Wine 2023: Surplus? Or Shortage?

Wine 2023:Surplus? Or Shortage?

Dave ChambersWine Marketing Enterprises, Inc.

November 8, 2013

“And In This Corner”“Shortage!” (Oct 22nd

report)• Australian Analysts Tom

Kierath and Crystal Wang

• Global shortage of 300 million cases

“And In This Corner”“Hogwash!”

• “Industry’s in fine shape” Jon Bonne, SF Chronicle

• “Just offsetting over-supply” Rob McMillin, SVB

• “Supply to vary by price point” Intl Business Times

Evidence Of Shortage• Growing demand

– China– Gen X, Millennials

• Shrinking vineyards• Global inventory depletion

Growing Demand

Growing Demand - China

Growing Demand – By Age

Shrinking Supply

Global Inventory Depletion

Round 1 – Shortage!

Not So Fast!

Round 2 – The Rebuttal• “The Morgan Stanley’s report is just

wrong” (Rob McMillan, Silicon Valley Bank)

• “Global production at its highest in 7 years” (Intl. Org of Vine & Wine, (OIC) France)

• “Bulk wine prices are stable… there is no shortage” (Rabo Bank, New York)

10-31 SFGate.comWSJ Market Watch

Rebuttal – Alternate Demand

Rebuttal – Surplus Product

CBC News July, 2013

The Winery?Treasury Wine Estates

• The total write-off was $145 million, USD (WSJ, July 15, 2013)

• “We overestimated U.S. Demand”• Stockholder lawsuit pending• Oct 31st - BofA/Merrill Lynch urges

Treasury to Divest of Beringer ASAP (Wine Industry Insight)

Rebuttal – Interest ConflictThe spinning of looming shortages to promote wine stocks… could work again for those unfamiliar with the public wine stock frenzy/crash/burn of the 1990s. That debacle was driven by a similar shortage myth, [creating] a huge wine tsunami in 2001.

Wine Industry Insight 10-31-13

Rebuttal – Interest Conflict• What bank lists

Treasury Wine Estates as their top “consumer pick”?

Rebuttal – Interest Conflict• Morgan Stanley, of

course.• Analysts were not

made available for comment

Wine Shortage Knockout?