The Uber-Wealthy’s Wine Industry
-Retailers in metropolitan areas report much more robust sales
-Auction houses are seeing significantly increased activity
-High End Restaurants are seeing a return to conspicuous wine purchases
-Napa Valley has seen a recovery in its hospitality sector
Today, the New York Times reports that luxury goods are flying off the shelves across the country even without the aid of discounting. This return to conspicuous consumption, however, appears to be limited to the very wealthy who over the past year and a half have seen their portfolios buoyed by huge gains in the stock market.
To put it all in perspective, this is a pretty good time to be selling a $200 Napa Cabernet, a $100 Oregon or California Pinot Noir or a $75 Syrah that has the backing of a reputable third party reviewer. There are some people in the wine industry now who are getting very rich.
However, the question is what kind of wine industry will be created by a resurgence driven by the uber-wealthy's return to conspicuous consumption, but where the lower end of the market doesn't have the same kind of support.
Put another way, is there some sort of structural, systematic evolution that has and will continue to effect the wine industry? Consider:
• In 1970, top CEOs made 38 times more than the average worker. In 1988 they made 188 times more than the average worker. Today, top CEOs make more than a 1000 times more than the average worker.
• In 1950, the ratio of the average executive's paycheck to the average worker's paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one
• The top 1% of U.S. earners control 34% of the wealth. The bottom 50% of U.S. earners control 2.5% of the wealth
• The top 1% of income earners own 50% of all stocks, bonds and mutual funds. The bottom 50% won .5% of all stocks, bonds and mutual funds.
• Since 1979, the top 1% have seen their share of America's income more than double. The bottom 90% have seen their portion shrink.