Wine Talk

Snooth User: Nancy Hawks Miller

Is the Trade Down Permanent?

Posted by Nancy Hawks Miller, Apr 15, 2011.

Y'all at Snooth should have a better feel for this than most of us. This article says $15.00/bottle is the new $40. http://www.latimes.com/features/foo...

Replies

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Reply by StevenBabb, Apr 15, 2011.

you can find a lot of great stuff in the 15-20 range... and while buying habits, for the most part, do shift with economic times, i believe that only represents about 75% of the consumer market... the other 25% will shell out what they want to get what they want....IMHO

so in short, i don't think we are going to see any $25+ wines disappeare anytime soon...

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Reply by zufrieden, Apr 15, 2011.

That 25% also represents the top 10% in income and income security, so as the the black rain falls on the punters exposed to the vicissitudinary nature of the world economy there will be shifts in buying habits overall.  But not for the well-heeled.

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Reply by Stephen Harvey, Apr 17, 2011.

It is important to recognise that wine is what economists call a discretionary purchase.

Wine prices will be significantly driven by demand and supply.  On the demand side, fashion, economic conditions, politics etc will determine where wine prices sit.

Since the GFC of late 2008 wine prices have been under significant global pressure [Other then Lafite in China].  This is no different to the impact on wine prices of other major economic downturns in history. eg  Property collapses in the late 1800's, WW1, Great depression, WW2, Credit Crisis of early 60's, Global Oil Shock of mid 70's, sharemarket collapse on late 80's and global recession of early 90's, Dotcom Bust early 2000's, and now GFC.

Wine prices during boom times which precede the recessions tend to increase and in particular there is always a sharp spike in the very top end, which of course tends to drag the mid price points up.

So, for my US colleagues, until the US economy recovers and then begins to grow prices will remain constrained and there will be plenty of wines that pre GFC sold at +$40 will sell at well below that price.

We should also note that production was geared for post 2008 growth and even at the pre GFC peak there was global oversupply, this has now deteriorated further as demand had dropped off, particularly at the higher price points.

I have no doubt that we are in a period where wine drinkers will be spoilt for quality at low prices, but once that big kahuna called the US economy moves back into a growth cycle I am sure that US consumers will regain their purchasing confidence and wine prices will begin to move upwards once again.

So lets all enjoy it while it lasts because drinking good wine will be at a relatively low cost for a while.

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Reply by dmcker, Apr 18, 2011.

Well put, Stephen.


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