Wine in an age of uncertainty

I hope you’re having a great Thanksgiving holiday!  Cy and I are spending it with his family in Brooklyn.  And the day after, we’re off to a lunch to celebrate my parents’ fiftieth wedding anniversary!  You might think all this would prevent me from posting.  But no.  By now you must know that I always have something to say 😉 !

As I mentioned in my last post, there’s not much wine news in the mainstream press outside of California.  But I get plenty of wine news via daily e-mails from industry publications, and there’s a lot of talk these days about the “New Normal” (I hate that expression, don’t you?) for wine sales.  No one is yet predicting when or if the glory days of 2006 and 2007 will return, and the data I’m seeing are either frantically gloomy or cautiously optimistic.

A.C. Nielsen, the marketing company known for its television ratings, reports that data from retailers, restaurants, and wholesalers indicate that 2009 fall wine sales are recovering from their disastrous 2008 levels, and should be up approximately 5% over last year.  On the other hand, Technomic, a foodservice consultant, predicts that wine sales in restaurants will fall 7% during 2010 from 2009 levels.  Technomic also notes that alcohol sales levels in restaurants fell more rapidly than food sales, so people are definitely spending less on drink with each restaurant meal.

Yeah, I don't know what it means, either.

Nielsen also reports that more than half of consumers eat less in restaurants than they did before the economic downturn, and one-third go out less to bars and clubs.  Combined with the data on total alcohol sales, it looks like the increase in total purchases for 2009 will come from people drinking at home.  They’re also buying less expensive wines.  (This is probably not a surprise to any of you, but it’s the one thing you can pull from all the numbers.)  The research firm Wine Opinions found that one-third of the wine drinkers they surveyed are buying more wines in the $6-15 price range, and 40% have cut back on wines that cost $30 and up.

It looks like not only are people drinking at home, but with the lower prices, they’re buying more bottles too.  So the old adage is true – in good times people drink; in bad times they drink more.  (At least if you ignore fall 2008.  Maybe then everyone was just too stunned to drink.)  I wonder, though, if Nielsen’s forecast for 2009 takes the holidays into account properly.  If people overall have less money to spend yet they’ll be spending more on wine, does that mean that they’re buying wine in place of gifts?  Or that they’ve decided that really nice holiday meals with good wine are a nice substitute for other spending?

One thing that all forecasts seem to agree on is $50 per bottle wines – a typical bottle price in Napa.  (Not surprisingly, much US wine industry news focuses on California in general, and Napa in particular.)  Wine Opinions reports that those 40% surveyed who have cut back on $30 wines aren’t buying any $50 wines.  Silicon Valley Bank’s annual wine industry assessment proclaims that a $50 bottle of wine is now permanently out of the question for a normal purchase, and Nielsen predicts that $50/bottle sales may not recover even in 18-24 months.  So producers are wondering what to do.  Do they cut prices, which would increase sales?  The worry is that lower prices will make Napa wines seem less prestigious.   People will get used to paying less for Napa wines, and then won’t accept price increases even after the economy improves.

On the other hand, out of sight is out of mind – so if they don’t cut prices to maintain sales, consumers will go elsewhere.  The fear is that when they can then afford to buy more expensive wines again, customers will be out of the habit of buying Napa wines and won’t go back to them.

Plummeting sales also put future production in jeopardy.  Since producers need the money from sales to make new wine, some of them are producing less of the 2009s and are planning to make less of the 2010s, even though experts predict that 2009 will be a very good vintage.  While they might wish they had more wine on hand when 2011-2012 roll around, it’s also possible that smaller supply will increase demand – and price, assuming people can afford them.

All of this has me wondering about first vine wine sales and why you, our customers, buy what you do.  We don’t fit the Napa mold, since our wines range from $9 to $29 (not counting champagne).  While we’re not immune to economic fluctuations, we (thankfully) don’t have to worry about a cellar full of really expensive bottles.  But we have decisions to make about the future, so we need your help.  Over the next month or so, we’ll be devising a short survey to help us understand our business better.  We hope you’ll indulge us and take a little time to complete it.

Mirabelles -- who knew?

Of course, we’re not going to give you a survey on a holiday weekend, so no worries.  In fact, since it’s a holiday weekend and we’ve done the Thanksgiving leftovers thing before, we’re not going to give you a food recipe either.  Instead, here’s a red wine aperitif.  It’s based on an apèro we had at a restaurant in northern Provence, Le Moulin à Huile.  They served us a drink made with red wine, mirabelle liqueur, and seltzer.  Mirabelles are small plums that aren’t usually eaten raw, but are cooked into desserts, made into jams, and of course, made into liqueur as well.  I’ve never seen the liqueur here in the U.S., but it’s perfectly fine to use Crème de Cassis, Framboise, plum brandy, or slivovitz (although you may want to add a little sugar if you use slivovitz because it’s slightly bitter).  This is a great drink to make with leftover red wine (should you have such a thing.  If you don’t have any, try it with our $13 Domaine Fond Croze Cuvée Confidence Red – first have a glass of the wine, then the apèro for dessert!).

Super simple too.  Take an average-sized wine glass and put a few ice cubes in it.  Add 1 ounce of the liqueur of choice, then add dry red wine until the glass is a little more than three-quarters full.  Top with seltzer, add a spritz of lemon, then give it a quick stir and enjoy.

Cheers!

Tom

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This entry was posted in Côtes du Rhône Wines, french wine, Le Moulin à Huile, Mirabelles, Tom Natan, wine delivery washington dc, Wine economics. Bookmark the permalink.

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