World wine production just hit a 56-year low but no bonanza for NZ

World wine production is heading for a sharp decline this year. Picture/Supplied.

Global wine production plummeted to an almost six-decade low this year - and that isn't even the worst news.

Thanks to the ravages of climate change, experts say that these sorts of bad harvests, once considered historic, will likely grow more common in the future.

This week, the International Organization of Vine and Wine, a Paris-based scientific and technical group, announced that production would fall by roughly 3 billion bottles this year, a drop of more than eight percent from 2016 and the lowest level seen since 1961.

The losses were driven by a trio of extreme weather events in Italy, Spain and France, three of the world's largest wine-producing countries. The most-impacted regions include those that produce Bordeaux, Rioja and Chianti.

Falling wine production around the world may help support prices for New Zealand product, but local winegrowers should not expect to see a bonanza, NZ Winegrowers chief executive Philip Gregan said.

New Zealand accounts for about 1 per cent of the world's production but is a significant player in terms of exports.

Gregan said there might be some improvement in prices at the bottom end of the market, brought on by the shortage.

"That would not affect us directly because we are not competing in that part of the market, but it could have an indirect impact," he told the Herald.

New Zealand produced 396,000 tonnes of grapes in the latest season, down nine percent from the previous year's record. Gregan said the local industry was comfortable with that level of production.

Rabobank, in its latest issue of AgriBusisiness Monthly, said both France and Italy are flagging the worst harvest in decades, with dramatically reduced wine grape yields.
Spanish production is also likely to contract.

"This will generate a significant decline in total global wine production in 2017," the bank said.

"France, Italy and Spain together account for around for 60 per cent of global production and there is insufficient growth elsewhere in the world to come close to offsetting their falls," Rabobank said.

The bank said it expected global inventories to fall by as much as 12 per cent this year compared with last year.

"Global bulk wine prices will likely see some upward pressure moving into 2018 as markets look to fill the gap," it said.

"The tight supply situation will also likely be favourable from a brand building perspective, as there will be little incentive to undercut competitors on pricing," the bank said.

additional reporting: Washington Post