Packaging is the number one source of GHG emissions associated with the wine industry, and cutting the weight of their glass bottles is the best way for the industry to reduce their impact.
However, according to Rabobank, fewer than 50% of US wineries have started the lightweighting process. Here’s why.
Earlier this year, Rabobank worked with WineBusiness Monthly to develop the magazine’s 2023 packaging survey. More than 200 wine industry professionals, most of them with intimate knowledge of their organization’s packaging strategy, completed the survey. It touched on a wide range of topics, including costs, lead times, sustainability, and alternative packaging materials and formats.
To better understand the survey results, we shared the key findings with more than a dozen industry leaders, packaging suppliers, retailers, recycling operators and lobbyists across the US and Europe. In the coming months, we will leverage the results of this survey and subsequent industry discussions to produce a series of reports on wine packaging.
Our first report in the series focuses on what wineries can do right now to unilaterally and dramatically reduce their greenhouse gas emissions without compromising their ability to grow a portfolio of premium wine brands: lightweighting.
Grain
- The S&P GSCI Agriculture Index declined 1.4% WOW amid South American rainfall and uncertainty surrounding Chinese grain and oilseed demand. These factors (among others) have led to funds adopting the largest net short position across agri commodities since June 2020. The market will be closely watching the USDA’s WASDE release on Friday.
- ICE #11 Sugar is up 4.7% this week, with the BRL up by 0.8% WOW and Brent by 2.3% WOW. The downside trend, originally triggered by changes in the ethanol policy in India, then technical trading, fund selling, and excellent Brazilian harvest data (first half of December crush came in 244% higher than the year before) seems to have found a pause, likely based on weather.
- CBOT Soy continued its freefall to multiyear lows of 12.40, as moisture across South America boosts late-planted soy and promises a record harvest. CBOT Soybean Oil bucked the bearish trend, as six-month low levels received strong buying interest and short-sellers appear stretched.
- CBOT Corn fell 1.7% last week to a contract low of USD 4.55/bu, as heavy moisture across Brazil and Argentina allayed concerns about the upcoming soybean harvest and safrinha plantings.
COFFEE
Despite the ongoing logistical issues at the port of Santos (increase in product shipment delays), Brazilian coffee exports showed a positive outcome. In November, 4.3m bags (60kg) were shipped, a
15% YOY increase. In 2023, exports have been recovering in H2 2023 and are currently only 3% lower compared to 2022 (as of July 2023, cumulative exports were 15% lower), reaching 35m bags in 2023 (Jan to Nov).
It's worth highlighting once again the excellent performance of conilon shipments. In November, 856,000 bags were exported, a 678% YOY increase. In the year-to-date total, 4.1m bags were shipped, a 186% increase compared to the same period in 2022.
The barter ratio in December showed an improvement, requiring 2.1 bags (60 kg) of coffee to purchase 1 metric ton of fertilizer (blend 20-05-20), down 15% MOM and 32% lower than in December 2022 (when 3.1 bags of coffee were needed to buy 1 metric ton of fertilizer).
In addition to the rise in domestic arabica coffee prices, which increased by an average of 7% MOM (as of December 14, 2023), fertilizer prices (urea and potash) experienced a slight decrease in the last 30 days. According to our local team, fertilizer prices should remain stable in the coming weeks.
The domestic prices of arabica coffee continue their upward trend. In November, they rose by 7% MOM. In December, they continued to appreciate, averaging BRL 954 per bag, a 7% MOM increase. In addition to concerns about the weather in Brazil (experiencing low rainfall and an intense heatwave in November), the low certified stocks in New York (despite the recent recovery, still close to the lowest levels in the last 24 years), and the logistical problems at the Santos port may be associated with the recent appreciation.
November's below-average rainfall in key coffee-producing regions, coupled with high temperatures, triggered concerns about the next Brazilian harvest.
Despite the adverse weather conditions, the situation remains promising in the arabica coffee-producing regions, especially in the south and east of Minas Gerais. The case is a bit more concerning in the robusta coffee-producing regions, especially in Rondônia and Bahia. However, the state of Espirito Santo (the leading region for conilon coffee in Brazil) still holds the potential for a good harvest.
Rains have returned in December, but it is essential to monitor their continuity in the coming weeks.
UN Food Price Index falls more than 10% in 2023
Poultry and Meat
Turkey meat no longer always takes center stage on the traditional UK Christmas dinner table. Consumption of turkey meat is at 50% of the level it was 20 years ago. Over the last five years, the drop has further accelerated, with UK consumption dropping by 30%. In 2023, we estimate that UK turkey consumption will drop by another 10%. As a consequence of low confidence among UK farmers, 20% fewer turkeys have been placed at farms in 2023, and this decline has not been compensated by additional imports. Total turkey consumption in the UK is forecast at 110,000 metric tons in 2023, while it was 230,000 metric tons in 2003. This means consumption has dropped from more than 4kg per person (CWE) in 2003 to less than 2kg in 2022, and in 2023 turkey consumption might fall to only 1.5kg per person.
Animal protein production will keep growing in 2024, but at a slower pace, as margins remain tight. The fact that animal protein companies continue to grow production and deliver on customer expectations amid such challenging market conditions is a testament to their resilience and flexibility. Despite a cost-of-living crisis putting pressure on consumer finances, there continues to be demand for animal protein, and companies have been able to overcome challenges, from high costs to regulatory uncertainty and disease, to capitalize on it.
Global summary
Some market conditions should improve in 2024 as input costs ease and as some consumers become more used to the uncertainties around them. However, other changes in market conditions are structural in nature rather than cyclical and so will add ongoing costs and changes – creating some opportunities and some risks.
“For companies to sustain the success of the past few years, it’s essential that they adapt to the structural changes in the market. Instead of simply riding out the storm, animal protein businesses need to take stock of their strengths and prepare to transition their supply chains to operating in an environment with high costs and tight margins. Companies should double down on improving their productivity, review their existing portfolios, strengthen supply chain partnerships, increase investment in new product development, and adjust their pricing strategies to navigate the challenges of the coming year,” says Justin Sherrard, Global Strategist – Animal Protein.
Although it is slowing, production growth will still be relatively robust in Brazil, will marginally increase in China and Oceania, and will actually accelerate in Southeast Asia, while contracting in other markets. While beef, pork, and wild catch seafood are down, poultry and aquaculture show the strongest growth across the species.
These are our key points from the outlook for animal protein in 2024:
North America
Beef production in the US continues to contract with the cycle, overshadowing changes in other species. Poultry will benefit from consumer preferences, while pork still needs to rebalance. The outlook for Mexico is slightly more positive.
Europe
There are ongoing production pressures for all species, given disease risks, market- and regulatory-driven production system changes, and lower exports. Poultry consumption is set to grow, while pork and beef will decline.
China
Slow consumption will continue to pressure the animal protein system in 2024. Poultry is best placed, with steady growth in production and consumption. Pork and beef markets will remain under most pressure, as the market is well supplied, at least in 1H 2024.
Brazil
Production is set to grow for all species, supported by export opportunities. Pork will grow fastest, followed by poultry. Disease remains a downside risk, especially for poultry.
Southeast Asia
The recovering economic situation and easing of disease pressures should support production growth in 2024. Pork leads growth, although is subject to ongoing ASF pressure, followed by poultry.
Beef will only see minor change from 2023.
Australia & New Zealand
The rebuilding of Australia’s beef herd means production and exports will grow in 2024. New Zealand’s production is expected to slow slightly for beef and expand slightly for sheepmeat.
Salmon
2024 will be an inflection point for supply. Prices will soften mildly but will remain at elevated levels, continuing the period of high margins.
Shrimp
2024 remains full of uncertainty. Shrimp faces a difficult oversupply situation, which can only be resolved by lower supply or higher demand.
Alternative protein
Consolidation of products and companies is underway and will continue in 2024.
Aquafeed
Potential minibans may affect the pace of fishing. El Niño is likely to persist through 1H 2024, and price normalization of fish meal depends on catch rates.
Feed and forage
Feed price relief will continue into 2024. Falling costs are helping to restore margins, but outside factors continue to add uncertainty.
one
Sub-Saharan Africa has long been considered an area of opportunity for trading grains due to the widening gap between the booming population and demand and the comparatively low local production and yields. These fundamentals remain the same, but interesting changes have emerged, with new dynamics, challenges, and opportunities. In this report, we focus on eastern sub-Saharan Africa (ESSA) and look at the long-term horizon toward 2035.
