Happy (wine) Days Are Here Again?
Silicon Valley Bank, (SVB) one of the leading lenders to the wine industry, has released its "State of the Industry" report and is estimating that fine wine sales will increase this year by 8% to 12 percent. However, they warn that wineries selling bottles that cost $50 or more “will again find 2010 a difficult year."
This is what I've been telling everyone: 2010 will indeed be substantially better than 2009.
I don't have the financial data that SVB possesses to make this call. But I do speak to a number of wineries, retailers and restaurants. And this what I know:
1. Sales in tasting rooms are up and continuing to trend up.
2. Wholesale purchasing is up, which tells me that wholesalers have begun to move through their inventories that they had been sitting on.
3. Winery-based clubs have either stopped their bleeding or have begun to accumulate more members.
4. High end restaurants are seeing customers return and buy wine.
5. Visits to Wine Country destinations are up.
All of this bodes well for wineries. The question for many fine wineries, however, is will they be able to sell those top end wines that SVB says will continue to be difficult to move if they are at the $50 and above level?
As recessions are measured, we have come out of the recession and the economy is starting to grow. Housing statistics suggests that lower interest rates and lower prices have brought buyers back to both new and existing homes. For me, the really key economic indicator is jobs.
Before credit markets loosen up, which leads to more business investments and more jobs and before lending rates start to creep up, a sign of a better economy, we will need to see some sign of sustained job growth. I'm keeping my eye on the job numbers that come out in early fall and what trend line looks like in four to five months. I expect it to be trending up and with it I expect wine sales, including $50+ wine sales to increase.
If I'm right, this is good news for everyone in the industry.
That said, right now remains one of the best times in the past 20 years to be a wine consumer with disposable income. Deals on wines abound, information on where those deals are coming from is better than ever and wine quality is continues to be outstanding.