Wine prices expected to shoot up as global production drops

Global wine production has dropped to the lowest point in decades, with world-wide yields expected to drop a further 8.2% in 2017, following “climate hazards” in many of the main producing countries.

This was the main finding in the latest Global Economic Vitiviniculure report by the International Orginisation of Vine and Wine (OIV) released this week.

According to the OIV, 2017 world wine production estimated at 246.7 million hectolitres (mhl), a fall of 8.2% compared with 2016’s 268.8mhl – one of the lowest levels in several decades.

“This drop is consecutive to climate hazards, which affected the main producing countries, particularly in Europe,” the group said.

In the European Union (EU), extreme weather events – from frost to drought – significantly impacted 2017 wine production, which was historically low. The forecasts of the three main producing countries saw a decrease compared with 2016 production, OIV said.

Italy confirmed its place as the leading world producer for the third year running in 2017 (39.3 mhl, -23%/2016), followed by France (36.7 mhl, -19%/2016) and Spain (33.5 mhl, – 15%/2016).

South Africa is the eighth largest wine producer in the world, and is expected to see a marginal increase in production in 2017, compared to 2016 – but still down from the yields seen between 2013 and 2015.

Current projections put the country’s wine yield (excluding juices and musts) at 10.8 mhl, up from 10.5 mhl in 2016.

This puts South Africa below China (11.4 mhl) and Argentina (11.8 mhl), but above Chile (9.5 mhl) and Germany (8.1 mhl).

The table below outlines the biggest wine producers in the world.

# Country 2016 Yield (mhl) 2017 Forecast (mhl) Change
1 Italy 50.9 39.3 -23%
2 France 45.2 36.7 -19%
3 Spain 39.3 33.5 -15%
4 United States 23.6 23.3 -1%
5 Australia 13.1 13.9 +6%
6 Argentina 9.4 11.8 +25%
7 China 11.4 11.4 0%
8 South Africa 10.5 10.8 +2%
9 Chile 10.1 9.5 -6%
10 Germany 9.o 8.1 -10%
11 Portugal 6.0 6.6 +10%
12 Russia 5.6 5.6 0%
13 Romania 3.3 5.3 +64%
14 Brazil 1.3 3.4 +169%
15 Hungary 2.8 2.9 +3%
16 New Zealand 3.1 2.9 -9%
17 Greece 2.6 2.5 -5%
18 Serbia 2.3 2.3 0%
19 Austria 2.0 2.4 +23%
20 Moldova 1.5 1.8 +20%

Cape Town water crisis

One of the biggest risks to South Africa’s wine production is the ongoing drought in the Western Cape, which is the country’s biggest wine producer.

Current projections warn that the province is at serious risk of running out of water as early as February 2018, with harsh water restrictions in the major metro areas such as Cape Town already in effect.

According to wine experts, yields could be down between 25% and 50% in South Africa, which will push up costs – however, independent viticulturists have also said that it is too early to tell, and that vineyards in Paarl and Stellenbosch have proven to be quite resilient.

Nevertheless, former FNB CEO and wine connoisseur and producer Michael Jordaan has warned that wine prices were likely to rise as a result of the global drop in production.

Commenting on the OIV report, he said: “Buy your wine now – prices are about to go much higher.”


Read: These are the South African wines you should be investing in

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Wine prices expected to shoot up as global production drops