Report of wine-grape shortage called ‘naive’

DAVE BUCHANAN/The Daily Sentinel Wine grape production in Colorado is heavily dependent on weather, and last year’s numbers indicate production almost reached the record levels of 2009. Here, tempranillo grapes ripen on East Orchard Mesa.

Under the chapter of “Breathless reporting of false news,” we have this entry:

On a recent online issue of The Business Insider was a story headlined, “America Won’t Have Enough Grapes To Make All Of The Wine It Wants To Drink.”

The story quotes a report from Gino Rossi and Craig Woolford, supermarket retailing analysts for Citi, the global banking conglomerate.

Their premise maintains the United States faces a shortage of wine grapes because 20 years ago California growers, in response to oversupply then, pulled acres of vines and replanted with more-profitable crops such as almonds.

Which, with today’s increased demand for wine, means the coming shortage is not in almonds but in wine grapes and winemakers are going to run short.

Well, maybe not and here’s why.

On the surface, that theory sounds good and if you were, say, someone who deals in grape futures. The theory might present an interesting business opportunity.

Rossi and Woolford write, apparently without their fingers crossed, that “[S]trong consumption growth in the U.S. has meant that demand has eventually caught up to supply and the small harvest in 2011 caused many industry participants to panic,” they add. “This sent grape prices higher, indicative of how nervous the industry is about a growing grape shortage.”

It’s not new news that more Americans are drinking wine, as noted by several sources including a recent issue of the Wine Spectator, and that rising interest seems to have spurred a cottage industry in stories about a possible grape shortage.

Of course, it seems such stories invariably originate from sources who stand to make money from hedging their bets on higher grape prices resulting from a perceived shortage.

Anyone who deals in agricultural products, from corn to soybeans to grapes, knows there are going to be years when demand outstrips supply and vice versa. Usually any shortages or overages are short-lived and once again we duck imminent disaster.

It’s curious that anyone with half a sense would forecast a grape shortage, since we’ve recently seen such articles, such as one recently in the Santa Rosa (Cal.) Press Democrat, saying California winemakers are concerned about not having enough tanks for this year’s harvest after last year’s record harvest filled up the available space.

And Harper’s recently wrote about Marlborough’s record 2013 harvest and a few weeks ago Bloomberg reported French wine production may be up by 11 percent overall this year despite hail in parts of Bordeaux and Burgundy.

The Aussies, in addition to a grape glut, also are troubled by a falling dollar (theirs, not ours), which means we’ll pay less for Australian wines.

An article in The Drinks Business (a United Kingdom-based online reports) quotes a Bloomberg report that Aussie winemakers are responding to the bumper crop by lowering their prices.

Yalumba, for one, reported increasing its American wine sales by 300 percent after lowering its Y Series from $12 a bottle to $10.

Fortunately, there are insightful and cautious industry watchers such as Lew Perdue at Wine Industry Insight, an online news service, who saw through the awful Citi report and called it “naïve.”

Perdue wrote, “...the shrill tone of the Business Insider piece implies a broad, apocalyptic shortage which is unsupported by the best of sources.”

There always is more to most stories, which is we try to remember.

Such as when you read here that in 2012 Colorado grape growers pulled out twice as many vines were planted and that overall grape planting in Colorado have fallen steadily since 2007.

A future shortage? Only if the weather blasts us again. Total grape growing area in the state is at its third-highest (707 acres) and in 2012 production fell just shy of the record levels of 2009.

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