World wine output set to fall to lowest since 1961

PARIS (Reuters) – Global wine production this year is set to fall to its lowest level since 1961, after harsh weather in Western Europe damaged vineyards in the world’s largest production area, international wine body OIV said on Tuesday.

Global output is expected to fall to 246.7 million hectoliters in 2017, down 8% from last year, the Paris-based International Organization of Vine and Wine (OIV) said in its first estimates for the year.

A hectoliter represents 100 liters, or the equivalent of just over 133 standard 75-cl. wine bottles.

The global decline reflects a plunge in output in the European Union, where the world’s top three producers – Italy, France and Spain – are each projected to see a sharp drop.

The European Commission, the EU’s executive, estimates the bloc’s wine-grape harvest will shrink to a 36-year low in 2017 as adverse weather from spring frosts and summer heat waves takes its toll.

In France, the weather has affected most of the main growing regions, including Bordeaux and Champagne, and the government has projected production will sink to its lowest in decades.

The OIV’s projections, which exclude juice and must (new wine), put Italian wine production down 23% to 39.3 million hectoliters, French output down 19% to 36.7 million and Spanish production down 15% to 33.5 million.

Reduced global production may erode a surplus over demand seen in recent years, when consumption was curbed by the effects of a world financial crisis in 2008.

The OIV said it was initially assuming a consumption range of 240.5 to 245.8 million hectoliters based on medium- and longer-term trends. But it did not yet have firm demand data for 2017.

However, the impact of reduced production on actual market supply and prices depends on levels of stocks from previous years and the quality of wine in landmark regions.

In France, the world’s leading exporter by value, producers have pointed to the prospect of good-quality wine.

Outside Europe, the United States, the world’s fourth-largest producer and the biggest consumer, was expected to see output remain little changed at 23.3 million hectoliters, down 1%, the OIV said.

Production in Australia was expected to rise 6% to 13.9 million hectoliters, while Argentina was projected to post a 25% jump to 11.8 million hectoliters after a weather-hit 2016, the OIV said.

The preliminary world estimates lacked data from some countries, notably China, for which the OIV provisionally assumed stable production compared with last year’s 11.4 million hectoliters.