The purpose of this article
is to show a few comparisons between past, present time and assess what could
happen with the wine industry given the current trends, without pretentiously
stablish correlations and causations.
I found the current
SVB report somewhat engaging and a good conversation starting point for commercially
invested in wine people. One thing that I did not like so much about it is that
this year they show more of whats than whys.
I know I am ageing, I do
not know why. I have an idea, but I do not know why it is happening.
Cut to the famous Shiller S&P 500 P/E ratio. You do not have to be (I am not one of
them) a macroeconomics specialist, but by now you ought to know who Robert
Shiller is and what he does. Please note the peaks and freefalls in the numbers
circa 2000, 2008 and the current last number (https://www.multpl.com/shiller-pe). That is right, we are now logging
the second highest Shiller P/E ratio ever. Before you assume I am blowing the
end of the world trumpet, look at this other graph from the SBV presentation for premium wine sales. Does it look familiar in any way?
My point here is that
we do have a lot of disposable income in this country (it took a pandemic to show
americans and residents that saving was possible) and premium/expensive wine
sector has been one of the winners in the process. But that also should be the
harbinger of possible future outcomes when the tie goes down and we see who was
swimming naked.
The report shows the
wine sector is failing to gain young consumers and at the same time traditional
steady loyal wine consumers are just ageing and getting out of the game. Boomers
and Xgens are just not picking up the share one would hope or expect.
I have heard people
get into wine business in California (the same applies to other famous places
in Europe too) in order to reap huge profits with real estate and the wine
would be a very welcome byproduct of that venture. They can afford to produce
and sell few bottles of wine at (allegedly) high quality and (reportedly) extremely
high prices.
The wine industry as
is is doing a great job in selling premium wines, albeit at the expense of
fewer consumers in the future and the more educated/savvy consumer (these guys
according to one graph barely increased their purchases), who recognizes great
value at much inferior price tiers. One the educated mature consumer ages and starts
consuming even more (hello insulin resistance and diabetes), who will sustain
the market for those $ 100 bottles of napa cabernet, Barolo, Brunello and Bourgogne?
What will happen once more
consumers in more states learn they can have access to edible or drinkable thc
or cbd compounds for a fraction of dollars and just get out of their minds in a
(debatable) healthier way than alcohol?
Premium prices demand
premium performances, be that also from a trophy wife, your favorite stock or
that house in you want in Medina.
Super premium wines
come ridden with inflated ego-trips, bogus stories to jack up prices, promises
of heaven in bottle that seldom fly. Young consumers are much smarter than
that. The wine tie will show before long who was swimming naked.