Global Wine Shortage A Boon For New World Exporters [REPORT]

Global Wine Shortage A Boon For New World Exporters [REPORT]

Wine lovers might end up paying higher prices in the near future for their next bottle because there’s currently a global shortage of wine. Consumer demand for wine is increasing, but the supply is not enough, according to a report.

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Global Wine Shortage A Boon For New World Exporters [REPORT]

Increase in demand

The report from Morgan Stanley (NYSE:MS) financial services indicated that the demand for wine “exceeded supply by 300 million cases in 2012.” According to the report, the wine shortage was the “deepest shortfall” recorded in the history of the wine industry over the past 40 years.

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The International Organization for Vine and Wine predicted last year that there would be a wine shortage globally because poor of grape harvests. In fact, the organization anticipated that wine production would drop to its lowest level as the largest wine producers worldwide such as Italy and France suffered from weak grape harvests last year. Argentina suffered the most with an estimated 24% decline in grape harvest in 2012. As expected, wine production declined to its lowest level.

In 2004, the global wine supply exceeded the demand by approximately 600 million cases. Since then, wine production continues to decline.

Global wine consumption

Tom Kierath and Crystal Wang, analysts at Morgan Stanley, noted that the global wine consumption has increased every year since 1996 except in the years 2008 and 2009. According to them, the global demand for wine is about 3 billion cases annually

The analysts estimated that there are more than one million wine producers globally, and their total output is around 2.8 billion cases per year. Kierath and Wang emphasized that previous vintages are primarily compensating for the current demand, which would reduce inventories over the short term.

However, the analysts said, “Expect the current production shortfall to culminate in a significant increase in export demand, and higher prices for exports globally” when the 2012 vintages start to make up for the consumption.

Shortage caused by declining production

Kierath and Wang said the global wine shortage is partly caused by the declining production in Europe due to the “ongoing vine pull and poor weather.” The overall wine production fell by 10% globally in 2012.

“With tightening conditions in Europe, the major new world exporters stand to benefit most from increasing demand on global export markets,” according to the analysts. The new world wine exporters include Australia, Argentina, Chile, New Zealand, South Africa, and the United States where wine production is steadily increasing.

The analysts identified the French as the largest consumers worldwide followed by the Americans. They said China and the United States are considered “main drivers of consumption” worldwide.

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Marie received her Bachelors Degree in Mass Communication from New Era University. She is a former news writer and program producer for Nation Broadcasting Corporation (NBC-DZAR 1026), a nationwide AM radio station. She was also involved in events management. Marie was also a former Young Ambassador of Goodwill during the 26th Ship for Southeast Asian Youth Program (SSEAYP). She loves to read, travel and take photographs. She considers gardening a therapy.
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