World Bulk Wine Exhibition: Taking the Pulse of the Market

Last week we attended the annual World Bulk Wine Exhibition (WBWE) in Amsterdam, probably the most relevant event of the year for bulk wine buyers and sellers. Along with the exhibitors and tasting facilities, the event offered a range of conferences. In one of them, Alison Leavitt, Managing Director of the Wine and Spirits Shippers Association, confirmed that bulk trade is increasing. In our own opinion, recent trade disputes, such as the US tariffs on selected European wines, together with ongoing concerns about minimizing CO2 emissions will support further expansion of bulk wine trade in the near future.

All major wine producing countries were represented there, in addition to considerable representation from eastern European producers. Wineries from Slovakia, Romania, Georgia, Ukraine, Bulgaria, Estonia, half a dozen wine producers from Macedonia, and almost twenty names from Moldova were showcasing their products. Even if they aren’t the largest producers in the world, all these origins are quickly consolidating their presence in the international wine trade scene. As consumers show a growing appetite for variety and novelty, buyers expand their assortment and increasingly count on eastern European producers for part of their range of products.

The decline in European crop yields from the 2019 harvest (-15% for France and Italy; -24% for Spain) after the abundant 2018 harvest has triggered some bulk wine price increases in the last couple of months. It is worth remembering that bulk wine prices escalated in the autumn of 2017, due to that year’s tight harvest in the northern hemisphere, but contracted in 2H 2018. With that background, the double-digit increases over last year’s prices that are seen in current prices are not unprecedented. Yet, it is unclear how sustainable these price increases are. Sellers are already anticipating the price increases for white wine may not stick, due to an excess supply of US (white) wines in the market. Red wine price increases seem to be holding better, despite Argentina’s very competitive prices and product availability. As always, all depends on the specific product.

The show seemed a bit quieter than prior years, perhaps due to the first WBWE Asian exhibition in China earlier this year. However, exhibitors were not disappointed, as public attendance and the number of contacts present met their expectations. Buyers came, which is positive. However, they are not immune to the current uncertainty about how consumption will evolve in 2020 and the near-term reconfiguration of trade flows (i.e. how much and from where China and the US will buy). Buyers seemed to be doing more price benchmarking and ‘shopping around’ than they have done on other occasions. Still, some sellers closed deals, which is not common at this type of event.

Demand uncertainties and ample differences in availability and prices constrain visibility about how prices and volumes will evolve. As a result, suppliers and buyers are paying more attention than ever to the first indications about the southern hemisphere crops. Buyers are likely to be more cautious, postponing some of their purchasing when possible. This may leave some sellers with higher stocks than expected, at least temporarily. After a year of low volumes (2017) and a year of lower prices (2018), having to fund this extra working capital, even if temporarily, is an extra cost and an additional element of uncertainty that is most unwelcome.