Saturday, January 22, 2011
Commodity prices: oil vs. wine
Emerging economies have accounted for more than 100% of the increase in global oil demand since 2000, while oil consumption in rich countries has declined. Likewise, rising incomes in emerging economies have spurred wine drinking, whereas consumption in Europe, notably France and Italy, has fallen. China (including Hong Kong) overtook Britain last year as the biggest export market for Bordeaux wines. So for both wine and oil, emerging economies now account for the bulk of incremental changes in demand and therefore have the biggest influence on prices.
Not only are emerging economies growing faster, but their growth is more energy intensive. Likewise, an increase in income seems to lead to a bigger rise in wine demand in these economies than in the rich world, and so gives a bigger boost to prices.