After any downturn we are rewarded for our patience with the recovery, who’s arrival is heralded as the solution to most of our sales problems. The catch cry of many winery’s seems to be, ‘We’ve weathered the storm, once things are back to normal we should be ok.’ Logic states after all, that as consumer confidence and spending increases, so will purchases of luxury goods such as wine – but I fear it’s not going to be that simple.
The downturn has had some unexpected side effects by changing the basic landscape of our trade, meaning our supposed recovery ’saviour’ will lead us towards new and uncharted territory. Let me know your thoughts on what follows.
First and foremost we’ve seen wineries discount to maintain sales volumes, effectively spoiling lucky consumers with increased value – the same product for less. The recovery might herald an increase in discretionary spending but it certainly does not mean that prices can then automatically return to their pre-downturn levels – a new norm has been set.
Next we have the consumer’s natural response to belt tightening – trading down. Habit is a powerful thing, so persuading people that they should stop buying $12 wines and return to the $20 bottles they enjoyed 2 years ago is going to be no mean feat.
Finally, the downturn has been a boon for the supermarket chains, with their slick ads, uber discounting and most importantly, their ’save save save’ advertising campaigns. Smaller booze budgets have seen consumers forgo the convenience of their local bottleshop to head over to big box in order to ’save save save.’ Getting them to return to a fine wine specialist or local hotel is hurdle one, but there’ll now be a consumer expectation that those supermarket prices are replicated to a certain degree throughout the trade – and that’ll hurt everyone’s margins.
All we suppliers can really do is continue to add value to our customers and role with the punches as the ‘new’ wine trade unfolds.