Glug, glug, glut?
Glug, glug, glut.
So read the title of an article in The Economist on the wine industry about five years ago. But on Friday when California’s Department of Food and Agriculture reported the state’s biggest grape harvest in ten years, it showed that the global glut has even hit the Golden State. Where will all that wine go?
Quality wine producers in France are distilling their wines into ethanol and Australians are contemplating the same fate for their tens of millions of gallons of excess wine in tankers. (see my backgrounder) Coming at a time when America is famously “addicted to oil,” will the bountiful harvest send California Chardonnay to American gas tanks?
Probably not. For one, in the last big harvest Bronco Wine Co. reinvigorated the $2 a bottle category with its Charles Shaw wines (“two buck chuck”). Further, American wine consumers are actually increasing their consumption, so the big harvest may just end up on tables instead of tanks. Finally, the US already gets most of its ethanol from corn, which is even more abundant than wine grapes–and cheaper too thanks to $1.4 billion in annual subsidies.
But with oil trading at $65 a barrel, that wine had better find its way to barriques quickly.
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