2010 HARVEST: THE GRAPE MARKET IS DOWN. PRODUCERS ARE AT RISK EXCEPT FOR MEMBERS OF COOPERATIVES. WINE SALES ABROAD ARE POSITIVE BUT NOT THE REST OF THE CHAIN

The 2010 grape harvest, according to initial estimates, although a bit early, promises high quality and interesting quantities. No doubt this is good news that goes hand in hand with the trend of increased wine sales, especially abroad, in 2009. The signals are not as encouraging in the first stage of the chain, which is always the weakest, namely the production of grapes. WineNews conducted a survey to assess the situation, from North to South, to try to understand what is actually happening in the vineyards.
“In 2009 critical issues affected grape production, coupled with a structural crisis of unprecedented dimensions and the problems have not been dealt with constructively. Measures to resolve them have been intentions more than facts, except for a few small interventions (eg, many important Italian Consortiums have reduced crop yields). A serious plan to restore supply has not been proposed; therefore the 2010 harvest will depend on the results of 2009. The prices of raw materials are very low (0.20 / € 0.30 per kilogram) and don’t even cover the costs of managing the vineyard (1 hectare of vineyard can cost a company an average of 4,000 to 6,000 euros), at least for IGT / Table Wines. (The prices of DOC and DOCG grapes, which in 2009 generally ranged from 1.20 / 1.50 euros per kilogram, could instead be subject to a further decrease directly related to the importance of production areas).
Then we add to this scenario the fact that the offer is dangerously higher than the demand and it is much more difficult for private producers of grapes to sell their crops, therefore they risk becoming a thing of the past. Producers of grapes associated with wineries are saved from this spiral and the cooperatives, at least the most capable and efficient ones, are preparing to play their “social” role.
We are beginning to see vineyards cultivated in “set-aside” mode (only treatments necessary to maintain plant life) and in some marginal areas the vineyards are uncultivated and will not be harvested. Some have used CMO aid for grubbing; others have opted for “green harvest”, a EU measure to reduce yields that has not been successful but rather has had a kind of “boomerang” effect. In many Italian regions, in fact, the European funds for this measure were used to resolve other problems and not used by growers, so the funds must be returned to the European Community.
This “flop” explains, at least in part, (the other key element could be that each Italian region is willing to maintain their productive potential at all costs) the good standard quantity of the 2010 harvest. It has been hailed by many, foolishly, as a competitive advantage, while instead it seems to be the number one cause of a difficult harvest.
Grape trading is still in “calm waters”. The historic buyers, the large bottlers, will wait - the tendency is to buy later and get better prices. But, they might prefer buying the wine directly to reduce risks and costs. And, there could be some “dumping” negotiations.
The most common feeling is that the industry itself has stopped working. If it is true, and it is true, that the first half of 2010 was very good, especially on foreign markets, it is however hard to understand the almost total absence of positive signals in the rest of the industry. Maybe we should be a little cautious: we could have witnessed a process of “re-stocking” and markets may slow down later in the year. If the current margins do not allow people to become rich on wine (as we all know, if you think you’ll get rich on wine, you’re in the wrong business) they certainly can be considered good business.