The Great Recession for the Wine Industry– A Great Mask?

The Great Recession For The Wine Industry– A Great Mask?

Mark Norman at Cave Nil Vino

According to the government the recession has been over, but for the huge number of Americans who are still unemployed and underemployed it is still a very real horror show. My best wishes go out to each one of these people. Many businesses have not fair much better with the outlook for 2011 only slightly improved.

During the Great Depression of the 1930’s most Americans who were spared unemployment still led austere lives. This recession was very different. Many Americans stopped their conspicuous consumption, but those with jobs faired decently. Salary raises were rare but generally there were no big wage cuts for people who were lucky enough to hold their jobs.

For the wine business the period of 2009-2010 will probably be remembered for significant adjustments. Consumers seemed to have dropped a price level or two in their buying. Trying to protect their brand image, wineries put non-current releases on sale with some considerable discounts to spur volume. Some wineries have used second labels for current releases to also protect their brand.

The wine industry is like no other. For consumers, nearly everything they buy can be purchased in any city across the country. Not for wine! True wine lovers tend not to buy the mass produced wines, but rather the artisanal wines that are much more limited in quantities and have limited availability.

Probably the most important question for the wine industry is when will consumers return to pre-recession buying levels?

I am a numbers guy. Piecing together numbers from several sources I see a definite trend. I may be mistaken, but I am surmising that without the increase in online wine sales traditional sales would be flat or possible even dipped slightly. Those discounted wines have found a home online.

Technology has advances dramatically in the past two years to the point where I am now seeing references to m-commerce (mobile commerce). Time-starved consumers don’t want to give up a source of good wine (at good prices) that also saves them trips to the local store (that comparably have limited selection). How will this all work together in the next year?

The age when consumers make a gradual transition is past. As more & more wine lovers share their experiences online there may be a shift not seen before in the wine industry in a relatively short period of time. If you are in the wine industry, are you prepared?

If you are a winery, do you still have a staff person working on DTC sales channels? If you are an importer or a distributor, have you discussed which retailers have the best track record for online sales? Do you have someone working on promoting your portfolio to online consumers?

In 5 to 10 years, as historians begin to digest what has happened and write about the Great Recession, will time reveal that it masked a tremendous shift in wine buying to online sales? Only time will tell.