It’s one of the classic economic models. Changes in supply and demand can impact on prices but should you be interested in this model if you like to drink a glass of wine?
Morgan Stanley, the American financial services firm has released a report on global wine supply and demand. Assuming that you haven’t had too much wine to drink already today then it does make some interesting reading.
First of all, global wine consumption has generally been rising since 1996 and the current consumption is approximately 3 billion cases per year.
This consumption (demand) of 3 billion cases of wine compares to the current production (supply) of 2.8 billion cases of wine. Unless you’re now on your second bottle of wine of the day you’ll be able to work out that demand exceeds supply by 200 million cases.
The report by Morgan Stanley predicts that in the short term “inventories will likely be reduced as current consumption continues to be predominantly supplied by previous vintages”.
In other words, the shortfall between annual demand and supply will be satisfied by wines that were produced in earlier years.
Once this stockpile has been used though it will simply be a case of demand exceeding supply and we all know what happens when demand exceeds supply. Yes, prices will increase.
If you’re a wine drinker then you’re likely to be facing a more expensive drinks bill in the future.