World faces global wine shortage

[jdaw1]

The world is facing a wine shortage, with global consumer demand already significantly outstripping supply, a report has warned.

The research by America's Morgan Stanley financial services giant says demand for wine "exceeded supply by 300m cases in 2012".

It describes this as "the deepest shortfall in over 40 years of records".

Last year, production also dropped to its lowest levels in more than four decades.

Global production has been steadily declining since its peak in 2004, when supply outweighed demand by about 600m cases.

'Main drivers'

The report by Morgan Stanley's analysts Tom Kierath and Crystal Wang says global wine consumption has been rising since 1996 (except a drop in 2008-09), and presently stands at about 3bn cases per year.

At the same time, there are currently more than one million wine producers worldwide, making some 2.8bn cases each year.

The authors predict that - in the short term - "inventories will likely be reduced as current consumption continues to be predominantly supplied by previous vintages"

‟inventories will likely be reduced as current consumption continues to be predominantly supplied by previous vintages”: that’s us.

[djewesbury]

As I was reading this article, a link to a post about this article appeared on my screen. How networked we are.

The original article is worth reading for the impressive growth on the bottles in the cellar (in the photograph, that is).

[djewesbury]

Is there a reason why the bottles in that picture are all standing up? Sorry, I can't link to it here but will attempt to amend that later.

[jdaw1]

[djewesbury]

Thank you. The mould / dust on the lower shelf looks a little like a drunken, upstanding mouse wondering what to drink next.

[LGTrotter]

Thank you. The mould / dust on the lower shelf looks a little like a drunken, upstanding mouse wondering what to drink next.

You've been at the special stuff again haven't you?

And how come they poured away however many bottles of treasury wine due to over supply in the American market?

[djewesbury]

They didn't pour them away.. glug...

[Alex Bridgeman]

Thank you. The mould / dust on the lower shelf looks a little like a drunken, upstanding mouse wondering what to drink next.

You've been at the special stuff again haven't you?

And how come they poured away however many bottles of treasury wine due to over supply in the American market?

They were in the wrong place and it was cheaper to get rid of them than to get them to where they were needed - these were not expensive wines that were poured away!

[LGTrotter]

Thank you. The mould / dust on the lower shelf looks a little like a drunken, upstanding mouse wondering what to drink next.

You've been at the special stuff again haven't you?

And how come they poured away however many bottles of treasury wine due to over supply in the American market?

They were in the wrong place and it was cheaper to get rid of them than to get them to where they were needed - these were not expensive wines that were poured away!

True, however I would guess that we are not thinking about a shortfall of 300m cases of Lafite or even wine of the kind of quality which is bought in supermarkets up and down the land. There may be some knock on effect higher up the scale but hopefully not too much impact on the port maket.

[Alex Bridgeman]

True, however I would guess that we are not thinking about a shortfall of 300m cases of Lafite or even wine of the kind of quality which is bought in supermarkets up and down the land.

True. I can't argue with this.

[LGTrotter]

Oh go on; you could for instance claim that I was cheating. Or that this must be a slow news day story based on zombie facts.

[RonnieRoots]

The world is facing a wine shortage, with global consumer demand already significantly outstripping supply, a report has warned.

The research by America's Morgan Stanley financial services giant says demand for wine "exceeded supply by 300m cases in 2012".

As it happens, I am currently writing a paper about this subject. It would be interesting to see how Morgan Stanley comes to this conclusion, as it is not backed by any figures I've seen. Neither OIV nor IWSR/Vinexpo say that demand outstrips supply, and Rabobank reports that prices of commodity bulk wine are relaxing again after they shot up end 2012 in fear of a shortage.

It is true though that production was very low in 2012 (252 million hl) and that consumption continues to grow (243 million hl in 2012), and production and consumption have been coming closer for years, but they are not yet at the point where demand outstrips supply.

BTW, most of this concerns the lower and mid-priced range of the market, the premium wine market has its own dynamics.

[jdaw1]

I am working on obtaining a copy of the original report.

But the authors are definitely correct. For the last forty years production of Graham 1970 has been zero, and consumption has been higher, especially since 1987 (when I first tasted G70). This is not sustainable.

[g-man]

http://wineindustryinsight.com/?p=50489

[djewesbury]

http://wineindustryinsight.com/?p=50489

Very interesting!

[g-man]

I am working on obtaining a copy of the original report.

But the authors are definitely correct. For the last forty years production of Graham 1970 has been zero, and consumption has been higher, especially since 1987 (when I first tasted G70). This is not sustainable.

+1 for teh first laugh of the day

[LGTrotter]

As I suspected (and identified in other posts) zombie facts at work;

http://www.decanter.com/news/wine-news/ ... y-analysts

[RonnieRoots]

As I suspected (and identified in other posts) zombie facts at work;

http://www.decanter.com/news/wine-news/ ... y-analysts

This looks more like the situation I found...

[LGTrotter]

And now HRH Jancis (my own personal queen) has told me not to panic I can only obey and relax;

http://www.jancisrobinson.com/articles/a201311011.html

[jdaw1]

Recently the world's media reported the alarming news that demand for wine has outstripped supply. Latest figures indicated a shortfall of 300 million cases in 2012, it was claimed... the world was facing the serious prospect of a wine shortage.

Scary graphs were published showing production dropping while consumption increased. The only possibly conclusion - there is not enough wine in the world.

But is it true?

All these news reports were based on a single piece of research carried out by the Australian research division of the investment bank, Morgan Stanley.

This made Reuters finance blogger, Felix Salmon, suspicious - especially when he realised the report was promoting an Australian wine company as a top stock pick to buy.



"What you do in investment banking - you come up with a thesis and argue it as strongly as you can," he says. "The whole idea is that you make a headline, and if you can say a big attention-grabbing headline like 'There's a global wine shortage' then that's going to get you lots of press."

The report was based on industry data from the Organisation Internationale de la Vigne et du Vin (OIV), based in France. It represents wine producers in 45 countries and publishes wine production figures three times a year.

But Felix Salmon noticed that the Morgan Stanley graph only used the OIV's data up to 2012, despite the fact data is now available for 2013 production - data which showed that wine supplies are bouncing back.

The data had been published by the OIV two days before the Morgan Stanley research hit the headlines.

"After a few years of scarce production we had quite a decent crop," says the OIV's director-general Federico Castellucci.

OIV figures show that in 2013, for the first time in many years, production is going to be much higher than consumption: 281 million hectolitres (Mhl) of wine made, compared with estimated consumption of only 245Mhl.

This would leave an excess of 36Mhl (12.8% of production).

So, Castellucci says there certainly is no wine shortage.

!

[LGTrotter]

There was a lovely piece on 'More or less' on this.

http://www.bbc.co.uk/iplayer/episode/p0 ... _shortage/

[uncle tom]

The wine trade has a long history of hyping up the idea of a 'shortage' as it works wonders for sales, so I read this with a good measure of skepticism.

For a start, with a million odd producers and no centralised record of sales and shipments, what data is out there to enable accurate conclusions to be derived?

If one had a massive amount of research team manpower available, it might be possible to laboriously derive some valid data, but my cynical side makes me suspect that some smart Alec put together a model based on a tiny amount of regularly published data, from which are extrapolated monstrous numbers.

Sales moreover, are only half the story, it's what get consumed that matters. Despite some 'green shoots' in the developed world's economies, it is still a fact that cash on deposit earns less interest than the rate of inflation.

Against that depressing backdrop, investment in wine provides a little light relief. However, what will happen when some semblance of normality returns, and good returns are to be had from non-vinous investment?

There's an awful lot of bottles in professional storage right now..