The impact of low 2017 production according to Rabobank.

The 2017 harvest will be remembered as one of the smallest of all time. Especially in Europe, frost, hail and drought caused a major drop in yields. In its latest report, Rabobank, announces an “inevitable” increase in the prices of bulk wines.

Similarly, inventories “which were already tight, will tighten dramatically,” said Rabobank.

The three countries representing nearly 50 per cent of production have a “disproportionately large impact on global supply”.

To limit this impact, Rabobank suggests that grapes that would normally be discarded could become viable for lower-tier wines, and a larger-than-normal proportion of grapes could be used for the production of brandy.

“The degree to which these strategies can be employed will limit the impact of the overall decline in wine production, but only marginally,” said Rabobank.

“Brand owners will see an increase in the cost of their wine, but will be reluctant to pass on the full impact, as drastic price increases will lead to loss of markets that are extremely difficult to recover,” said Rabobank analysts. “As such, we expect that many European wineries will face a combination of lower volumes and tighter margins. Some wineries may not survive this challenging combination,” concluded Rabobank.