Global wine shortage forecast

20th March, 2012 by Andrew Catchpole

A Californian wine shortage is creating increasing concern over a tightening of global wine supply.

Reports from the Central Coast Insights Conference that the California wine industry is entering an extended period of structural supply shortage will add to the concerns being voiced globally that the era of global glut may soon be ending.

Speaking at the conference in San Louis Obispo, Matt Turrentine, of Turrentine Wine Brokerage, pointed to a disparity of 47 million cases between wines shipped from California and the 210m case yield of the 2011 vintage, arguing that vineyard plantings have not been keeping pace with growing demand, resulting in a doubling of bulk prices in the past 12 months.

Against a backdrop of global recession, which has seen the depletion of inventory by producers rather than an upping of production, this effect is being compounded in many major production regions by a combination of smaller vintages and, in certain key markets, continued growth in consumption.

The concept of a global wine glut has become so ingrained in the collective consciousness that the suggestion of a shortage just around the corner is often met with some incredulity.

But with strong growth in consumption in markets such as the US and especially China, where Vinexpo estimates suggest a 54% increase in consumption in the next four years to just over 1bn bottles annually, there have been many examples of bulk prices rising around the world as gluts are depleted.

Examples include the 2011 harvest in the Languedoc, where grape prices rose to a 10-year high. “The story has already turned from global oversupply to approaching global shortage,” says Languedoc-based Ivo Hassler, wine director at D&D International, responsible for sourcing wines across D&D’s global portfolio.

Similarly, regions in Spain such as Rioja, where 2011 yields were down in excess of 20%, and La Mancha, have reported a serious depletion of stocks matched by price rises. “We are no longer in a position of over-supply and in DOs like La Mancha and Valdepenas prices have had to rise,” reported Felix Solis Ramos, marketing and export director of Felix Solis Avantis, one of Spain’s largest exporters.

In Australia, too, Neil McGuigan, CEO of Australian Vintage, which accounts for up to 10% of the annual crush, describes a complex but cautionary picture.

“We have an oversupply of cooler climate and higher quality fruit,” says McGuigan. “But if you look to the big producing areas, where production has been decreasing and vineyards left or uprooted, then there is hardly any spare capacity at all.”

What all agree upon is that global recovery coupled with thirsty emerging markets presents a situation where those managing future supply need to start thinking ahead in terms meeting renewed growth in consumption rather than a continued cull of recent oversupply.

 

One Response to “Global wine shortage forecast”

  1. ryan says:

    Sounds like a PR piece to increase the price point of CA wines. Shortage – rubbish. World wide production has increased massively over the last few years while the US alone has grown by 2813 producers since 1995 across 50 states.

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