Take a second, look to the right of your screen, and share your own thoughts on what it takes for you to spend $50+ on high-end wines at retail. With the preliminary findings report from Silicon Valley Bank’s Wine Division (see recent post Wine Sales Stink and the World is Not Flat) underscoring the massive swing in growth rates that has lead to an (11%) decline in high-end wine sales in 2Q ’09, share your thoughts on what needs to happen to reinvigorate your appetite to purchase more high-end fine wines by taking the one question poll to the right of this post.
The pipeline at retail and in consumers’ cellars is clearing out after a destocking period that contributed to sales declines this year and things look better for 2010. Already the producer economy is adjusting and the Bank’s report outlines margin recovery steps in motion throughout the industry that is contributing to a normalizing wine economy;
renegotiating grower contracts, dropping less important contracts, examining farming costs for savings, and upward adjustments in yield to enhance per acre revenue, selling down excess bulk wine, developing programs for the slowest moving SKUs, and blending down reserve wines to boost value in lower priced wines
The Bank’s report reminds that this troubled condition is not permanent and recovery will come for those that can adapt their business models and navigate through their current challenges. They quickly point out that this market downturn is dissimilar to past blips and will take time to sort out:
This isn’t a permanent change. However, true recovery will take time to sort through due to lasting negative impacts in housing, consumer wealth, consumer credit, business spending, and restaurant sales…Consumers always aspire to better products. Wine as a product category has demonstrated consistently increasing per capita consumption for decades now and nothing suggests that is likely to stop…we do believe that we are in the midst of a price reset in fine wine that will lower the wannabe cult wine prices and collapse brands into narrower pricing bands below $50.
So what do you think? Take the poll and weigh in!