What Wine Shortage?!
at the Wine Rack
Recently reports surfaced that a global wine shortage was looming. The stories spoke about emerging markets consuming more wine and the traditional wine producers making less wine, which suggested that sooner or later wine would begin to run out. For the most part I initially ignored these reports. Emails were forwarded to me, I received many tweets, LinkedIn and Facebook messages on the topic and I still refused to believe it. Why? - I guess it's because I visit wine countries every year where I speak to winemakers and vineyard owners, and I never heard about a shortage. I was just in France in the summer in the heart of Bordeaux and no one spoke about running out of wine.
Origin of the reports:
The stories all seem to be based on ONE (1) Morgan Stanley Australia Limited 78 page report titled "The Global Wine Industry - Slowly moving from balance to shortage" filled with fancy charts and graphs implying that a global wine shortage is imminent. Now I did not study journalism in school; I did electronics and then business, but I happen to know that you cannot base a story around one source. It also seems to me that a number of the writers who helped to make this story go "viral" don't understand the wine business and did no real digging into the details of the source. I guess it's because the brand associated with the report is held in high regard, so it must be true. I have long understood that this is not so and it seems that Reuters blogger Felix Salmon felt the same way and he decided to dig a little more into the story.
Morgan Stanley Australia apparently omitted the most recent grape production numbers for 2013 from the report and also made some big assumptions around what they refer to as "non-wine" uses for grape juice. These factors helped to skew the numbers to make it look as if supply is running out. Not true, say the major industry players.
The Reuters piece titled "There's no global wine shortage", written by Salmon, digs a lot deeper into the numbers and quotes from multiple sources. They go back to one of the information sources cited in the Morgan Stanley report - the Organisation Internationale de la Vigne et du Vin, the international governing body for winemaking and grape production, whose numbers don't project a decrease in wine production, but rather a fairly substantial increase.
Reuters finance blogger Felix Salmon suggests a possible motive: " It's simply trying to present the idea that demand for Australian wine exports is likely to rise, and to justify the fact that a company called Treasury Wine Estates is the bank's "top Australian consumer pick".
This line is taken directly from the report "Treasury Wine Estates (TWE.AX, A$4.73) is our top Australian consumer pick - Pure play listed wine companies are rare, and vary in terms of their ability to capitalise on global opportunities. Within the Morgan Stanley coverage universe TWE is the only diversified wine 'pure play'."
No need to hoard wines. They're not running out any time soon.
Christopher Reckord - Businessman, Entrepreneur & Wine Enthusiast. Send your questions and comments to firstname.lastname@example.org. Follow us on twitter: @Reckord