Argentine market is quiet: European buyers finally

decided to source Malbec out of Chile, where the

price is more like USD1.50/litre. But hopefully, if the

Argentine market proceeds as expected, with lower

prices in November, December and January – just as

Chile is potentially running low on Malbec – Argentina

will become attractive again. The World Bulk Wine

Exhibition in Amsterdam, 20-21 November, could be

when business around Argentine Malbec starts flowing.

Argentina’s economy is now growing again (+0.3% in

Q1 2017; +2.5-3% in Q2 2017; and +3.5-4% forecasted

for Q3), with consumption growing by 4.8% in May.

Having struggled to turn around the economic troubles

it inherited from its predecessor, the incumbent Macri

government will be hoping such better economic news

starts to be tangibly felt by voters before October’s

midterm polls.

Key TakeawaysThe ongoing peso devaluation against the dollar

should make 2017 Malbec prices more attractive for

international buyers as this year moves to a close.

Suppliers are currently open to negotiation on the

USD1.90-2.00/litre Malbec price.

Ciatti ContactEduardo Conill

T. +54 261 420 3434


See next page for pricing.


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 ↑

ChileTime on target

HARVEST WATCH: A cold, snowy winter is

raising fears of a bigger frost risk come the

spring

Chile continues to experience abnormal weather

conditions. The city of Santiago and parts of the Valle

Central received one the heaviest snowfalls in the

country’s history on 14-15 July, causing significant

damage and leaving up to 350,000 homes without

power. According to the Associated Press, up to

16 inches of snow fell in parts of the region, and

snowfall in the capital was the heaviest in 46 years.

Experts thus fear a greater frost risk this coming

spring.

The 2018 grapes are being sold and prices are higher

than they were for the 2017 grapes. There is a fear

among some wine producers that, at the present rate

of sales on 2018 grapes, they will have to come onto

the market to secure their needs and risk a drop in

wine prices in 2018.

As expected and mentioned in previous Ciatti Global

Market Reports, Chile’s short 2017 crop increased the

domestic demand for wines and the domestic market

is very active. Some international buyers expected a

drop in wine prices, which has not occurred. Some

2017 varieties are sold out or closing to being so:

Sauvignon Blanc, Pinot Noir, Malbec, Carmenere, and

Chardonnay. Meanwhile, Merlot is short, Cabernet

is still available but getting short, and there are not

many generics still available. All wines have been

experiencing price increases.

As shown in the below table, Chile’s bottled wine

exports continue to grow (+4.5% in January-June); bulk

exports continue to fall (-2.4%) and would be even

lower if Argentina had not been active on the Chilean

market due to its problems at home (Argentina

shipped 52 million litres of wine out of Chile between

January and June this year).

The main drops in Chile’s bulk exports were to

Germany (-7%), the US (-26%), China (-46%), and

Canada (-63%). The main increases were to Norway

(+400%), Argentina (+100%), New Zealand (+79%),

Belgium (+10%) and Mexico (+8%). It should be noted

that volumes to Norway and New Zealand are small

enough that a couple of containers causes a substantial

change in the percentage. Sparkling wine exports,

meanwhile, are continuously growing.

See next page for more on Chile.


Key TakeawaysThe domestic market is very active and

international buyers waiting for prices to drop

on 2017 wines have been waiting in vain: 2017

Sauvignon Blanc, Pinot Noir, Malbec, Carmenere

and Chardonnay are sold out or close to being

sold out, and all wines have been seeing price

increases. In addition, prices for 2018 grapes are

higher than they were for the 2017 grapes.Ciatti ContactMarco Adam

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


Finally, the Chilean peso has been progressively

strengthening against the US dollar in recent weeks:

in May it was at an average of 671.54/dollar, in June at

665.15/dollar, in July at 658.17/dollar, and as of 7 August

it stood at 649.88/dollar. This is less helpful for Chile’s

wine exporters, particularly with the current high

prices on Chilean wines.

Chilean Export Figures

Wine Export Figures

January - June 2016 January - June 2017 Volume

Million Liters

Million US$ FOB

Average Price

Million Liters

Million US$ FOB

Average Price Variance %

Bottled 225,57 692,88 3,07 235,60 715,75 3,04 4,45

Bulk 204,75 129,48 0,63 199,88 160,14 0,80 -2,38

Sparkling Wines 1,72 7,10 4,12 2,07 8,46 4,09 20,02

Packed Wines 15,53 26,54 1,71 13,50 23,10 1,71 -13,09

Total 447,58 856,00 2,38 451,05 907,46 2,41 0,78

Chile: Current Market Pricing (USD per liter; Ex-Winery)


NV Generic White 0.68 – 0.75 ↑ NV Generic Red 0.73 – 0.80 ↑

2017 Chardonnay (Basic) 1.05 – 1.15 ↑ 2017 Cabernet Sauvignon (Basic) 0.98 – 1.05 ↑

2017 Sauvignon Blanc (Basic) 0.98 – 1.05 ↑ 2017 Cabernet Sauvignon VDF 1.10 – 1.25 ↑

2017 Sauvignon Blanc VDF 1.10 – 1.25 ↑ 2017 Carmenere (Basic) 1.10 – 1.25 ↑

2017 Syrah (Basic) 0.95 – 1.05 ↑ 2017 Carmenere VDF 1.20 – 1.40 ↑

2017 Syrah VDF 1.10 – 1.25 ↑ 2017 Merlot (Basic) 1.00 – 1.10 ↑

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

2017 Malbec VDF 1.60 – 2.00 ↑


FranceTime on target

HARVEST WATCH: Forecast to be down

16% on the five-year average; severe heat/

drought a big concern

A 2017 harvest of between 37 and 38.2 million

hectolitres was forecasted by AGRESTE on 17 July,

which, if the mid-range of that estimate came to

pass, would equal the size of the frost-ravaged 1991

harvest – the smallest French wine harvest on record.

However, July’s forecast came before the anticyclone

dubbed “Lucifer” struck France at the start of August,

bringing consecutive days of intense heat with

temperatures pushing past 40°C in some areas. This

will only compound the impact on volumes of April’s

frosts and June’s heatwave.

The southeast – the Languedoc, the south of the

Rhone Valley, Provence, and Corsica – has experienced

particularly high temperatures. Provence has seen

wildfires, though not in key wine areas. The southwest,

particularly the Toulouse area, has received rainfall; the

southeast has experienced storms but mainly hail, not

consistent rainfall to replenish water levels. Drought is

increasingly a concern: as of 7 August, 80 department

in France contain zones that have water shortage alert

levels severer than the lowest level (‘Vigilance’), up from

55 departments on 11 July. It remains the case that the

zones containing the most areas on the highest alert

level (‘Crisis’: the discontinuation of non-priority water

use, including for agriculture) are mainly in western

France, particularly Bordeaux (where there is also a low

groundwater warning) and the Loire Valley.

The concern is that the growth cycle of the grapes

has been sped up by the heat and they will be rapidly

ready for harvest in a highly concentrated, low juice-

yielding state. Some harvesting commenced on 31 July

in the Perpignan area, 15 days earlier than normal.

Rain and cooler temperatures are needed to slow grape

maturation, but no weather forecast promises rain for

the next few days.

A crop in the middle of AGRESTE’s July estimate, at

37.6 million hectolitres, would be 17% lower than 2016’s

crop and 16% lower than the five-year average. As

shown by the table below, the harvest could be down in

Bordeaux by as much as 51% on last year’s (which was

a big crop), 30% down in Charente (leaving little if any

white wine left over after Cognac production), and 6%

down in Languedoc-Roussillon.

Despite significant concerns regarding the size of the

2017 harvest, prices on the market in France remain

fairly low and continue to decline – to the extent that

buyers from Germany, for example, note that it can be

cheaper to buy in France than in Spain, even before

the cheaper transport costs from France are taken into

account. Some co-ops are very happy to negotiate in

order to make sales, not only to make space for the 2017

vintage but also to generate cashflow before the end of

the financial year on 31 August. The issue for French

suppliers is that the Vin de France category on the

domestic market has been replaced by European blends

in recent years, so there is a diminished market for

French generics. On this front, there have been signs

that Spanish and Italian buyers are considering French

generics as a solution, a complete reversal from the

norm of recent years.

See next page for more on France.

Key TakeawaysThe prospect of the smallest harvest since 1991 is

not busying a French market in which – right now

– there are excellent opportunities to be had on

international varietal and generic bulk wines. Give

Ciatti a call.

Ciatti Contact

Florian Ceschi

T. +33 4 67 913532


http://www.ladepeche.fr/article/2017/06/09/2590343-le-cav-vide-les-cuves-d-un-domaine.html


2017 French Harvest Estimate by Acre (AGRESTE, 27 JULY 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 2,350 14% 9%

Alsace 1,088 1,230 861 -30% -21%

Savoie 110 119 110 -8% 0%

Jura 77 94 41 -57% -47%

Val de Loire 2,455 2,113 2,261 7% -8%

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

Sud-Ouest 3,409 4,064 3,315 -18% -3%

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

Languedoc-Rousillon 12,900 12,362 11,600 -6% -10%

Corse 338 350 350 0% 3%

Sud-Est 5,448 5,799 5,229 -10% -4%

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


2016 Generic White 0.45 – 0.60 ↓ 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 ↔

What is an Anticyclone?An anticyclone – also known as a high pressure area – is a large atmospheric circulation system with the wind

flowing clockwise around it in the Northern Hemisphere, and counter-clockwise in the Southern Hemisphere

Anticyclones form from air masses cooling more than their surroundings, which causes the air to contract slightly

making the air more dense. Since dense air weighs more, the weight of the atmosphere overlying a locatiion

increases, causing increased surface air pressure. The air mass cooling that results in an anticyclone forming can

be caused by either conduction as the air flows over a relatively cool ocean surface, or through the loss of infrared

radiation over land during the fall, winter, or spring when little sunlight is available to warm the air mass.

Source: http://www.weatherquestions.com/What_is_an_anticyclone.htm


Just as in France and Italy, Spain has been affected

by the anticyclone dubbed “Lucifer”, with all but

the northwest of the country receiving extreme

weather warnings as temperatures move towards

and sometimes exceed 40°C (104°F). Drought is a

big issue, especially for the non-irrigated vineyards;

consequently, current forecasts for the 2017 harvest are

in the region of 38-39 million hectolitres, down from

2016’s eventual output of 42.5 million hectolitres.

Much of the shortfall will come in northern Spain – Gali-

cia, Navarra, the Basque Country etc. – due to the severe

frosts in April and subsequent hailstorms. Down in La

Mancha, production is expected at approximately 21-22

million hectolitres, 10% down from 24.5 million hectoli-

tres in 2016. The non-irrigated vineyards will suffer dis-

proportionately: irrigated vineyards and recent plantings

will hold up much better.

The harvest is running approximately 2-3 weeks ahead

of an average year: grapes for sherry were starting to be

picked in Andalusia in the last week of July; international

white varietals such as Sauvignon Blanc and Chardon-

nay were starting to be harvested in La Mancha in the

first week of August, with the main body of La Mancha’s

harvest commencing in mid-August. The heat and lack of

rain has sped up the growth cycle of the grapes and the

juice yield will be slightly down. Quality looks excellent,

however, with perfect grapes sanitary-wise, no fungus

issues, and good alcohol degree.

The prospect of a smaller harvest in Spain this year has

combined with the global picture to nudge-up prices on

Spain’s remaining 2016 reds, week-on-week. Inventory

is not big and buyers must face prices higher than they’d

like.

HARVEST WATCH: Estimated to be 10-15%

down on the 2016 harvest; severe heat /

drought a concern

SpainTime on target

Inventory of generic red in Spain is sufficient but not

huge: the price increases in Spain are serving to make

France’s softening prices more competitive, especial-

ly when respective freight costs are taken into account.

Inventory of Spanish varietal reds such as Merlot and

Cabernet is also getting low, in part due to increased

demand from buyers who normally source from Chile,

put off by tight supply and high prices there. Chile’s bulk

wine exports to the US, Canada and China were notice-

ably down in the January-June 2017 period (see the Chile

page), as buyers bought from Spain instead. Inventory of

Spanish whites is okay, as suppliers held back on selling

until prices picked up.

Because of the very high demand and the upward price

trend, buyers who have contracted wines in Spain are

recommended to respect their loading deadlines or they

risk having their contract/s cancelled and the wine sold to

another customer at a higher price. They would then have

to buy lower quality, higher-priced wines on the open

market.

As the harvest has only just started, it’s too early for the big

negociants to set the prices for the coming 2017/18 buying

campaign. The expectation is very much that prices will

start higher than they did at the start of the current cam-

paign, and are more likely to be in-line with where they

were a couple of months ago.

Key TakeawaysInventory is low and pricing is creeping up on

Spain’s generic and varietal reds. Buyers with

contracted wines still in Spain are urged to respect

the loading deadlines or they risk their wines being

resold. Pricing for 2017/18 is likely to start where it

was at the middle of the current campaign.

Ciatti Contact Nicolas Pacouil

T. +33 4 67 913531



http://www.ladepeche.fr/article/2017/06/09/2590343-le-cav-vide-les-cuves-d-un-domaine.html


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


2016 Generic White 0.35 - 0.40 ↑ 2016 Moscatel 0.45 - 0.60 ↔

2016 White Blends (Higher Quality) 0.45 - 0.55 ↑ 2016 Generic Red 0.40 - 0.50 ↑

2016 Sauvignon Blanc 0.60 - 0.80 ↑ 2016 Generic Red (Higher Quality) 0.50 - 0.65 ↑

2016 Chardonnay 0.70 - 0.80 ↑ 2016 Cabernet Sauvignon 0.60 - 0.80 ↑

2016 Generic Rosé 0.40 - 0.45 ↑ 2016 Merlot 0.65 - 0.85 ↑

2016 Varietal Rosé 0.45 - 0.60 ↑ 2016 Syrah 0.60 - 0.75 ↑

ItalyTime on target

HARVEST WATCH: Struggling with intense

heat and prolonged drought

The anticyclone nicknamed “Lucifer” brought

temperatures to Italy of up to and beyond 40°C (104°C)

at the beginning of August, with high humidity in

the north and hot winds from Africa in the south.

This heatwave, combined with a prolonged drought

(11 regions are facing critical water shortages), led to

wildfires. Water scarcity is having a significant impact

on Italian agriculture: for example, it was widely

reported that olive yields in some areas could be 50%

down this year on the average.

Some 26 of Italy’s major towns and cities have been on

the country’s maximum heat level alert. Italy could be

facing a significant loss of wine grape harvest potential

for 2017 unless cooler temperatures and some rain

arrive in the next couple of weeks.

At the start of August Ciatti visited Piemonte – where

temperatures were at 37-38°C – to find growers

concerned, having suffered frosts in April, high

temperatures and a lack of water for irrigation since,

and no precipitation except the odd damaging

hailstorm. The heat has sped up the growth cycle of

the grapes and the harvest could be one of highly

concentrated, low juice-yielding fruit. Sicily has just

started to harvest and expectations there are that the

island’s wine grape output will be down 20%, though

quality should be very good.

Due to the uncertainty caused by the climate

conditions, there are as yet no fixed prices for 2017

wines. Pinot Grigio prices cannot be established until

the impact of April’s frosts on the Prosecco yield is

better known, for if the impact is significant, Pinot

Grigio volumes will be required for use as a blender.

There are as yet no fixed prices for 2017 wines; it’s a

case of waiting to see how the 2017 vintage fares after

its very troublesome growing season.

Key Takeaways

Ciatti ContactFlorian Ceschi

T. +33 4 67 913532




South AfricaTime on target

HARVEST WATCH: Continuing drought a

concern looking ahead to the 2018 harvest

Through July the winter in the Western Cape

continued to be dry, with high temperatures including

five successive days of 20-23°C (68-74°F) towards the

end of the month. A warm, dry July would be less of

a concern if May had delivered rain, as in previous

years, but that was not the case this time. Towards the

end of July producers in some bulk wine areas were

reporting less than 300mm of rain for the year to

date, down from normal 700mm levels. Water levels

in Cape Town’s catchment dams stood at 29.4% as of

7 August, only slightly up from 25.3% at the start of

July. There are promising winds, which usually bring

rain, and cooler spells of 12-15°C forecasted for the first

fortnight of August – but only around 10mm of rain

per week is predicted during this time (when July and

August are traditionally the Western Cape’s wettest

winter months).

According to data from South Africa Wine Industry

Information & Statistics (SAWIS), total bulk and

packaged wine exports for the July 2016 to June 2017

period reached 449.2 million litres, up 8.7% from

413.1 million litres in the prior year. As mentioned

last month, exports to Eastern Europe (i.e., Russia),

the Far East (i.e. China), Canada and the US increased

significantly in the period: to Eastern Europe they rose

by 25% to 35.7 million litres; to the Far East by 67% to 28

million litres; to Canada by 29% to 27.8 million litres;

and to the US by 133% to 25.6 million litres. Exports

to Australasia (+25% to 2.2 million litres) and of reds

to South America (+75% to 1.2 million litres) were also

noticeably up.

The strong export trends for varietals such as

Sauvignon Blanc, Cabernet Sauvignon, Shiraz and

Merlot, discussed last month concerning the June

2016 to May 2017 period, still persist. This is powered

by various levels of increased demand from China,

Russia, and Canada, due to the continued higher pricing

and lack of availability in other New World supplier

countries. Exports of bulk generic white to the US are

significant this year, mainly driven by speculative multi-

million litre Ciatti agreements. The months of May,

See next page for more on South Africa.

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



2016 Chardonnay 0.65 – 0.85 ↔ 2016 Cabernet Sauvignon 0.70 – 0.90 ↑

2016 IGT Pinot Grigio 0.95 – 1.20 ↑ 2016 Merlot 0.65 – 0.90 ↑

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

2016 Chianti 1.60 – 2.00* ↔

*Bottled Price


+7.5% growth in 2015, it must be considered that the

growth in consumers’ real inflation-adjusted income

halved.

On the local SA market, still wine sales continued their

steady growth of between 3-4% in 2016, as seen in

recent years, mainly powered by good growth in red

wine sales, compared to white wine, which lost market

share. A continuing trend over the last seven years is

for the mid-priced category to take share from the

standard-priced category, with the premium-priced

end also becoming increasingly popular, apparently

most notable among “female, urban-based consumers”.

Bag-in-box sales again grew by 10% in 2016 while the

volume of wine sold in glass bottles fell slightly: the

respective formats are moving towards parity in terms

of market share.

June and the beginning of July always show increased

export shipment activity on all reds from South Africa,

as the new vintage reds become ready for shipment.

July and August show an annual levelling off, as the

Northern Hemisphere enters its summer vacation

period and shipments start slowing down. It’s difficult

at this stage to discern whether monthly shipment

variation is due to varietal demand and/or availability,

or simply caused by the timing of shipments.

A new SAWIS report on liquor consumption patterns in

South Africa reveals that, in 2016, while beer continues

to dominate the country’s alcoholic drinks market –

representing 76% of total litres consumed, in line with

the international average – wine consumption grew

at +2.8%, the fastest rate of any alcoholic beverage

category. While this compares unfavourably with its

Key TakeawaysExports continue to be strong, with demand

particularly from China, Russia and North

America. Supply of varietal bulk 2016 Sauvignon

Blanc, Chardonnay, Cabernet and Merlot is very

tight. The low water reserves in the Western Cape

are a concern: it is hoped August and the start of

September bring replenishment.

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 ↑


Australia’s 2017 harvest is estimated by the

Winemakers’ Federation of Australia (WFA) to

have come in at 1.93 million tonnes, up 5% from 1.8

million tonnes in 2016 and the third consecutive

year of increased tonnages. Vintage 2017 has also

shown a 7% upping in the average purchase price to

AUD565/tonne (USD447/tonne). Irrigated areas saw

a 10% increase in pricing to an average of AUD345/

tonne; pricing on wines from cool climate regions

strengthened by 3% to an average of AUD1,232/tonne.

The estimated total value of the wine grape crush is

AUD1.22 billion, up 13% from AUD1.08 billion the

previous year.

The volume of red crushed increased by 12% overall,

with Shiraz up 15%, Merlot 10% and Cabernet 8%: the

average price of reds increased 6% to AUD691/tonne.

White volumes were down 2% overall, with increases in

Sauvignon Blanc output (+4%), Pinot Gris/Grigio (+2%)

and Muscat Gordo (+24%) failing to offset a 13% decline

in Chardonnay volumes: the average price of whites

was, like the reds, up 6%, to AUD420/tonne. Irrigated

areas saw an increase in volume by 3%, making up 1.32

million tonnes of the total 2017 volume. Output from

cool climate regions grew 9% to reach 610,000 tonnes.

According to Wine Australia’s latest Wine Export

Approval Report (‘WEAR’), Australia’s wine exports in

the past 12 months have grown by 7% in volume to 778

million litres and by 10% in value to AUD2.31 billion;

the average price per litre was AUD2.97 FOB, up 3%.

Australia’s bulk wine exports grew by 5% in value to

AUD413 million; bottled goods grew 10% to AUD1.88

billion.

Australia is the world’s fifth-largest exporter of wine

behind France, Italy, Spain and Chile. The leading

destination for its wines is now China; the value

of its shipments there grew 44% in the past year to

AUD607 million. The next four largest export markets

for Australian wine were the US (+3% to AUD464

million), the UK (-7% to AUD341 million), Canada (-5%

to AUD186 million) and Hong Kong (-8% to AUD114

million).

Red wine sales continue to dominate exports with

a 73% share of the total; whites are at 23%. Shiraz,

Cabernet Sauvignon and Chardonnay are Australia’s

most in-demand varietals. Shiraz is the most-shipped

variety, increasing in demand by 15% to AUD541

million. Cabernet Sauvignon, Shiraz/Cabernet blends

and Merlot have also seen growth in all sectors of

between 6-14%. White wines have experienced growth,

especially Sauvignon Blanc, which saw a 30% rise in

value to AUD39 million.

AustraliaTime on target

HARVEST WATCH: Estimated at 1.93

million tonnes, up 5% on 2016


Key TakeawaysThe harvest volumes of 2017 Shiraz are

estimated up 15% on the prior year, with Merlot

up 10% and Cabernet 8%; Chardonnay volumes

fell 13%, though Sauvignon Blanc (+4%) and

Pinot Gris/Grigio (+2%) volumes increased.

Shiraz, Cabernet Sauvignon and Chardonnay are

Australia’s most in-demand varietals.

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 ↑


2016 Merlot 1.15 – 1.35 ↔ 2016 Shiraz 1.25 – 1.40 ↑


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

2017 NZ Marlborough SB NZD3.70 – 4.50 ↔ 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

1101 Fifth Avenue #170

San Rafael, CA 94901

Phone (415) 458-5150

Ciatti.com

http://www.ciatti.com/


Key TakeawaysThe New Zealand Geographical Indications

(Wine and Spirits) Registration Act is now

in force and should lend extra integrity to

geographical indications on New Zealand wines.

This is particularly important as the country’s

wine exports continue to grow; Gallo’s recent

addition of Saint Clair Family Estate wines to its

US distribution portfolio is another example of

New Zealand wine’s excellent growth in the US in

particular.

Ciatti ContactsMatt Tydeman

T. +61 8 8361 9600


Simone George

T. +61 8 8361 9600


New ZealandTime on target

New Zealand exporters have been reassured by the

UK’s foreign secretary, Boris Johnson, that they will

not be disadvantaged as a result of the UK’s decision

to exit the EU, and that they will be near the front of

the queue for a free trade deal when the split finally

occurs. The UK is the second biggest export market

for New Zealand wine, after the US, and is worth just

under NZD400 million (USD290 million) a year.

E&J Gallo Winery (Gallo) has announced that it has

been awarded the exclusive rights to distribute New

Zealand’s Saint Clair Family Estate wines in the US,

effective immediately. Known for producing some

of the best Sauvignon Blanc from the Marlborough

region, Saint Clair Family Estate is the latest addition to

Gallo’s premium import portfolio.

HARVEST WATCH: At an estimated 396,000

tonnes, a smaller 2017 crop than expected

Following an extensive investigation by New Zealand’s

Ministry of Primary Industries, Canterbury winemaker

Southern Boundary Wines and three of its staff are

facing 156 charges in relation to the production and

labelling of Sauvignon Blanc and Pinot Noir. The

allegations include mislabelling of wine from vintages

2011, 2012 and 2013, and the falsification of records.

(It is important to note that this is a mislabelling and

record-keeping issue rather than a health and safety

issue – all wine sold was perfectly safe to consumers.)

The integrity of 18 New Zealand wine regions can

now be better protected thanks to the New Zealand

Geographical Indications (Wine and Spirits)

Registration Act, which came into force in late July.

This act formally recognises the collective intellectual

property of a wine region by allowing for registration of

the region’s name as a GI. This ensures that the name is

reserved only for wine from that region. Importantly,

registration will also give the region’s wine and grape

producers a greater ability to protect those GI names

from misuse.

Craft Beer Update

17Ciatti Global Market Report | March 2017

PROVIDER OF CRAFT HOPS AND PROVISIONS

In an exciting development, John Fearless is now able

to offer malt to craft brewers on the West Coast of the

US. This is thanks to a new and exclusive distribution

partnership with the world’s second-largest malt

supplier, Malteurope. Malt was a key strategic product

group for John Fearless to move into: now, in addition

to US and New Zealand hops, hop essence, used oak

barrels, and fruit purees and concentrate, John Fearless

can offer the biggest ingredient that goes into beer in

terms of volume and cost.

France-based Malteurop supplies big brewers globally

from 27 malthouses situated across 14 countries.

Collaboration with John Fearless offers the company a

distribution foothold among small and medium craft

brewers in California, Oregon, Washington State, Arizona,

Nevada, Idaho and Hawaii. Malteurop have introduced a

number of malt products that are designed for the craft

beer brewer; thus, in turn, John Fearless is able to offer

a range of 10 base malts and 7-8 specialty malts ready to

distribute to craft brewers from its Californian warehouses.

This base malt range comes from barley grown in the US,

such as Montana. In July, John Fearless headed up to Big

Sky Country to see how the barley was looking in the field.

This year’s barley harvest has been underway in Europe

since July, is getting underway in the US now, and will

commence in the Southern Hemisphere from November.

The base malt range John Fearless offers includes two malt

types that have undergone a steam process as an additional

step in the barley to malt conversion process – certainly an

offering that is new to the West Coast and exciting brewers

John Fearless speaks to. The speciality malts, meanwhile,

are produced exclusively from Dutch-grown barley by

The Swaen, Malteurop’s highly-respected malting plant in

Kloosterzande, Holland. As well as being produced from

barley from a specific provenance (and therefore imparting

some characteristics unique to that provenance), these

speciality malts undergo a particular process of kilning and

roasting that is unique to The Swaen.

Generally speaking, base malt will form the backbone of

the beer, making up anything from 90-95% of the malt

content in light-coloured lager to something closer to 60-

70% in a dark-coloured porter or stout; correspondingly,

specialty malt is generally used in smaller doses to impart

colour to the brew – whether that be a biscuit or red colour,

a dark or a chocolate colour – so is used most in darker

beers. Whichever beer they wish to produce, brewers

seeking high quality, innovative malt should get in contact

with John Fearless.Key TakeawayJohn Fearless can now provide base and

specialty malt in addition to aroma and

bittering hops, fruit purées, fruit and

wine grape juice concentrate, fresh wine

grapes (during harvest), and oak barrels.

Fearless ContactsCEO - Rob Bolch

T. + 1 800 288 5056


www.johnfearless.com

Sales - Geoff Eiter

T. + 1 800 288 5056

E. [email protected] barley growing In Montana

Photo: Rob Bolch

http://www.johnfearless.com




Export Pricing: USD per liter Currency Conversion Rates as of August 11, 2017

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: 0.788920 / NZD Rate: 0.728317


NV Dry White 0.47 - 0.59 ↔ NV Dry Red 0.67 - 0.75 ↑

2016 Chardonnay 0.63 - 0.75 ↔ 2016 Cabernet Sauvignon 0.99 - 1.10 ↑

2017 Sauvignon Blanc 0.71 - 0.91 ↔ 2016 Merlot 0.91 - 1.07 ↔

2017 NZ Marlborough SB 2.69 - 3.28 ↔ 2016 Shiraz 0.99 - 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 0.80 - 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 ↔

Chile (Pricing in bulk; FOB Chilean Port)


NV Generic White 0.68 - 0.75 ↑ NV Generic Red 0.73 - 0.80 ↑


2017 Sauvignon Blanc 0.98 - 1.05 ↑ 2017 Cabernet Sauvignon (Varietal Plus) 1.10 - 1.25 ↑

2017 Sauvignon Blanc (Varietal Plus) 1.10 - 1.25 ↑ 2017 Carmenere 1.10 - 1.25 ↑

2017 Syrah 0.95 - 1.05 ↑ 2017 Carmenere (Varietal Plus) 1.20 - 1.40 ↑

2017 Syrah (Varietal Plus) 1.10 - 1.25 ↑ 2017 Merlot 1.00 - 1.10 ↑

2017 Malbec 1.30 - 1.50 ↑ 2017 Merlot (Varietal Plus) 1.15 - 1.25 ↑

2017 Malbec (Varietal Plus) 1.60 - 2.00 ↑


France (Pricing in bulk; Ex-Winery) Rate: 1.175330


2016 Generic White 0.53 - 0.71 ↓ 2016 Generic Red 0.53 - 0.65 ↔

2016 Chardonnay IGP 1.06 - 1.18 ↔ 2016 Cabernet Sauvignon IGP 1.00 - 1.18 ↔

2016 Chardonnay VDF 1.00 - 1.12 ↔ 2016 Cabernet Sauvignon VDF 0.82 - 0.94 ↔

2016 Sauvignon Blanc IGP 1.00 - 1.18 ↔ 2016 Merlot IGP 0.94 - 1.18 ↔

2016 Sauvignon Blanc VDF 1.00 - 1.18 ↔ 2016 Merlot VDF 0.82 - 0.94 ↔

2016 Generic Rosé IGP 0.82 - 0.94 ↔ 2016 Red Syrah / Grenache IGP 0.94 - 1.18 ↔

2016 Generic Rosé VDF 0.82 - 0.94 ↔

2016 Varietal Rosé IGP 0.94 - 1.12 ↔

Italy (Pricing in bulk; Ex-Winery) Rate: 1.175330



2016 Chardonnay 0.76 - 1.00 ↔ 2016 Cabernet Sauvignon 0.82 - 1.06 ↑

2016 Pinot Grigio 1.12 - 1.29 ↑ 2016 Merlot 0.76 - 1.06 ↑

2016 Prosecco 2.94 - 3.53 ↔ 2016 Primitivo / Zinfandel 1.41 - 1.65 ↔

2016 Chianti 1.88 - 2.35 ↔

South Africa (Pricing in bulk; FOB Cape Town) Rate: 0.074466




2017 Sauvignon Blanc 0.60 - 0.78 ↑ 2017 Ruby Cabernet 0.48 - 0.52 ↑

2017 Chenin Blanc 0.45 - 0.50 ↑ 2017 Merlot 0.61 - 0.69 ↑

2017 Muscat 0.48 - 0.51 ↑ 2017 Pinotage 0.52 - 0.62 ↑

2017 Generic Rosé 0.39 - 0.42 ↑ 2017 Shiraz 0.56 - 0.66 ↑

2017 Cultivar Rosé 0.46 - 0.51 ↑ 2017 Cinsaut 0.48 - 0.51 ↑

Spain (Pricing in bulk; Ex-Winery) Rate: 1.175330



2016 White Blends (Higher Quality) 0.53 - 0.65 ↑ 2016 Generic Red (Higher Quality) 0.59 - 0.76 ↑

2016 Sauvignon Blanc 0.71 - 0.94 ↑ 2016 Cabernet Sauvignon 0.71 - 0.94 ↑

2016 Chardonnay 0.82 - 0.94 ↑ 2016 Merlot 0.76 - 1.00 ↑

2016 Generic Rosé 0.47 - 0.53 ↑ 2016 Syrah 0.71 - 0.88 ↑

2016 Varietal Rosé 0.53 - 0.71 ↑

2016 Moscatel 0.53 - 0.71 ↔


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

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[email protected]

http://www.johnfearless.com/

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Global Market Report - ciatti.com Market R… · Ciatti Global Market Report August 2017 5 The winter weather in Mendoza has been proceeding normally, with cool, sunny days (4-6°C/39-42°F)

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