Pricing, supply and demand: What can the wine industry expect in 2014?
I think 2014 will be a good year for UK wine consumers, as the market moves back into overall growth, and I expect both the quality and value of wine to improve. There are several reasons for this:
Pricing
An ease in inflation means that the duty increase on alcohol won't seem as steep in 2014 compared with last year. In addition, the pound is enjoying a period of relative strength against all currencies relevant to wine, and particularly the Australian and New Zealand dollars and the South African rand. This should see prices drop and may pave the way for a return for producers that have been priced out of the UK in recent years.
Supply
Contrary to recent news articles, there is plenty of wine in the world, despite a lean 2012 in Europe. The next 12 to 18 months will see this wine flow into the market, further softening prices. While there are some shortages in highly sought after regions, such as Burgundy and parts of Italy, on the whole, supply will still be plentiful due to a strong 2013 harvest in Spain and an incredible confluence of record harvests in Chile, California, Argentina, South Africa and New Zealand.
Demand
On the demand side, the UK economy seems to be holding up reasonably well, so consumers may have a little more to spend on discretionary items like wine. If we really are on our way to putting the recession behind us, I think the UK wine market can expect positive volume and value growth in 2014.
