A global wine shortage may be around the corner, just as B.C. shows the first signs of overproduction
According to a report released last week by Morgan Stanley Research, there was a global undersupply of about 300 million cases of wine in 2012, the largest deficit recorded in almost 50 years.
A major reason is because wine production in Spain, France and Italy-the world’s three largest wine-producing countries making 60 percent of the world’s wine-has sharply decreased as less land is being used to grow grapes.
Meanwhile, wine consumption worldwide has increased eight percent since 2000. The report finds that wine production peaked in 2004 and has been steadily declining ever since.
“The data suggests there may be insufficient supply to meet demand in coming years, as current vintages are released,” the report concludes.
However, the local market appears to be bucking world trends, according to a recent report issued by the B.C. Wine Institute.
It noted that B.C. wines sales are still on the rise, as is production – but prices on the open market have softened somewhat.
B.C. wineries say the average amount spent by customers dropped 10 tho 30 per cent this summer over the previous one, with restaurant sales declining.
The report also noted that price points were coming down, with $30 -$40 bottles of wine now priced in the $20 range.
Retail sales increases are offsetting the drop in restaurant sales, resulting in a current market that is flat or up just slightly. Customers appear to be opting to buy a bottle of B.C. wine at a liquor outlet and taking it home as opposed to purchasing in a restaurant.
Many wineries are reporting similar visitor counts to last year.
“The global situation won’t affect us very much,” predicted Mark Wendenberg or Wine Aspect, a bulk wine brokerage based in Penticton.
“As far as B.C. is concerned, I feel that a situation of surplus grapes and bulk wine is creeping up on us.”
Wendenberg said that some grapes will likely be left hanging on the vine this year in the Okanagan and Similkameen valleys, as growers fail to find buyers.
“I don’t have any numbers, so I can’t say whether the situation is more or less than previous years.”
However, Wendenberg noted that in the marketplace, ads from people trying to sell grapes are still being published, as of November 1.
“The fact that it’s November 1 and they are still trying to sell their grapes is not a good sign,” Wendenberg said.
“It seems to be getting worse, not better,” he continued. “There was a time when every single grape in the province got used.”
Wendenberg said the proliferation of wineries in the province may become an issue in the future.
“At approximately 265 wineries in the province, that’s a huge amount of wineries,” he said, “to the point where our tourists get diluted among the wineries. In the 90s, there was only a handful.”
“Everybody is trying to carve their niche – Naramata, Okanagan Falls, the Similkameen – as wine tourist destinations.”
Wendenberg fears a “little shakedown,” might be in the future for the local industry .
“I have heard of stories of growers getting out of grapes and into cherries,” he said, noting that it takes four years for a vineyard to reach full production.
“There may have been some overplanting done, because the plantings were based on industry growth figures that didn’t pan out after 2008.”
“I’ve been in the wine industry for 30 years – I’m not going anywhere,” Wendenberg said in a statement of confidence about the future of the industry.
“But people need to be careful,” he concluded.