Turrentine Brokerage, the Novato based brokers of grapes and wines in bulk, has released the twelfth issue of its exclusive publication, The Turrentine Outlook: Forecasts and Strategies for a Competitive Advantage. This issue uses extensive proprietary data to provide a comprehensive review of the supply and demand picture for Chardonnay, Cabernet Sauvignon, Merlot, Pinot Noir, and Pinot Grigio, both globally and in key regions of California. Most importantly, it does two things. First, it documents the dramatic transition from about twelve years of worldwide excess to a new state of relative shortage. Second, it suggests strategies for growers, producers and marketers to deal with this fundamental change.
The change to shortage was amplified by a short crop in 2011 in California and several other key producing regions around the globe. The change may be temporarily and partially ameliorated by a larger crop in 2012. The underlying reality, however, as demonstrated by the data and analysis of The Turrentine Outlook, is that sales are growing while vineyard capacity in the U.S. and other global markets directly competitive with California may not be keeping up with the increase in demand. There has been very little planting beyond replacement requirements anywhere in the world in the last five or six years (although that began to change in 2012, particularly in the San Joaquin Valley). Despite the effects of the recession and the weak recovery, sales have generally been growing faster than production for many years.
Although planting has now started, it takes several years to acquire land, obtain permits, obtain and plant vines, bring vines into commercial production, make, finish and bottle wine and finally ship the bottled wine to market. Such a process can take as little as three years for some varieties in some areas to as much as eight or nine years. For vineyards supplying brands that retail in the $2.00 to $10.00 per bottle range, this process probably averages about four years from recognition of need for supply to an increase of bottled wine shipped to market. For vineyards retailing in the $15.00 to $25.00 range, this process probably averages about 6 to 7 years. In the meantime, it is highly likely that sales will continue to grow. Growers, producers and brands that understand these changes and organize around them will have a huge competitive advantage over those who ignore them.
Turrentine Brokerage tracks, and analyzes in context, key indicators available nowhere else, including bulk wine inventory levels, spot market grape prices and the most sophisticated acreage and grape crop projections, as well as tracking collateral values. We have accurately predicted the last four radical changes in the market, including the dramatic 1989 shift to excess, the landmark 1994 change to shortage, the painful 1999 change to excess, and the recession-delayed 2011 change to shortage. Anticipating these kinds of changes is absolutely critical to success for growers, producers and marketers. Turrentine Brokerage also provides crucial advice about short term market developments, including such factors as crop size, bulk wine trends, international competition, and supply and demand balance.
The company’s web site can be found at www.turrentinebrokerage.com.
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