Last week the wine world was aflutter with the news that a global wine shortage was upon us. Morgan Stanley, the too-big-to-fail investment bank published some investment advice suggesting that wine consumption was growing and production declining, and the news media picked it up like it was the latest Obamacare blunder.
Are we about to enter a world where plonk costs as much as a good meal?
The reliable financial journalist Felix Salmon pours cold water on the whole story.
It turns out that Morgan Stanley has some stock in Australian wine they want to sell and they were just trying to gin up some business by cherry picking data.
To create the first chart [showing consumption outpacing production], Morgan Stanley just took the second chart [showing wine production losing steam but ahead of production], added 300 million cases to the red line, and then — this is pretty cunning — simply deleted 2013 altogether, so that the uptick at the end disappears. (The 300 million number is Morgan Stanley’s estimate of the annual demand for “non-wine uses” of wine.)
The 2013 vintage is expected to be robust, the best production numbers in several years. Morgan Stanley just left it off to make their story about increasing wine prices more plausible..
Although the first chart is scarier than the second chart, even the second chart does a little bait-and-switch, which you can only find by looking at the sourcing note at the bottom of the page. The numbers for the charts come from OIV, the Organisation Internationale de la Vigne et du Vin, including the estimate for 2012 production and consumption. But the 2013 estimate, showing a modest increase in production, is not the OIV estimate; it’s the Morgan Stanley estimate. And what Morgan Stanley doesn’t tell you is that the OIV estimate for 2013 is much higher.
As Salmon points out, we are likely to see lower acreage numbers in the future as new technology and global warming allow producers to get more production per acre. But there is little evidence of a wine shortage.
So what we have here is a little Wall St. hustle that fooled journalists who have apparently lost their ability to recognize corporate bullshit when they see it.Follow @DwightFurrow