While everyone continues to focus on stocks, a much larger, far more important situation is fermenting for wine lovers: global wine production crashes to 50-year low.
New data from the International Organization of Vine and Wine (OIV) indicates total world output is projected to hit 246.7 million hectoliters in 2017– an 8% drop compared with 2016 “one of the lowest levels for several decades”.
According to the drinks business,
Global wine inventories were already slightly tight going into 2017, but the decline in production in these key European producers will mean that the global wine industry is going into 2018 with inventories that are likely to be at least 20m hectolitres lower than they were going into 2017 – equivalent to nearly 8% of total global wine consumption. Wine available for consumption around the world will be at its lowest point in decades.
Why is there a global wine shortage?
A new report issued from OIV indicates lower production levels were blamed on ‘extreme weather’ in Italy, France, and Spain– top 3 producers in the world. Meanwhile, Portugal, Romania, Hungary, Austria, the U.S. and countries in South America have seen a rise in production compared with 2016.
- Very low production in Europe: production levels were at a historic low in Italy (39.3 mhl), France (36.7 mhl) and Spain (33.5 mhl). Germany (8.1 mhl) also recorded low production. Portugal (6.6 mhl), Romania (5.3 mhl), Hungary (2.9 mhl) and Austria (2.4 mhl) were the only countries to see a rise compared with 2016.
- An even higher level of production was recorded in the United States (23.3 mhl).
- In South America, production increased compared with the low levels of 2016, particularly in Argentina (11.8 mhl) and Brazil (3.4 mhl). In Chile (9.5 mhl), vinified production remained low.
- Australian production (13.9 mhl) grew and New Zealand production (2.9 mhl) maintained a very good level despite a slight decline.
BBC indicates wildfires in California occurred after the harvest and will have minimal impact besides a 1% drop in production.
Output in the US – the world’s fourth-largest producer and its biggest wine consumer – is also due to fall by only 1% since reports indicate wildfires struck in California after the majority of wine producers had already harvested their crops.
2017 Wine production in the main producing countries
The VINEX is an independent web-based exchange connecting major buyers and sellers who trade bulk wine in high producing countries. VINEX Global Price Index (VGPI) shows bulk wine prices soaring in the past 1.5-years.
In addition to skyrocketing wine prices, world wine consumption (demand) continues to weaken from a 2008 peak, along with printing underneath the mean. Estimated wine consumption for 2017 is in the range 240.5 to 245.8 mhl.
The bottom line for wine lovers is higher prices in the future. You’re witnessing one item a central bank cannot control = food price inflation. Just remember, food price inflation has toppled empires. You’ve been warned.