Australian Analyst Morgan Stanley has declared something that I thought
was improbable given the nature of the item and the Statement. They’ve stated
that the World is running out of Wine as stated in “World faces Global Wine
shortage - report”, published 30 October 2013 Last updated at 18:07 GMT, BBC News and “Global
Wine shortage on the horizon, economists warn”, published 30 Oct 2013
10:35AM GMT By Denise Roland, The UK
Telegraph.
You might want to do like the lady is doing in the photograph as Wines produced the way we do now may go extinct by 2020! As hoarding Wine, that’s pointless; you’ll eventually find some reason to imbibe, be it celebration or in times of melancholy!
It also tells me what I need to get this Christmas: A bottle of Wine, be it Red or White for each day of Christmas as described in “Wines for the 12 Days of Christmas”, published Thursday, December 24, 2009 by Christopher Record, The Jamaica Observer and “Raise your glass - Wine flavours”, Published Thursday December 12, 2013, The Jamaica Gleaner.
But this news makes you wonder. Is this a case of the Boy Crying Wolf
just to increase the payout on a financial Bet on a company, in this case
Australian Vinery Treasury Wine Estates?
Apparently it’s the fault of the Americans and the Chinese; they’re
drinking it all! America is on pace to become as big a Wine drinking nation as
France and the Chinese have doubled their Wine consumption in the past five
years according to the Morgan Stanley report.
1.
12% France
2.
12% USA
3.
9% Italy
4.
9% China
5.
8% Germany
6.
5% UK
7.
5% Russia
8.
4% Spain
9.
4% Argentina
By their numbers, Global Wine Production stands at 2.8 billion cases of Wine
per annum from some 1 million Winemakers in both the Old World and New Worlds
while Global Demand is outstripping that at 3 billion cases of Wine per annum. This
works out to be roughly 300 million Cases, approximately the amount of Merlot
(Brit’s favourite Vintage!) that the UK Drink in two (2) years as per the video
above!
That means our American and Chinese Connoisseurs are drinking off all the
Good stuff from the Old World producers, which are mostly located in Europe
e.g. France, Italy, Spain, Portugal and Germany, forcing the New World
Producers i.e. US, Australia, Argentina, Chile, South Africa and New Zealand to
ramp up Production of two (2) year old Vintages to meet demand.
Old World Growing less Grapes –
Collision course to outstrip Wine Production in 2020
But it’s not just more Wine being consumed by suddenly cultured Americans
and Chinese. It’s also being made worse by the decline of land areas under
Grape cultivation, the traditional food crop fermented to make Wine. According
to Morgan Stanley the years 2004 and 2006 in Europe saw a massive oversupply of
Wine as that was BEFORE the Global Recession.
We may STILL be heading for a Second Recession soon as I’d predicted in
my blog article
entitled “EU,
USA and the Second Recession - Economist Dennis Chung's Andromeda and The Long
Night”. As we all know, the Recession in the US of A happened around 2008.
Around that time in 2008, Production began to plummet, as the Global
Economic Downturn in terms of demand for Wine as well as loss of financing from
the imposed Austerity packages in 2011 from indebted Banks in Italy, Greece and
France as described in my blog article
entitled “EU
Debt Deal Reached on Wednesday October 27 2011 - Austerity measures for
sustained Recovery” forced many Old World Wine producers out of business
between 2008 and 2012.
Thus there are less Acreages growing Grapes in the Old World. That’s when
the problem started.
This was a boon to the New World Wine producers in the US, Australia,
Argentina, Chile, South Africa and New Zealand who began capitalizing on the
opportunity to ramp up Production. Thus by 2012, with reduced acreages under Wine
Production from the Old World, New World Wine producers suddenly found their Wines
in demand and their Vintages flying of the shelves as supply from the Old World
Wine Producers began to outstrip demand.
The shortage isn’t visible now as most Wine in 2013 was produced and
bottled from Grapes that was grown and fermented two (2) years prior in 2011.
But as 2014 comes around, Morgan Stanley is predicting that Global Shortage
will become visible to consumers, as 2012 Production of Grapes from Vineyards
that have been closed down in Europe would affect Old World Wines Production
but not New World Wines such as those in Australia.
This is not even considering rare Vintages that take longer than two (2)
years to ferment in those big underground casks or the more modern Stainless
Steel Vats used by Mass producers of Wine.
A good example of this outside of Australia is the American Carlos Daley
CEO of Asymmetrical Investments and Financial Planning Company Limited, who
sponsoring an International Reggae Wine Festival in Jamaica and promoting his
own line of Reggae Themed Wines as explained in “Reggae
Wine from Indiana to be launched in Jamaica”, Published Sunday December 8,
2013 by Richard Browne, Business Reporter, The
Jamaica Gleaner. They’re riding this wave using the popularity of Reggae
and Brand Jamaica to promote their Bob Marley Fruity Wine Selection.
Is this for Real or a Hoax –
Arguments for and Against the Coming Wine Shortage
It’s this demand for New World Wines which explains the blind optimism of
the New World Wine Producer’s as this coming shortage benefits them. However,
could Morgan Stanley have made a mistake? According to Bin32 Owner and
Businessman Christopher Reckord in the article “What
Wine Shortage?!”, published Thursday, December 05, 2013 by Christopher
Reckord, The Jamaica Observer it’s
just hype being generated to boost stocks in Treasury Wine Estates, a Vinery in
Australia that’s Australian based Morgan Stanley’s pick for Top Australian Wine
Producer.
This is the theory posited by Reuters blogger Felix Salmon in his
analysis of the Morgan Stanley Stats using the original source stats from the OIV
(Organisation Internationale de la Vigne et du Vin) in his article “There’s
no Global Wine shortage”, published November 1, 2013 By Felix Salmon, Reuters Blog as the original report was
written by Morgan Stanley Australia.
Apparently investors that follow Morgan Stanley’s advice have a lot of money
invested in this Vinery and thus decided to use their good name to deceive the World
into believing that Wine would be in short supply and thus drive stock prices
up.
The Global Wine Shortage – The
Glass is Half Full and Half Empty
The Main Difference is that the OIV is estimating an increase in Production
in 2013, whereas Morgan Stanley is projecting a Decline, based on the coming
demand from USA and China.
Therein lies the Rub; neither Australian analyst Morgan Stanley or
Reuters blogger Felix Salmon are any more credible as they’re BOTH Estimates as
pointed out in the unbiased article “A Global
Wine shortage could soon be upon us”, published October 29, 2013 By Roberto
A. Ferdman, Quartz.
The reality aside from Wine Production in either the Old World or the New
World Vineries is still true though:
1.
Americans and Chinese are projected to consume
over 400 million cases of Wine by 2016
2.
2008 Recession hit vineyards in the Old World
supply nearly 60% of Global Demand for Wine have seen a 25% decline since 2004.
3.
New World Vineyards are a mere 30% of Global Wine
Production and even lower for Global Wine Exports
4.
No new Vineyards aside from the New World Vineries
in US, Australia, Argentina, Chile, South Africa and New Zealand have come
online
Note I said Global Demand; America and China are not the only ones
developing a taste for Wine. South America, The Caribbean and Africa are slowly
catching on to the trend from the First World Countries. Wine, once a rich
man’s drink, is now common even in shows such as the Big Bang Theory, where the
actors, especially Kaley Cuouco aka Penny drink an awful lot of the stuff!
In addition, there is also an increase in the demand for land for the Production
of other Agricultural produce to meet a coming Global crunch in Food Supply in
the next 20 years projected by the UNFAO (United Nations Food and Agriculture
Organization) as explained in my blog article
entitled “United
Nations Food and Agriculture Organization says Insects is the Meat for the next
20 years - Soylent Green may be avoided via Indiana Jones and the Temple of
Doom”.
So the Glass is Half Full – or half Empty, depending on who you choose to
be, that being an Optimist (Reuters blogger Felix Salmon argument) or a pessimist
(Australian Morgan Stanley argument). Cheers to you and yours this Christmas
2013 and a Happy New Year in 2014…as depending on how this all pans out, this
may be the last toast you Make!
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