Why it’s a good time to buy wine

The wine industries of the world are in disarray. Years of decreasing consumption in what used to be high-volume markets were partly masked by an increase in the consumption of lower volume but more expensive products.

That trend reversed in the post-Covid-19 years, though there were clear signs even before then that millennials/Gen Z were not replacing baby boomers as ready-made answers to the vignerons’ prayers.

The effect of this pattern can easily be seen in the statistics of the greater Bordeaux region. Vineyard areas decreased 30% in 30 years, while the number of growers more than halved in the same period.

At the same time, prices for the best estate wines increased beyond the wildest dreams of producer avarice: in hard currency terms the launch price for Lafite Rothschild went up 2,200% in the 40 years from 1982 to 2022.

The high-end producers thought this roller-coaster ride would never end. But it has: for the past five years the pipeline of generally good and quite abundant vintages has been starting to block up. This year the primeur sales (future purchases paid for now for delivery next year) of the quite ordinary 2024 ground to a halt, despite discounts of about 30% compared with the previous vintage.

In many ways Bordeaux is a microcosm of the international problem, though its primeur selling methodology does set it apart. Burgundy, with many more growers and much smaller volumes from craft producers’ cellars, looks more stable. But on a recent trip I found a real sense of anxiety, fuelled by the certainty that demand is tapering off, has afflicted many of the quite high-profile wineries.

Germany has been battling for some time (riesling is properly out of fashion). Alsace has seen a huge erosion of volume, as well as tumbling prices, for several years.

Italy is looking only a little better (below the high-profile appellations, much of the wine is mopped up by tourism and local consumption).

Portugal is putting on a brave face as it converts Port varieties into “new style” unfortifieds (which are not selling that well and are not really covering the costs of the labour-intensive viticulture).

Consumption is markedly on the decline in the US, while Trump’s less than generous comments about Canada have led to a huge loss of shelf space in what was California’s most important export market.

In many ways it is a bellwether of all that is happening in the world of wine. No-one feels like celebrating when the world is in a mess.

South Africa's producers are not inured to these worldwide trends. First, the domestic market is shrinking — hardly a surprise given the stagnant economy — while exports are not taking up the surplus.

On the contrary, Trump’s tariffs will have a significant impact on our wineries. In 2023 the US was our fourth largest international market for bottled wine — this at a time when we had the full Agoa benefit. It’s a fair assumption that most, if not all, this wine will need to find a new home.

Given the decline in consumption in most of the established markets, this won’t be easy. Champagne — probably the strongest and most recognised of categories — has shed 20% of its volumes in the past two years.

In many ways it is a bellwether of all that is happening in the world of wine. No-one feels like celebrating when the world is in a mess, to paraphrase a remark made by a leading producer.

Then there’s the problem of fewer people drinking wine, and drinking less of it, whether because they don’t have the money or don’t regard it as an essential purchase or because the legalisation of marijuana has hijacked that portion of their household budget. 

There’s no easy solution to this growing stock overhang: grubbing up vineyards is a last resort because of the high cost of replacing them and because often there’s no obvious replacement crop.

So it may be that the producers who survive are those who reduce prices first and with the deepest cuts. For consumers with a little disposable income, there might never be a better time to go shopping.