Brazil's decade-old love affair with imported wine has hit a rough patch due to an economic slowdown curbing middle class spending power, analysts at Rabobank have said.
Annual wine imports have tripled in Brazil over the past ten years, but slower economic growth, inflation and a depreciating local currency have ‘dramatically’ curtailed rising demand.
Substandard storage facilities at ports and poor transport infrastructure are also dampening wine’s potential.
After tepid growth for wine imports in both volume and value terms in 2012, Rabobank analysts have warned that the market in 2013 remains lacklustre.
‘I wouldn’t be surprised if 2014 was not a spectacular year either,’ Rabobank analyst Stephen Rannekleiv told Decanter.com.
However, he believes that passion for foreign wine will be rekindled longer-term. ‘Our view is that this is a temporary pause,’ he said, citing Brazil’s large population and economic potential.
One corner of the market currently flourishing is direct-to-consumer wine sales, partly fed by a rise in middle class dinner parties. ‘You see affluent consumers entertaining more at home,’ said Rannekleiv.
Another trend is large retailers delisting slower-selling bottles, which will likely benefit bigger wine brands.
In 2012, Brazil imported close to 80m litres of wine with a value of US$300m, official figures show. Chile and Argentina are key suppliers, with Italy and Portugal also strong due to historical and cultural ties.
Higher imports have pushed wine up the political agenda in Brazil. Late last year, the government sidestepped calls by some domestic producers to put quotas on foreign shipments.
Written by Chris Mercer