The Guardian UK ran a story this morning about the expected smaller grape harvest across France this year. To me, it's not a big surprise as all the time I was in Bandol, the Rhone and the Roussillion this past July (2017) all I was hearing was how dry the regions were getting, how stressed the vines were getting and most of all, how much the vineyards needed rain.
What this means is manyfold, depending on what part of the wine world you play in. Add in a strengthening Euro against the dollar and the pound, combine that with a smaller harvest, and most likely we'll see higher prices regardless of quality for the 2017s whenever they hit the shores. A smaller harvest, good or bad drives up prices at the winery door. That in turn increases prices to the importers, who have to then pass those costs on to the distributors, retailers and ultimately, the consumers. A weaker dollar also adds to that cost.
Next is the distribution and allocation game. France has had some very nice harvests the past few years, especially in 2016, but overall, they have been decently sized, with exceptional years in grape quality looped in, across many regions. The smaller harvest means less bottles to go around. That in turn forces the wineries to sell each importer less, who in turn have to sell wine more thinly across their customer base, or leave some sitting on the sidelines. That's a challenge unless the increase price point causes some buyers to turn away themselves leaving just enough for those who want to buy the wine. In a less than stellar year that's a likely scenario but if the smaller harvest ends up being of wonderful quality, and the wines in turn end up as great, no one will be turning away.
That means the importers have to find more producers to make up the case shortages they will face from retailers and restaurant buyers, in order to keep their slots on the floor or on the lists, and have enough similar wines to go around. The allocation game then works its way down the buying chain, with everyone getting less and paying more all the way to the consumer.
So where is the opportunity?
Winemakers from countries not affected by the weather in France can breathe easier and sell more wine. If they don't get greedy, with the stronger Euro they can lower their prices a bit and sell more wine. For wine producing countries on the rise like Croatia, Portugal and the Czech Republic, this is a chance to build market share by bringing to the market high quality, lower priced wines that have yet to reach new markets in a big way. And, if the smaller harvest in France can end up a winemaker vintage then there's even more opportunity for these emerging producers. If it's a bad one, this all gets even more precipitous for the French and more opportunistic for the new producers coming to market globally.
Savvy importers will be looking beyond France now to make up possible losses and savvy buyers, somms and consumers will start to look at from where else they can be looking to find wines from 2017 that are right for them, at the right price points and with the right quality.