Wednesday 30 October 2013

Wine Shortages

There's a few reports talking about wine shortages, such as this one at the BBC:-

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 firm says demand for wine "exceeded supply by 300m cases in 2012".

...

They say this could be partly explained by "plummeting production" in Europe due to "ongoing vine pull and poor weather".

Well, 2012 was about poor weather, yes. Wine writers aren't too keen on what they've tried of Bordeaux 2012s, where 2010 is considered to be very good indeed.

I'm sure someone is going to start screaming about climate change, even though it seems to have produced some great years, but the point that should be underlined in that article is "vine pull", which Wikipedia explains as:-

Vine pull schemes are programs whereby grape growers receive a financial incentive to pull up their grape vines, a process known as arrachage in French.

in other words, set-aside for wine.

So, there isn't really a crisis in production, more that there's a one-off adjustment to remove subsidised, low-grade wine grapes and have wine grapes sold at market rates. Which is why European production is in decline and New World production is growing. The labour and land costs of someone in Chile are lower than in France.

7 comments:

Graeme said...

I could say things about the French wine lake of the 1980s...but I won't. There is much less totally crap wine being produced and everyone benefits.

Ian Hills said...

The poorly-subsidised British wine industry seems to be doing quite well - what a surprise :)

TheFatBigot said...

The very concept of a wine shortage is patently absurd.

There is as much wine produced as there is wine produced.

If anyone thinks more should be produced he can set-up a new vineyard and winery (or take-over an existing one and make it more productive).

Much that is produced will be pre-sold to supermarkets and to wholesale and retail wine merchants. The rest is there for everyone to buy.

Once it has run out, it has run out. But it won't run out, it never does, the market economy takes care of that.

When less is produced prices will go up to ration supply to those who can afford this luxury product. When more is produced prices will fall and scum like me will be able to afford a bottle or two of Chateau Pissoire.

Chile has a thriving wine industry because it produces many excellent wines which, even after shipping costs, are far cheaper than the French and Australasian competitors.

British wines are generally of high quality because they have to be to compete - our climate does not allow mass production of decent wines that can sell for £6 a bottle, so that market is left to others. Our producers have to aim for the £10-£15 a bottle market and hope their premium products can top-up the till to such an extent that they can continue in business.

I am confident that Chateau Pissoire will keep me in liver-rot for as long as my addled organs will last.

Mark Wadsworth said...

I tend to agreed with TFB on this one. The price mechanism will, in the medium term, ensure that supply and demand will balance out.

See also "energy gap', "peak oil" and so on.

Bayard said...

China is a big consumer of wine and the so-called "wine belt", i.e. those latitudes where vines grow well, runs right across China with the predictable result that China is now the sixth biggest producer of wine in the world, with plenty of room to expand. Prices go up, Chinese plant more vines. There are probably places in China that will produce a wine every bit as good as a top Bordeaux, especially if the Chinese lure a leading French winemaker or two to the far east, if, indeed they haven't already done so.

Dinero said...

The CAP overides the price mechanism does it not.

I heard that a large portion of the finished wine in Spain is distilled into industrial alcohol.

Tim Almond said...

Graeme - agree

Ian Hills - English wine seems to do OK, but having tasted some, I can't figure out why people buy it.

TFB - yup. One of the shifts is away from Europe and towards the new world. It's reckoned that in 20 years there will be more wine produced outside Europe than within Europe.

Mark - the other thing is that productivity of wine production rises. Large vineyards use all sorts of science to improve yields.

Bayard - yeah, I was quite surprised to see how China had leapt into the top wine producing nations as you don't get any of it here.

And yes, there's no reason if they have the right conditions that China shouldn't be able to produce great wines. Australia produces wine like Penfold's Grange that nearly hits the same prices as the top growth Bordeaux.

That said, once you get over about £20 for a bottle of wine, things get silly. I can taste a load of sub-£20 wines and generally tell you which are the cheapest and which are the most expensive. Over that, it's a crapshoot. I did a tasting of some serious wines for fun once and Chateau Lafite-Rothschild I rated lower than some £45 wines.

Dinero - quite possibly. That's what you get with overproduction.