Wine and the economy


This past Sunday I was at Loxton Cellars working at the tasting bar as I usually do.  It was the Sunday of the Memorial Day weekend.  Typically the Sunday of a long weekend is the busiest day of the three day weekend.  So mentally, I had prepared myself for a little bit of chaos.  Philip and Mark can attest that the tasting room at Loxton is not that big.  Well, the space is big but the space is also used for 256 barrels, the winery office, the winery lab (which doubles as the kitchen) and the winery restroom.  If you get more than 10 people in this space it gets busy.

The everything room @ Loxton Cellars
What happened was not pure chaos but peaks and valleys of visitors.  While not ideal, we did manage to see a lot of people and the best part, for us, was that we sold a bunch of wine.  In those valleys of calmness it gave me an opportunity to think about and discuss with my coworkers for the day, Chris the owner and wine maker of Loxton, and Barrett, part-time Loxton guy like me and training to be a sommelier, what the impact of the current economic state has had on the wine industry.

What I am going to say is based on observation of my time at the winery and what I see when I'm in wine country.  I didn't do any hard research.  So what effect has the slowing of the US economy had on the wine industry?  By my account, not a whole lot.  In fact, I would argue that there isn't much of a change at all.

Again, I'm speaking based on my perspective.  We've seen less people at Loxton compared to this point last year.  However, the winter this year was especially long and wet in Sonoma.  People just don't like going out in wine country when it's wet and cold and this includes the locals.  Weather is a huge factor to us both to the number of visitors and the quality of our product.  Good weather is something we pray for.

The real determination for us, as a business, to whether the weak economy is affecting us is our sales.  It is true that first quarter sales were lower than last year.  However, if we factor in that we saw less people because of the weather then we need to look at another measure to really compare.  That figure would be average dollar amount per purchase.  When we looked at this it wasn't very different.  In fact it was a single digit difference from last year.  So it appears that when people did visit us and made purchases they were purchasing the same amount of wine they were the year before.

What about sales to date?  The total number of purchases?  It can be easy to rationalize events.  View them in a way that makes them seem normal maybe even look good or optimistic.  However, when you look in your bank account the truth will hit you.  Is there money there or not?  For us, we can't complain.  Sales are a little bit off from last year but that can be attributed to the slow start to the year.  This, as I stated earlier, was due to the crappy weather.  People are still buying our wine.

This brings me back to the Memorial Day weekend.  While we did have time to talk about some these topics the fact is we were pretty damn busy.  We saw a lot of people and those people were buying wine.  We had to turn away a van of twenty, twenty-something women, we just didn't have enough staff to serve everyone.  Sales wise, we were right on target with last year.  While I can't say for sure that the slow economy US is not affecting the wine industry it doesn't seem to have as much an effect on us.

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  • Snooth User: oceank8
    Hand of Snooth Voice of Snooth
    55708 2,030

    I totally agree with what Philip is saying and want to add that most people see wine tasting as a vacation and already plan to spend money. I think if they still make it out to the wineries, they will still spend money.

    May 30, 2008 at 11:22 AM

  • Snooth User: Philip James
    Founding Member Hand of Snooth Voice of Snooth
    1 12,575

    John, from what I understand, “vices”, like alcohol, gambling and cigarettes, sell more during a recession. However, wine isnt cheap vodka, so might not fall into the same category.

    However, I also know that Gucci dresses and Coach luggage sells as well during a recession. These ultra high end brands are basically recession proof, as only the very wealthy can afford them in the first place.

    Wine straddles both spectrums.

    The Silicon Valley Bank report talked about some compression in the $15-20 range, with those people spending $12-15 instead, but its clear that if you are buying $100 wine, you can probably winter a downturn.

    May 30, 2008 at 12:56 PM

  • Snooth User: Mark Angelillo
    Founding Member Hand of Snooth Voice of Snooth
    2 5,324

    Must be pretty nervewracking to be so dependent on good weather! I think of the days when I get to the office to find the internet down or intermittent. So unproductive!

    May 31, 2008 at 5:07 AM

  • Snooth User: John Andrews
    Hand of Snooth Voice of Snooth
    36106 3,448

    @Mark … weather can play havoc with our business that is why a strong wine club is very important for us.

    Jun 05, 2008 at 11:24 AM

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