What Does 2010 Hold for Wine Sales? Good News and Bad News

By John ~ January 15th, 2010.

Wines at a local wine retailerFirst, the bad news. When the stock market leaped forward last year after horrific declines, many thought that the economy would quickly follow suit. So far, that has not been the case. In fact, yesterday, we learned that retail sales unexpectedly fell in December, leaving 2009 with the biggest yearly drop on record, indicating that there are still significant hurdles facing the economy as it struggles to recover from the deepest recession since the days of the great depression in the 1930’s.

As we reported last fall, the wine business, especially the higher-price segment of the wine business, has suffered along with the economy and continues to be less than robust today. So the big question is: What does 2010 hold for wine sales?

To give you some educated thoughts, I’m going to share excerpts from Silicon Valley Bank’s Preliminary Findings for their 2010-2011 Annual State of the Wine Industry Report. Silicon Valley Bank’s Wine Division is the leading provider of financial services to wineries and vineyards in the western United States, with over 300 winery and vineyard clients, so their findings are widely circulated and well-respected.

Here’s what SVB says:

  • The economy will not return to the market experienced during the past decade.
  • Distribution has all but ended as a viable sales channel for small wineries.
  • A rapid and full recovery in high-priced wine sales is not in the cards at this time.
  • Add in predictions from restaurateurs that 2010 will be another difficult year.
  • For many Boomers, a $50 bottle of wine is now permanently outside of their budgets.
  • It’s common to see wineries that two years ago sold out 100% of their production ahead of the next release, discounting significantly to move their product.
  • 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.

That’s a pretty sobering forecast for wineries, isn’t it? However, for the wine consumer, it is good news, because it means more and more good deals on great wines. While sales of wine here in Washington State actually increased slightly last year, it was mostly the lesser expensive wines that were selling.

As far as the better higher-priced wines go, my suggestion is to make a list of some of the wines you’ve dreamed of owning. Then, keep in touch with your favorite local retailer and tell her what you are looking for, scan online resources like Wine-Searcher.com regularly, and be ready to buy when the price fits your budget. As I’ve said before, it is definitely a buyer’s market, and it may get even better.

Filed under: General Wine Information

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