Friday, April 17, 2009

A word about the economy

"Prosperity doth best discover vice, but adversity doth best discover virtue."  - Francis Bacon
"A penny saved is a penny earned."   - Benjamin Franklin
Ok, so this is more about saving money than the economy in general. Actually, I'm still dumbfounded that it's taken an economic crisis of this magnitude to really put the brakes on sales of top end tier wines. Were we as a society really all that happy about ourselves going out and buying wines at prices ranging from $100 to $1000+ per bottle?
Was the wine really that much better than a $45/bottle wine, or were we "compensating" for something?

People are dropping the higher end wines from the shopping lists, generally, in favor of lower priced relatively "bargain" wines, and the results from near and far afield are a boom in the sales of the remainder of the market. This isn't the end-all indicator of the economic turn around, but hearing that the CA wine industry has boosted its shipments of wine by 15 million gallons in 2008 is a sure sign that people who are drinking wines aren't stopping their consumption, just looking to drink those which "fit in" with their new budgets. And it is an interesting difference to see three main EU players dropping in market share while upstarts like the Californians and Argentinians shoot upwards....
Sadly, this also comes at a time in the EU where the wine industry has been under attack in France(!), by the French themselves. In the past decade, French legislators and firebrands have changed the wine consumption habits of its' people directly via laws restricting advertising, and indirectly through cultural campaigns to curb drinking period. This has been a huge contributor to the French producers' angst and has no doubt helped them to get themselves into the rioting mood these past few years. As the French Giant has nodded off, Italy has passed France in wine consumption, with the US now nipping at its heels. In a way that shouldn't really come as a surprise given that there are ~3 times as many Americans as Frenchmen, but with the US consumption of wine only a paltry 8.7 litres of wine in 2005 compared to the French per capita rate of 55.8 litres that same year it is quite a feat! Converted to cases of wine per year, the US would be slightly under one case per person in 2005, while France was at nearly 6.2 cases per person annually.
And that's not too bad of a deal when we look and see that 2008 had an overall drop in global consumption of almost 1% of the previous mark in 2007...

It will be interesting to see how long it is before the high-end tier recovers once the economy does get its legs back under itself. 
Of course at that time we'll see what happens to the lower end of the market as well, but hopefully people in the US are continuing to embrace wine as more of a necessity than they have in the past. Even if they are at a price-point they thought they couldn't/wouldn't like as much...

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