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Short wine supplies will lead to flexibility on provenance

Published:  26 November, 2012

A new era of tight global wine supplies will weaken the age-old divide between New World and Old World, according to a PricewaterhouseCoopers retail analyst.

Supermarkets' need to put wine on shelves at the best possible price will require them to become more flexible on provenance, according to Christine Cross, chief retail adviser at PricewaterhouseCoopers.

"The sector will start to forget the New World versus Old World debate," she told Harpers on the sidelines of a PWC round table discussion on commodity price volatility in the food and drink supply chain.

"Retailers will be thinking: if we can't get this Chardonnay from France, then we'll get it from somewhere else," said Cross, who has previously been head of global sourcing at Tesco.

Last week, Majestic Wine's chief executive, Steve Lewis, warned that wine prices will have to rise in the UK following a string of low grape harvests in Europe.

Harvests in some areas of France and Italy are down by as much as 40% or 50% in 2012. Globally, analyst group Rabobank estimates that stocks of commercial wine are at their lowest point for over a decade.

At the PWC session, Cross said that more wineries should consider forging links with those in other parts of the world, in order to insulate themselves from poor harvests in one region.

"There is likely to be more collaboration," she said. "I don't necessarily mean consolidation in terms of acquisitions, I'm thinking more a consortium of producers," she said.

There are some signs of greater collaboration in a UK wine sector, with Accolade Wines agreeing to bottle for Treasury Wine Estates earlier this year.

More generally, the PWC panel warned that volatility in food and drink commodity markets is "the new normal" and that all producers must manage supply risk more closely.