Wine exports slow down in first four months

07/07/2022

Logistical difficulties and price increases are slowing down the sector's sales abroad, which grew only 0.28% in the 1st four months.

Portuguese wine exports are slowing down significantly. After growing at double digits for much of last year and the start of 2022, they are now, at the end of the first four months, up just 0.28% to 285.8 million euros. This, despite volume sales falling 3.63% to 102 million liters, down four million from the same period in 2021. The average price is up 4.06% to €2.8 per liter.

For the president of the Associação de Vinhos e Espirituosas de Portugal (ACIBEV), "it is not Portugal's competitiveness that is in question, but the cooling of international trade" that is dictating this slowdown. Besides, says Jorge Monteiro, "the double-digit growth is not sustainable when the international market grows at 1 or 2% and it should remain so in the coming years.

In terms of markets, the four largest destinations - France, the United States, the United Kingdom, and Brazil - are down, although in the British case, less was sold, but slightly more expensive, i.e. with a total increase of 0.35% to almost 20 million euros.

It is the entire European bloc that is falling: 133 million, 2.5% less than in the same period of 2021. Vinho Verde wine falls 8%, to 11.7 million, and sparkling wines lose 28.7% to 1.338 million. Dão, Bairrada and Douro wines grow 1.4% and Port wine is selling 1.1% more to EU markets than last year, for a total of more than 60 million euros. In the opposite direction, the cheaper wines are reinforcing positions, with a 41.1% growth in bag-in-box sales to the European Union, to 10.3 million euros, and the bulk rising 5.4%, to 2.5 million euros.

For Jorge Monteiro, part of the explanation for this European cooling is related to the effect of the war in Ukraine, pointing out that countries closer to the conflict, such as Germany, Norway or Sweden, are the ones that show the greatest retraction. But there are others, he says, which are surprisingly positive, such as Canada, which grows 8.4%, and Poland, with an increase of 3.5%. Russia falls 57.5% to 1.3 million euros.

In fact, it was the extra-community markets, which grow 2.8% to 153 million euros, that prevented the first four-month exports from falling. And there the highlight goes, besides Canada, to the 38.8% growth of Angola (12.5 million euros), the 41.9% of Japan (3.2 million euros) or the 75.5% of Mexico (553 thousand euros).

And although he admits that four months do not allow, yet, to foresee what will be the year 2022, the president of ACIBEV considers that the slowdown in wine exports is due to the international situation, with inflation and the increased cost of production factors, combined with problems in the logistics chain.

"We are not falling, we are just growing less than expected. It is true that there are still problems with containers, which cause delays of two or three months in shipments, and there is a general lack of pallets in the market, which may be contributing to a cooling of exports," he argues.

Jorge Monteiro doesn't consider, however, that the lack of bottles, referenced in the last months, is a generalized problem. "Who has a good purchase planning and who has a correct and fulfilling payment policy doesn't have, at this moment, supply difficulties. I admit that small companies that have a lesser loyalty to their suppliers, those who make casuistic purchases or those who eventually have payment difficulties, will be having more difficulties", he emphasizes.

About the growth of the average price of exported wines, Jorge Monteiro points the finger at inflation. "This 4% growth is not a very usual rate and reflects increases in the cost of production factors. But even so, it doesn't reflect it totally, there is a sacrifice in the margins of the companies", says the president of ACIBEV, who estimates that the increase in production costs has been from 10 to 20%. "Let's see how the price of grapes evolves in the next harvest," he warns.

Source: Dinheiro Vivo