Industry Observations

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Well I have been in the NJ/NY area for a couple of weeks now and have been in several wine shops and the picture that is emerging is of the industry on the brink of collapse. You are not going to read this kind of stuff in trade magazines or newspapers I am sure since no one wants to create a panic, but from what I have seen and heard the wine glut is real, the high end is totally stagnant, and it is just a matter of time before there are more wine related business failures of all kinds (vineyards, distributors, retailers, etc.).

If I had a nickel for each person that told me the only thing that is selling is under $13 a bottle wine... you know the rest. Some of the rumors and anecdotes I have heard so far: premier French producer offering what was once $400 a case (wholesale!) wine for $150 case. Several NJ/NY importers/distributors belly up this year already. The creation of new labels to move expensive wine cheaply in an attempt to stave off brand destruction, etc.

This is going to become an even bigger issue as wineries and distributors dump product and large retailers have huge sales (that are now nationwide with the Internet) - why pay $80 for a Brunello when you can get the same thing for $40 (or $30!) with a little patience and shopping around. There is going to be some serious price destruction to the top tier wines - from everywhere. Personally I think the whole retail world is going to go this route - not only is there a product glut - there is a luxury product glut. We have begun the process of going backward in time, when only genuinely wealthy people bought luxury items, because they could afford them, and not when everyone buys luxury items after cashing out the home ATM or charging it on their credit card. It is going to be an interesting time as this all shakes out.

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