World's running out of wine, says report

Make the most of that bottle of Merlot tonight: there's a global wine shortage, says Morgan Stanley, and it's only going to get worse.

According to its new report, there was an undersupply of about 300 million cases last year - the worst deficit for nearly fifty years. Demand has risen, particularly in the US and China, which has quadrupled its consumption over the last five years. Meanwhile, production in Europe has dropped by a quarter since 2004.

Last year, European production fell ten percent because of bad weather. And newer wine-making regions failed to take up the slack, with global production falling by five percent.

As for the future, says Morgan Stanley, things aren't going to improve. In some areas - particularly in France - 2013 was the worst vintage ever. Meanwhile, Chile was hit by early frosts. "The data suggests there may be insufficient supply to meet demand in coming years, as current vintages are released," say the researchers.

According to the report, the US now consumes nearly as much wine as France - around 12 percent of the global supply. But it's China that's the fastest-growing market, accounting for nine percent. Meanwhile, though, consumption is falling in some parts of the world. In France, says Morgan Stanley, only 17 percent of people drink wine every day, compared with 51 percent in 1980. In the UK, says the report, we're drinking four percent less than we did in 2007.

However, according to the International Organization for Vines and Wines (OIV), things may not be that bad. In its own report, released this week, it says that despite shrinking vineyards, the world should still produce 281 million hectolitres of wine in 2013.

"With a loss of 300,000 hectares of vines compared with the year 2006, the 2013 harvest has been fairly significant, thanks to a productivity which continues to increase, despite the abrupt stop caused by adverse climate conditions in 2012," says OIV director general Federico Castellucci.

The OIV says that while production fell for a few years, it's now back to 2006 levels. It's up slightly in Italy, France and Portugal, and Chile and New Zealand have reached record levels, it says.

All the same, it might not be a bad idea to start stockpiling wine, particularly the better varieties. The poor harvests this year, it says, could lead to higher global prices.

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