Sour Grapes: Oversupply of Wine Forces Price Drops

Sour Grapes: Oversupply of Wine Forces Price Drops

March 8, 2020

For two decades, wine sales have increased. Until this year.

With wine sales dropping unexpectedly, it has caused an oversupply of grapes that was not in the forecast by California wineries.  The result of the oversupply of grapes combined with lagging wine sales is a reduction in the price of wine.

It takes five years from planning to harvest for wine grapes on average. Experts predict the demand/supply imbalance in grape harvests will not be resolved for another 2-3 years.

Video Spotlight:

This post is based on the CNN article, The price of wine is dropping fast, by Allen Kim, February 17, 2020, and the YouTube videos featured in the Video Spotlight. Image source: Dmitri Ma/Shutterstock.

Discussion Questions:

1. What are the challenges to long-term forecasting for grape production?

Guidance: This article provides a good lead-in to review the risks to long-term forecast estimates.  Students should note that all long-term forecasts are very risky due to factors such as market changes, political policies, Continue reading