Current Economics of Wine

I'm so tired of reading about the current state of the economy and the gloom and doom of it all - aren't you? However I must admit that when it comes to wine and alcohol, there is a rather amazing dichotomy happening. Sales are up but profits are down worldwide. Weird?

Here's the thing, in a down market, alcohol sales always go up. I have read article after article about how alcohol sales in restaurants are at an all time high (see Food and Wine). The funny thing is, the industry is still complaining.

Case in point, The Press Democrat published an article about tourism being down in Napa Valley and yet they barely mention that sales have gone up because more people are "day tripping" to the area.

New World Wine has a great article on the wine industry in India (I recommend reading it) but the underlying message is that indeed wine prices there have dropped 50% and many places include a buy one get one free bottles of wine (which alone is a reason to travel there).

A Passionate Foodie states that Sake exports from Japan have doubled!

But the best two most telling articles are about New Zealand's wine exports. NewstalkZB states "Wine exports increased 24 percent to $992 million with the number of wineries lifting 58 to 643. Domestic sales of New Zealand wine grew 29 percent to 60 million litres... However, Stuart Smith, chairman of New Zealand Winegrowers, says the industry faces lower profits this year". Decanter.com goes on to say "Some unmistakeable warning signs emerged this year. Despite sales volumes benefitting from increased supplies from the 2008 vintage, those increased supplies also delivered increased competition and downward price pressure."

In a nut shell, we're drinking more but expect bulk discounts. I like this trend a lot!