World wine production set to slip but demand picking up, OIV says

World wine production could fall this year to one of its lowest levels on record due to harsh weather in Europe, while demand is expected to recover to near levels seen before the coronavirus pandemic, an international wine body said on Thursday.

In initial projections for 2021, the International Organisation of Vine and Wine (OIV) pegged world production at between 247.1 million and 253.5 million hectolitres (mhl), with a mid-range estimate at 250.3 mhl.

This would mark a third consecutive year of below-average output and approach the 2017 level of 248 mhl, the smallest in six decades, the OIV said.

One hectolitre is the equivalent of 133 standard bottles.

A drop in production in Italy, Spain and France, the world's largest wine producers, would outweigh what is forecast to be the highest-ever volume in the southern hemisphere, the OIV said.

Vineyards in western Europe were hit by spring frosts, while French producers also endured heavy rain, hail and mildew disease.

Global consumption trends were encouraging, with first-half data suggesting a rebound despite ongoing disruption to tourism and hospitality linked to the coronavirus pandemic, the OIV said.

"We still expect the global consumption to increase compared to 2020," Pau Roca, the OIV's director general, told reporters, noting first-half trade data showed volumes above pre-pandemic levels.

A shift to online sales had also helped the wine industry during the pandemic, he added.

However, an expected decline in Chinese demand could limit an annual rise in consumption to around 2% this year compared with a 3% drop in 2020, the OIV said.

In the European Union, production was forecast to fall to 145 mhl, down 13% from last year, it said.

In the southern hemisphere, favourable weather should allow high output in major producing countries, except for New Zealand, the OIV said.

Total output for the southern hemisphere was projected at a record 59 mhl, up 19% from last year.

US production was forecast to rise 6% from last year to 24.1 mhl, although summer drought in some regions was expected to keep the volume below the five-year average.

The body did not give a 2021 production forecast for China due to a lack of harvest data, but said it expected a structural decline since 2016 to continue.