Research from Morgan Stanley shows a shortfall between production of wine worldwide and the demand for it. In 2012 it was the biggest gap seen, with some 300m fewer cases produced than were demanded, compared with a decade ago when there was a surplus of 600m cases. A massive over-supply from 2004 to 2006 was brought about by a series of bumper crops. The low prices, followed by the financial crisis, led some vintners to take vineyards out of production. This has combined with a increase in demand, especially by the rising affluent class in China, to cause the shortfall.
Well, it happens, and I’m not worried. In farming bumper crops of one product lead to lower prices that cause farmers to switch to other crops the following year. There is often a cyclical pattern. A glut of wine brings lower prices, making it less profitable. Scarcity means high prices and more acres committed to production. I am quite confident that the higher prices resulting from the shortage will lead growers to plant more acreage in pursuit of the greater returns available.
If necessary new grape strains and hybrids will be developed to prosper in areas previously though inimical to grape-growing. As ever, technology and ingenuity, stimulated by the pursuit of success will find ways.
Filed under: Updates |
Madsen Pirie 
I see I am not alone in my Skepticism: http://blogs.reuters.com/felix-salmon/2013/11/01/theres-no-global-wine-shortage/
My concern is how can it be that after over two hundred years of free market capitalism, experience right before our eyes ‘as we speak’ of how every day life works (free market in action) that so many in the population, the media and (Oh dear) expensively, educated politicians in what passes for Government, still do not understand it?