Global wine shortage can add value

By Harpers Editorial team

Published: 03 May, 2013

Tighter global wine stocks should be seen as an opportunity for retailers and merchants to build extra value in markets like the UK, according to wine analysts, Rabobank.

A series of smaller harvests mean worldwide wine inventories are at their lowest level for at least 12 years and have fallen by 40% since 2006, according to a new Rabobank report, citing figures from the International Organisation of Vine and Wine (OIV).

The global shortage in wine is putting pressure on bulk wine supplies that traditionally feed the lower end of the market. Trade prices are rising for bulk wine sourced from Spain and France, in particular.

"It is clear that consumption will come under pressure from rising prices," says Rabobank's quarterly wine report, adding that global wine production fell by a further 6% in 2012, while consumption remained flat against 2011.

But the situation should be seen as much as an opportunity as a problem. "We're not sounding any alarm bells over shortages," Rabobank analyst Stephen Rannekleiv told Harpers.

Globally, there is greater balance in the wine market and in the UK specifically. Rannekleiv argued tighter supplies are an opportunity to "take pricing" and "build value". Growing numbers of wine companies are beginning to understand this, he added.

But he warned the trade needs to tread carefully: "As the year progresses, it will be important to watch how price-sensitive markets react and whether consumers will accept higher prices or switch from wine to spirits and/or beer."

Tighter global inventories are not translating into higher bulk wine prices everywhere. Prices for Chilean and South African bulk wine have barely moved in recent months.

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