WorldWine News

2012-01-26

Rabobank: Dramatic increase of bulk trade

The future of the world wine trade lies in bulk shipments, if you believe a recent study of Netherland's Rabobank. Analysts of the Dutch bank who are considered to be among the most experienced wine market specialists worldwide, assesss that the share of bulk wine in total shipments has grown dramatically during the past two decades.

The doubling of bulk shipments in the last decade alone, mainly originated from new world countries, has shifted a total of 1 b $ of value creation from the countries of origin to the consumer markets. Among the reasons for this development, according to the authors of the study, are the shrinking margins of the wine trade in the consumer markets on one hand, the massive overproduction in many producing countries on the other, which both have led to an enormous cost pressure.

That this kind of strategy cannot be a universal remedy for wine producing countries must be clear for anyone who has observed the Australian export experience in the last five to eight years. And the analysts of Rabobank too acknowledge that countries which can never be competitive on the bulk trade price side alone because of their unfavourable exchange rates or of their fundamental cost structures, need to focus on product innovation and brand building, instead of seeking their salvation in cost reductions alone.

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