Rabobank believes that wine production will fall in all of the world's major regions aside from those of France and New Zealand. This is a byproduct of increased availability of bulk wine at reasonable prices globally.
European production looks set to experience a sharp drop, particularly in Spain and Italy, with the latter predicted to register a decline of a steep 15 per cent.
France is the European anomaly, as its production is predicted to bounce back.
“Improving wine sales and rising average prices are good news for the market, but what often receives less attention is the role that pricing has played in these trends. Wines priced below $9 have seen volume declines largely because prices have increased in response to rising grape costs,” explained Rabobank analyst Stephen Rannekleiv.
The report added:
“The US wine market is littered with once-profitable brands that were seduced by the short-term benefits of discounting and subsequently degraded their brand equity. In this increasingly challenging environment, wine companies with more sophisticated price management tools will see direct results to their bottom line.”
Production has suffered as a result of poor harvests in Chile.