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World wine shortage of 1.3B bottles looms
First Published Oct 18 2012 12:54 pm • Last Updated Oct 18 2012 02:06 pm

The world faces a wine shortage equivalent to 1.3 billion bottles next year after production slumped in France, Italy and Spain, the main suppliers, according to the biggest French wine cooperative.

"It’s historic," Bertrand Girard, chief executive officer of Groupe Val d’Orbieu, said Thursday at a news conference in Paris. "We’re short of wine. We’ve never seen that in three or four decades."

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The global shortfall is expected to be at least 10 million hectoliters (264 million gallons), Girard said in an interview after the meeting. That volume would fill more than 1 billion standard-size bottles. World production fell in the past decade even as consumption rose, according to data from the International Organisation of Vine and Wine, or OIV.

Adverse weather damaged grapevines in southern Europe this year. Wine inventories in Italy and Spain were depleted in the past two years, leaving no buffer to compensate for the slump in 2012 production, according to Girard.

"Spain has zero stocks," he said. "Italy has zero stocks. We no longer have stocks to bridge the gap. We have no more entry-level wine."

European wine production is forecast to slide 15 million to 20 million hectoliters this year after drought hurt vines in the region’s south, the CEO said. Vineyards across Europe suffered damage from winter dryness, a cold start to the season, hailstorms and a summer heat wave.

Smaller Harvests

Farm lobby Copa-Cogeca this week predicted wine output in the 27-nation European Union will drop to 144.4 million hectoliters from 160.5 million hectoliters in 2011. Grape harvests in France and Italy may be their smallest in 40 to 50 years, according to the Brussels-based group.

In the Southern Hemisphere, production in Chile and Argentina was "mediocre" this year, with only South Africa producing "correct" volumes, according to Girard. "Super harvests" in South Africa or Chile next year will fail to compensate for the shortfall in Europe, he said.

There’s already a scarcity of budget wines, which account for 80 percent of consumption and typically cost between 2 euros and 4 euros a bottle, according to Girard. The price of generic bulk wine in Spain has jumped to 60 euros ($78) a hectoliter from 30 euros two years ago, he said.

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Diverted Production

Global wine output fell to 265 million hectoliters in 2011 from 280 million hectoliters in 2000 as consumption rose to 244.3 million hectoliters from 225.7 million hectoliters, OIV data show. Supply was short of demand last year because wine amounting to about 25 million hectoliters is diverted annually to make products including liquor, Girard said.

The world’s vineyard area shrunk in the past decade, falling to 7.59 million hectares (18.8 million acres) last year from 7.85 million hectares in 2000, according to the OIV.

The main risk facing the industry is that a lack of wine in stores will prompt consumers to turn to other beverages such as beer, Girard said.

Val d’Orbieu is a cooperative of about 2,500 vintners in the Languedoc-Roussillon region of southern France, with annual production of 1 million hectoliters. The group forecasts sales will be about 290 million euros this year.

Wine output in Languedoc-Roussillon, France’s biggest growing region, may slump 21 percent to 11.7 million hectoliters this year, the country’s Agriculture Ministry has forecast. That would be 29 percent of total national production, which is predicted to slide 20 percent to 40.6 million hectoliters.

Sales will likely stagnate next year, Girard said, without providing further details.

"It will be a year in which we won’t grow," he said. "It’s not easy to grow your sales if you don’t have the wine."

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