A Wall Street Journal article confirms essentially what most of us had suspected: that high end wine sales are hurting.
According to the article, which cites Jon Fredrikson from Gomberg, Frederikson & Associates, even though first quarter sales volume is up 5%, sales of wine priced above $25 per bottle fell 11% year over year.
Perhaps even more telling about the economic malaise now enveloping the wine industry, the Auction Napa Valley this year raised slightly more than 50% of the total take from last year’s auction.
As part of the trickle down (or up, depending on your perspective), luxury restaurants are adjusting wine lists, catering to budget-conscious consumers by including more bottles in the $60-$70 range.
Loni and I have noticed the impact as well in at least a few additional ways.
For one, much like real estate, the days of the wait lists for wine clubs appear to be over. I remember several wineries marketing (even boasting) about exclusive, limited clubs that had year-long wait lists. If you were lucky enough, you may someday get in, if someone died. Now, though, I checked into some of these same places, and it’s amazing how accomodating the tone is now. Nothing like a raging recession to alter how a company perceives customers and prospects.
More recently, I’ve noticed a trend to more aggressively market (i.e. discount) magnums and large format sizes. I’m guessing this is because sales are devestated in this category thanks to less parties, less celebrations. To pop open a magnum, people normally have company over or are hosting a larger event. When those are cancelled, magnum size bottle sales hurt. And wineries can’t afford to let them sit.
One interesting silver lining in the article, to the dismay of distributors, was the mention of social networking used by Alpha Omega to good effect. This year, its sales are apparently up 40%, largely since selling direct cuts out the distribution expense, and allows them to retain higher margins. Specifically, Facebook and Twitter are mentioned as ways to connect directly with customers and potential buyers.
[Source: Wall Street Journal, Luxury Wine Market Reels from Downturn]