Why the current global wine industry crisis?

Abstract Occasional boom-bust cycles have long characterized national wine industries, but without them coinciding with the cycles of other countries. Today's wine crisis is different in that prices for all but high-quality wines are depressed in all major wine-producing countries, and the world is awash with a large surplus of (especially red) non-premium wine. This article first outlines the nature and extent of the crisis. It explores its various causes, arguing that they are structural rather than just cyclical. It then suggests what is required for profits to return to normal. To simplify the analysis, use is made throughout of a two-part industry framework that involves non-premium and fine wine producers. Both parts are struggling, but the pressures for structural adjustment are far more severe for non-premium vignerons. The study concludes that the longer it takes for the surplus to be disposed of and for a non-trivial share of the world's least-profitable vines to be removed, the longer will prices be depressed not only for non-premium wine but also for some higher-quality wines.