Yes, there is and will be a global wine shortage. Here's some perspective on it.

I'm not sure who did a worse job of reporting on Morgan Stanley Australia's report of an upcoming global wine shortage: The mainstream media that initially freaked out, or the wine media that responded, "No there isn't."

I asked Morgan Stanley for the report and they kindly sent it. I read it. I'm not responding emotionally. I just want you to consider the facts.

First of all, a global wine shortage means that there won't be enough wine produced to keep up with worldwide consumption.

It doesn't mean your local wine shop is going to have to ration wine. Nor does it mean prices are going to skyrocket in the US -- although there could be some upward pressure on the bottom of the shelf.

It does mean that poorer countries like Angola and Romania will have a hard time getting wine, because we'll outbid them for it. Sucks for them: Romania drinks more wine, total, than Australia; Angola drinks more wine than New Zealand, and is Portugal's biggest export market. Eventually UK supermarkets will start taking that lowest end wine off Portugal's hands.

In 2012, world wine consumption exceeded world wine production. This was momentous. The OIV says that won't be the case in 2013, despite what appears to be a disastrously small vintage in France, because of big harvests in the southern hemisphere.


But structurally, Morgan Stanley's reasoning is sound. World wine consumption is steadily increasing and there's no reason to forecast a slowdown. World wine production varies from year to year -- the nature of agriculture -- but longterm, it is slightly decreasing, because of large-production low-quality vineyards being taken offline in Europe. Huge plantings aren't going in to other parts of the world to make up for them.

Morgan Stanley is right: By 2020, there probably will be more consumption than production nearly every year.

Why would anyone forecast differently? Who wants to plant big vineyards to battle for the bulk wine market? France and Australia have a hard time selling the lowest-quality wines they make now.

Keep in mind that Morgan Stanley's report was for its Australia unit, and the point was to advise that Treasury Wine Estates is now a good stock buy. The reasoning is simple: TWE has a lot of vineyards, there's going to be a world wine shortage, so even TWE's lowest quality grapes should find a home. This is important investment information about a company that just had to pour $145 million worth of wine down the drain, and thus sees its shares trading at a low price. I won't comment on TWE's investment worthiness -- the company could shoot itself in the foot again -- but structurally, the argument is sound.

I read a piece in my local paper where the reporter went out and interviewed a wine shop buyer, who said, We're not having any trouble getting wine. And they never will.

If you're willing to pay $15 a bottle for wine, the global wine shortage will never affect you. Every company making $5 wines aspires to make $15 wines. In that $15 to $20 range, if anything there's an overage, a plethora of great choices, that drives prices down. And that's only going to get better for us as wine producers try to elbow their way into the US market.

That said, there's an ongoing, worsening global wine shortage that does affect wine lovers, not generic supermarket wine buyers.

When was the last time you had a Bordeaux first growth? Checked the prices of Montrachet lately? How about a nice Oakville Cabernet Sauvignon?

Not only is overall world wine consumption increasing every year, connoisseur wine consumption is increasing every year. When everybody wants the same of any product that is in limited supply, that's a shortage.

I'll argue that because more types of wines are being considered worthy by connoisseurs every year, we'll never live to see an overall shortage of the whole class of delicious artisanal wines, unless there's a zombie apocalypse. Five years ago, who knew what delicious wines you could get from Greece and Slovenia and Hungary and Uruguay? Personally, if I can't buy Burgundy, I'll just have a fine Pinot Noir from Tasmania or Chile or southern Germany. Easy.

But that doesn't mean there aren't localized shortages: more all the time. Scarcity makes wines as different as Petrus and Screaming Eagle unattainable for the average wine lover. The number of wines on the "unattainable" list is only going to increase. Can't get Screaming Eagle? How about a little Scarecrow, fire? (See what I did there?)

This is why a lot of smart business people are investing in California Pinot Noir vineyards. A generation ago, California Pinot Noir was a joke, a whimsy, something nobody thought could be done well. Now, it's easy to see it as the next source of trophy wines. Laugh if you want, but you're not the one paying $2000 for Screaming Eagle, right? Somebody is, and with the right marketing, they might be paying that for some tiny Sonoma Coast vineyard's Pinot Noir.

So to sum up: We are living in a time of global wine shortage, for the most famous names in wine. And we are moving towards a structural period of perennial global wine shortage. It's not the end of the world, and unless you're buying 5-liter jugs, it may never affect you at all. But it exists. Morgan Stanley is right. And the media are mostly sheep. But you knew that part.

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