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Categorized | General

Economy Hurting Luxury Wine Market

Like everything you buy these days, it’s on sale, and if it’s not then you are not buying it.  Many of America’s and the World’s high-end wineries are feeling the economic down-turn, as even wealthy wine drinkers slash spending on high end priced wines.  Recession weary consumers are buying more low and mid priced wines, with wines priced at $25 a bottle or higher sales falling sharply.  Many wineries have been forced to cut prices and seek new distribution channels.  Total U.S. wine sales rose about 5% in terms of volume in the first quarter from a year earlier, but wines priced at $25 a bottle and up fell about 12%.  The Auction Napa Valley, the premier charity and social event of the year in the U.S. wine industry raised just $5.7 million last month, down sharply from the $10.4 million raised last year.  The change in consumers buying habits, which became pronounced last fall as the recession deepened, has prompted many retailers and distributors to cut orders of luxury wines, and when they do order the higher-end wines, they are asking for steep discounts, which are being passed along to consumers.  One of the main markets for high-end wineries is luxury restaurants, and they have been hurt as Americans dine out less.  The good news for high-end vintners is they are coming off an extraordinary run of near constant increases over the past 15 years.  The downturn has been migrated by California’s lean grape corps in recent years, which have kept supply from outstripping demand.  So far, industry layoffs have been milder than other sectors of the economy.  Most  of the Napa and Sonoma winemakers are small operations and often need what little staffs they have to run tasting rooms and keep vineyards in order.

 

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