In the past week, wine drinkers around the globe have been shaken by rumors of an impending shortage. Their fears were stoked by a report released by Merrill Lynch, the investment banking firm, which predicted that a combination of bad harvests and curtailed production would mean reduced availability on the retail shelf.
Does this mean you should jump in your car immediately, head for the supermarket or wine shop, and stock up before the drought?
Not hardly. In my opinion, the report is bogus for a number of reasons. Yes, there have been occasional poor harvests in selected areas, but the level of worldwide wine production has never been higher. It’s also true that some producers have gone out of business in the past five years, and others have ripped up vines in response to economic variables, but these situations represent a mere drop in the global ocean of wine.
In Northern Italy, there are literally hundreds of producers desperate to sell their wine in America, and who are unable to secure distribution. The same goes for Portugal. Australia is even worse: The glut of wine there has reached epidemic proportions, spurred on in large part by a decline of enthusiasm for their products here in the U.S.
Speaking of Australia, it’s interesting to note that the report was issued by the Australian office of Merrill Lynch. One of their main clients happens to be Treasury Wine Estates, which recently decided to destroy large amounts of wine over fears that the product may not have been up to quality standards; their stock has tanked as a result. One cynical theory about the report views it as an attempt on the part of Merrill Lynch to shore up demand for TWE.
Like any other agricultural product, wine is subject to the laws of supply and demand. The past three decades have seen an oscillating pattern of glut and drought, and we are now finally emerging from one of the largest wine gluts in memory. While the report may be right in stating that production is declining, this is really more of a useful correction than anything else.
Let’s also remember that Merrill Lynch is an investment bank, and their decisions haven’t always been right on target. Anyone who invested in mortgage-backed securities six or seven years ago would be justified in viewing this report with suspicion.
Mark Spivak is the author of Iconic Spirits, published by Lyons Press (Globe Pequot); his second book, Moonshine Nation, is forthcoming from Lyons Press in June 2014. For more informaion, go to amazon.com