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I did not include this link — America Won’t Have Enough Grapes To Make All Of The Wine It Wants To Drink — in News Fetch Monday because I believe it would have been irresponsible.
Because the data from Citi seems at odds with every other recent credible data source — from Rabobank to Allied Grapegrowers — which indicate an adequate domestic supply, especially with increasing imports and huge harvest around the globe.
Sure, ultra-premium Napa wines will always have intermittent shortages even in the most oversupplied of times. But the shrill tone of the Business Insider piece implies a broad, apocalyptic shortage which is unsupported by the best of sources.
But the issue is far more complex and requires far more analysis and thought than this shrill, naive and simplistic article presents.
Since that Business Insider article ran last Friday, I’ve sent emails and made phone calls trying to get a copy of the Citi study. But to no avail. Indeed, I spoke with a number of top wine industry bankers who were unaware of the Citi study. All of them said they had no idea that Citi followed the industry.
The most fundamental thing missing from this piece is context. While it’s true that plantings of new vineyards has dropped precipitously, the chart and the article does not mention that the new plantings in 1997-1999 represent part of the over-planting that produced the glut of 2001-2005.
Allied Grapergrowers has accurately told growers that plantings need to increase slightly in order to meet demand, but that getting spooked and overplanting as in the past should be avoided. Indeed, the near-record harvest of 2012 showed that impending fears of a shortage were unfounded.
Overplanting, on the other hand, is a financial disaster for a grower. Growers need solid data. Not Chicken Little clucking.
In addition, the Business Insider’s superficial treatment failed to consider that wine is a global commodity. With imports headed above 35% U.S. wine drinkers increasingly are finding that foreign wines are their favorites. Recent links in News Fetch show that supplies of Australian and New Zealand wines are headed toward record levels and that Argentinian Malbecs and Chilean wines of all sorts will be readily available at good prices.
If this Business Insider piece accurately reflects the Citi study, then the data seems either old, naive, something for the pump n’ dumpers. Or all the above.
All of this reminds me of the “analyst” BS that preceded the public winery boom of the 1990s and crash of the early 2000s. Back then, “analysts” at major brokerage houses acted as PR mouthpieces for those who had much to gain buy frightening the market into overplanting. This smells similar.
Back when I owned Wine Business Monthly, I warned about those impending disasters as early as 1996 and got thoroughly demonized until it happened — as I predicted — starting in 2001.
My non-fiction book, The Wrath of Grapes, and several major Barron’s articles based on that book showed just what a phony war that “impending grape shortage” was.
I say all this by way of noting that nothing really changes.
If anyone has a way of obtaining a copy of the Citi study for me, I’d like to take a look at it without the same self-interested eyes that profited from the last glut. I’ve emailed the writer of the Business Insider article, but he has not responded.
Perhaps there might be some merit in the Citi study — if that study actually exists. But the superficial Business Insider article lacks the data and the credibility to be accepted on its own.
Until then, I do not think it would have been responsible to link to that Business Insider article and, in the process, re-ignite an irrational rush to plant.
Yes, planting must happen, but keeping a balance and planting enough to meet demand should be based on rational facts and decisions. Vineyard owners deserve the best of that.