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Let the hard times roll


Item: “Retail Sales Plummet. High End Walloped,” with luxury goods down a catastrophic 35%, the biggest decrease of any consumer item in the country, including furniture and electronics. That’s from last Friday’s Wall Street Journal. And like it or not, wine is a luxury item.

Item: Eighty-eight percent of the participants in Wine Market Council’s new Wine & the Economy study feel the economy is getting “much worse” or “a little worse,” with Boomers and seniors even more discouraged than Millennials and Gen Xers. And “[wine] consumption rates…are trending downward for all wine drinkers,” the report found. The reasons? Nearly half of all consumers are “not spending as much money on wine” as they used to, while more than one-third are “not dining out as often as they used to,” even those who self-describe themselves as “better off financially.” The report concludes: “The financial situations of males, Generation X wine drinkers, and those 63 and older significantly worsened over the past six months.” (The report is not yet available online.)

Item: The governors of the nation’s two largest states both want to raise alcohol taxes, including on wine. In New York, Gov. David Patterson has proposed more than doubling the excise tax on wine, from 18.9 cents per gallon to 51 cents. In California, Gov. Arnold Schwarzenegger’s “nickel a drink” tax hike is supposed to help staunch the state’s exploding deficit, which Schwarzenegger recently described as “financial Armageddon.”

What happens to consumption when alcohol prices go up? “…increases in the monetary prices of alcoholic beverages, which can be achieved by raising Federal, State and local alcohol taxes, significantly reduce alcohol consumption”, according to this study from the National Institute on Alcohol Abuse and Alcoholism.

Item: Meininger’s Business International is reporting the following situations in the wine industries of these European countries:

Hungary: “…until recently the wine industry had seemed relatively immune to the economic crisis…But since late October, the industry has experienced a brutal reality check.”

Denmark: “…if Danes make spending cuts, it won’t be to wine.” Way to go, Danes!

Austria: The global crisis “has not, so far, had great repercussions for Austria´s wine industry.” But this conclusion is based only on statistics for January-June, 2008, meaning that third quarter and especially fourth quarter numbers could be grim.

Italy: “…we’ve seen a significant shift from on –premise to off-premise sales as consumers forgo restaurants and wine bars, preferring to dine and entertain at home,” Meininger’s quotes a marketing manager as saying. The article concludes, “…according to many industry experts, times are increasingly difficult for Italian wine.”

France: Exports down. Prices expected to drop in 2009. Champagne, Cognac and Bordeaux most at risk. Allan Sichel, the president of Bordeaux’s Negociants’ Union:  “We are anticipating difficult times, yes,” especially for smaller vignerons who “can’t get the backing from banks.”

  1. I am wondering if the majority of Wine Market Council’s responders are not those dependant upon the archaic and confiscatory three tier system for their existence? When nearly half the purchase price is a direct result of the product being “stepped on” three times before it reaches the consumer, it may well be perceived as overpriced. We are pleased to have shown a fifty percent increase in our own fourth quarter 2008 gross by continuing to market directly to those true critics whom either swallow or spit then vote with their wallets.

  2. Happy New Year Steve

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