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by Cyril Penn | June 28, 2013 | 2:15 PM

Many people in the wine industry have seen the Turrentine Wine Wheel of Fortune. It's divided into four phases characterizing the supply cycles of the wine business from times of excess supply through a period of supply shortage.

Some have questioned how relevent the wheel is these days, given the continued globalization of the bulk wine trade.

Well, a recent post by Turrentine Brokerage says globalization is turning the wheel into an oval, because global supply is flattening the wine business cycle, making each of the various phases last a bit longer:

The Turrentine Wine Business Wheel of Fortune® is subject to modification from outside influences. An incredibly powerful force, in fact, is currently at work, flattening the Wheel, making it into more of an oval than a circle. This is the force of intensifying global competition. Economic reforms around the world have unleashed the power of free enterprise. Technological improvements, especially in communications, and free trade agreements that reduced the barriers to cross-border commerce have created a new playing field for wine and just about everything else.

So where is the wine industry now?

 

There has already been significant planting in the interior regions of California, mostly under contract to large producers. Planting in coastal areas has been much more restrained. Growing sales and a light harvest in 2011 created a shortage of supply and convinced many brands to raise price or to reallocate supply to higher priced brands. A large crop in 2012, however, eased supply constraints. The race is now on between a recent increase in planting, which will gradually increase average crop size, and a slow but steady increase in consumer sales. Overall, we expect consumer sales to increase faster than average production for a few years and growers and wineries will need to be mindful of Global competition to make sure that sales of California wine continue to grow to keep up.

Read more here

 

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