GLOBAL WINE SHORTAGE? NOT SO FAST HENNY PENNY

MORGAN STANLEY CAUSED a small panic recently when it announced that there’s just not enough wine in the world and the problem is only going to get worse. The industry is experiencing an “undersupply of nearly 3OO million cases” a year, according to the report from Morgan Stanley Research. Australia-based analysts Tom Kierath and Crystal Wang claimed the shortage comes despite the fact that there are one million wine producers globally, making 2.8 billion cases each year. About half of that comes from Europe. But that’s not enough to keep up with worldwide demand. Global production fell by more than 5% last year – to its lowest level since the 196Os – primarily due to bad weather in France and Argentina. Production in Europe alone dropped 1O% in 2O12, the report said. That same year, worldwide consumption rose by 1%. However, and this is a big however, virtually all the expert wine world has debunked this grim prediction. The International Organization for Vine & Wine (OIV) says that a squeeze on supplies has eased during 2O13, with wine production expected to return to 2OO6 levels of around 281m hectolitres. Additionally, a wide range of analysts and experts have come out to say that the shortage is not anything to be concerned about. What’s more, the investment thesis is not, particularly, based on the existence of any present or future wine shortage; it’s simply trying to present the idea that demand for Australian wine exports is likely to rise, and to justify the fact that Treasury Wine Estates is the bank’s “top Australian consumer pick”. (The report was written by Morgan Stanley Australia.) Frankly any prediction coming out of Morgan Stanley, especially when it comes to wine, has to be taken with a grain of salt and viewed as a potential investment strategy. But for now, you needn’t race out and buy enough wine to fill your cellar, you’re likely to be fine in the years ahead.