Global wine shortage fears exaggerated, say analysts
- Wednesday 30 October 2013
(Vines in New Zealand, where producers have helped to boost global supplies in 2013, according to the OIV)
Morgan Stanley analysts this week raised fears of a global wine shortage after estimating that the sector is ‘under-supplied’ by around 300m cases, largely due to 2012 yielding the lowest production for several decades.
However, the International Organisation for Vine & Wine (OIV) said this week that a squeeze on supplies has eased during 2013, with wine production expected to return to 2006 levels of around 281m hectolitres.
This is largely a result of bigger harvests in the Southern Hemisphere, notably in Chile and New Zealand, the OIV said.
But, it said the 2013 French harvest is still expected to increase by 7% on an unusually low 2012, to 44m hectolitres, despite serious difficulties with poor weather in Bordeaux and Burgundy.
At this time last year, OIV director general Federico Castellucci warned that, ‘we’re dipping into the reserves for supply’. This week, he praised higher productivity in the vineyards.
Although it is accepted that there is greater balance between supply and demand than a few years ago, some believe the original concerns around shortages were exaggerated.
‘As this past year has unfolded, it has become pretty clear that we were not as tight as we thought,’ Stephen Rannekleiv, expert wine analyst and executive director of agri-food research at Rabobank International, told decanter.com. Some large companies underestimated their production in 2012, he believes.
In the market for bulk wine, prices initially rose towards the end of 2012, but have been falling back this year. ‘Average bulk wine prices in Chile, California, France, Italy and Spain have all come down by anywhere from 10% to 33% since January,’ Rannekleiv said.
‘I would assume that improved availability will create some additional opportunities for suppliers and retailers to offer deals to the consumer.
‘Still, I would not expect a full return to the aggressive types of deals that some retailers were offering prior to 2012.’
‘Supply tightened last year but should be looser this year,’ David Gleave, managing director of UK merchant Liberty Wines, told decanter.com.
‘In 2013, it seems as though quality will be a more important consideration. Prices are soft but [across the market] quality is going to be patchy.’