The situation might be similar to India where the recession took a deep dive after the 26/11 terrorist attack in Mumbai in November 2008, after showing its ugly streak as early as September when Sula had confessed to delWine that the imminent slow down had begun. After two years of free fall the market became to stand on its feet again and from all the current indications, the wine market is back on the growth path, despite an expected shortage of grapes in 2 years time.
Dean Robert Smiley of the university’s Graduate School of Management who presented his findings Tuesday at the 20th annual Wine Industry Financial Symposium in Napa, warns that despite the economic doldrums and unusually cool temperatures that hampered the grape crop, and despite the wine production likely to face several more rough years, the wine consumption is set on the growth path. But the prices are not expected to increase much, he feels as the customer is very price conscious. Retailers are counting a lot on discounted high-quality bottles to attract the buyers. Producers are also working more vigorously with third-party wine clubs, besides their own, to broaden their customer base.
The report also reveals what professionals believe to be the most pressing issues for the wine industry during the next decade. Consolidation within the industry's distribution sector, increased government regulations and environmental issues, have been pointed out. Slow economic recovery, pricing pressures, government regulations and higher taxes were at the top of growers' lists that are reluctant to add more vines despite the expected increase in demand- a situation not much different than in India where the farmers uprooted vines when they could not sell grapes and are now disenchanted. For the first time in the surveys' 20 year history, professionals have also included grape shortages, as well as unpredictable weather and oil prices, as likely constraints on industry growth.
Talking of a possible shortage of grapes, he says in a statement, "Even though we have technically been out of the recession for two years, growers have been reluctant to expand their plantings or replace older vineyards that are moving into declining production."
China will be the saving angel again for the market. ‘With high demand expected among young drinkers and foreign customers, especially in China, 53% of wine industry executives say this year will be more profitable than last,’ says the report, with nearly three-quarters anticipating that 2012 will also outpace 2010.
Indian exports has seen a silver lining in UK with the retail chain Waitrose claiming to have sold off the initial consignment. Shailen Patel Proprietor Cranbrook Wines Ltd., former distributor for Grover Vineyards, who is now the distributor for Four Seasons has informed them that he is having regular meetings with them and they are expected to place further order next week, according to Abhay Kewadkar, Head of the Business Division of Four Seasons and the Chief Wine Maker.
The report could also be termed positive for European and New World producers who are regular exporters to the US but the foreign exchange valuations of their currency may be a very important factor. |