Waterford Wedgwood bankruptcy: lessons for high-end wine
Waterford Wedgwood, the British luxury crystal and ceramic maker, has been placed in administration, or what we here in the States call bankruptcy protection. The International Herald Tribune reports that the reasons for the company’s failure are “the combination of high manufacturing costs, declining demand for luxury goods during the current economic downturn, and a weak dollar last year [that] overstretched the finances at the company.”
But Judith Flanders’s op-ed piece in the Jan. 9 New York Times more deeply analyzes WW’s demise and comes up with some lessons that have important ramifications for the high-end wine segment. The problem was that the company “has long forgotten the lessons of one of its founders, Josiah Wedgwood.” Josiah was a born marketer, so talented that in 1765, when his fledgling company was only 6 years old, he sold a tea set to Queen Charlotte, the wife of George III, which was like launching Google 240 years ago. That set the stage for more than two centuries of catering to the rich and powerful. But nowadays, WW’s “marketing is dreadful,” Flanders writes. She specifically accuses WW of resting on its laurels and assuming that what worked in the past would continue to work in the future. WW thought that consumers would never tire of what Flanders scathingly describes as “contemporary design…crudely imposed on 100-year-old shapes.”
What’s so striking are the parallels with today’s modern, super-expensive wines. They increasingly seem like anachronisms, the kind of stodgy showpieces people no longer want, can use or can afford. Consumers, especially younger ones to whom the future belongs, are looking for contemporary, exciting and certainly less expensive wines, not more monster cult Cabs, made by celebrity winemakers, bottled in overwrought bottles, and that furthermore cost a day’s or a week’s wages.That dog, as Bill Clinton used to say, won’t hunt.
I expect the most iconographic cult wines will survive (no need here to list who they are). But there are dozens, perhaps scores of others that just don’t seem geared to our 21st century society. This is the end of the California cult wine bubble.
And along the same lines…
Forget the housing bubble, the stock market bubble and all the other pretty little bubbles that have burst. In China, the buzz is all about the Pu’er Tea Bubble.
Pu’er [sometimes spelled Pu'erh] tea is a fermented, ageable tea whose price until recently kept going up and up. In 2007, it sold for as much as $150 a pound, causing thousands of “ordinary Chinese” to invest in it, reports the International Herald Tribune. The paper quotes one tea broker as saying, “Everyone thought they were going to get rich.”
Well, you know where this is going. Another day, another bubble. The Pu’eh tea market tanked, and now, “Most of us are ruined,” said another tea trader, adding, “A lot of people behaved like idiots.” Which just proves that bubbles can arise anywhere, anytime, over something as innocuous as tea, not to mention $100 Napa Cabernet Sauvignon. And it doesn’t take an evil genius like Bernie Madoff to pull it off.