Merlot and Shiraz are both dark grapes that are used to produce two kinds of red wine named after them.
edit The grape
Merlot is a grape that is soft and fleshy, early ripening makes it popular for blending with later ripening cabernet sauvignon grape. There is one variety so the wine made is called Varietal and named after the grape with a capital letter.
Shiraz is a variety of grape, used mainly to blend with other varieties when very ripe. In 2004 Merlot was the most popularly grown grape in the world while the Shiraz was the 7th most widely grown grape.
Merlot is a milder, flavorful, medium bodied wine which showcases the fruit and is a better wine for beginner tasters. It has a fruity, delicate, feminine flavor with a velvety feel on the mouth. Hints of berry, plum and current accompany the flavor.
Shiraz is more full bodied, bold, powerful wine with earthy qualities of pepper, truffle and leather. It is more masculine, has more tannins, is dense, hearty and intense.
edit Food pairing
Merlots can be paired with any type of food. Softer, fruitier Merlots (particularly those with higher acidity from cooler climate regions like Washington State and Northeastern Italy) go well with dishes like salmon, mushroom based dishes and greens like chard and radicchio. Light bodied Merlots can go well with shellfish like prawns or scallops, especially if wrapped in a protein-rich food such as bacon or prosciutto. Merlot tends not to go well with strong and blue veined cheeses that can overwhelm the fruit flavors of the wine. The capsaicins of spicy foods can accentuate the perception of alcohol in Merlot and make it taste more tannic and bitter.
Shiraz are usually paired with red meats, steaks, wild game and thick stews.
Merlot is grown extensively in the Bordeaux region of France. But it is also grown in Italy, Romania, California, Washington State, Chile and Australia.
Shiraz excels in the climates of California, Australia and is extensively grown in France's Rhone Valley.