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Global Wine Consumption is on the Rise While Production is Slipping

The convenience store chain 7-11 is now selling premium wine brands in some locations.

| BY Kent McDill

Fine wine is either more accessible than ever, or growing scarce, depending on who you listen to.

The convenience store chain 7-11 is now selling “ultra-premium wines’’ (a category in which wine is priced between $15 and $20 a bottle) to go with the spray cheese and roller-cooked hot dogs.

Examples of wines being sold at 7-11 include Louis Martini Cabernet Sauvignon and Wild Horse Pinot Noir from California.

Meanwhile, new research shows that there is a global wine shortage, as production drops and consumption climbs, in some countries dramatically.

Wine is not a new item sold at 7-11, but its quality of wine has changed. According to Alan Beach, vice president of merchandising for 7-11, the recent recession changed the company’s viewpoint about selling high-end wine.

"We noticed that in the 2010-2011 time frame, beer sales flattened out and wine started having higher growth rates," Beach told CNBC. He said wine sales have increased by double digits over the past 12 months.

The company identified 1,000 stores that it thought would be a good marketplace for premium wines, and 700 of those are already offering the new product lines. For customers, the change in marketing for 7-11 is significant, according to Beach.

"I want people to see that in their time-stressed world their neighborhood store has what they need and want," Beach said.

It’s still wine being sold at 7-11, and Beach said he knew there would be some question about the quality of wine being sold at the corner store. So the company chose products that scored highly in market publications such as Wine Spectator and Wine Enthusiast.

As 7-11 branches out into the higher end wine market, Morgan Stanley Research reminds us all that there is a global wine shortage.

An Australian research firm working with Morgan Stanley revealed that global demand for wine is now exceeding supply. In 2012, global demand exceeded supply by approximately 300 million cases.

“Data suggests there may be insufficient supply to meet demand in coming years as current vintages are released,’’ the report stated.

The shortage comes as a result of two factors: increased demand and dropping production.

Wine consumption continues to rise as it has almost without interruption since the late 1990s. The United States and China lead the way in increased wine consumption, with the U.S. consuming approximately 12 percent of the world’s wine annually (just below world leader France). China’s consumption has doubled twice in the last five years.

At the same time, wine production in Spain, Italy and France has dropped steadily as the “area under vine’’ (land used to grow grapes for wine) has been reduced at significant percentages since 2001. Some of the land use issues are political in nature, as the European Union pays subsidies to wine producers to uproot vineyards to deal with over-production and falling prices.

Europe produces about 60 percent of the world’s wine but its production has dropped approximately 25 percent since 2004. Much of the problem is blamed on poor harvest due to unusual weather, although the 2013 harvest is reportedly one of the best in years, according to the International Organization of Vine and Wine.

Most experts believe Europe is the only hope to avoid a real problem. Although the number of American wineries continues to increase, most of them produce so-called “boutique’’ wines and do not mass-produce. Several new world wineries now exist in places like Australia, New Zealand and South Africa, but experts say the Morgan Stanley Research says they are almost maxed out in terms of production already.

Then there is Fred Franzia, the CEO of Bronco Wine Co., which produces “Two Buck Chuck’’, more formerly known as Charles Shaw Wines, which sell at Trader Joe’s for between $2.49 and $3.79. Franzia, whose family created (but is no longer affiliated with) the Franzia boxed wine product, says there is no wine shortage.

“We don’t see (a shortage) on our horizon at all,’’ said Franzia, who told the Huffington Post that wine producers often create a shortage in order to sell their wine at higher prices.



About the Author


Kent McDill

kmcdill@spectrem.com

Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.

In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.

McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.

McDill is the father of four children, and an active fan of soccer, Jimmy  Buffett and all things Disney.