A new report into the fine wine world shows amazing optimism in the face of worldwide economic realities.
© iStock|The fine white wine sector remains in good health but will that golden run continue through the present economic problems?
The global fine red wine sector is in impolite health and will stay so in spite of the current economic upheaval– at least in its own eyes.
A freshly launched report suggests 90 percent of respondents– all associated with the upper end of the global wine market– were taking a bullish technique to the next year, although economists are warning of more pain in the pipeline for homes in the coming 12 months.
The 2022 Gérard Basset Global Fine Wine Report– produced by the Gérard Basset Foundation– surveyed 943 “leading global fine white wine market gamers”, including 56 Masters of White wine, 32 Master Sommeliers, 72 Advanced Sommeliers and 250 WSET Diploma holders about how they visualized the coming year for fine white wine and the reactions were optimistic; 60 percent stated the outlook was positive, while another 30 percent called it “extremely favorable”.
Simply 4 percent opted for an unfavorable possibility, while the other 6 percent were neutral.
In fairness to the respondents, they were polled on their forecasts back at the start of the year, when the international financial outlook was significantly rosier than it is now. Respondents were especially encouraged of the general strength of the great red wine market, rising demand for great wines, increased quality of great red wine taken in worldwide, and growing levels of financial investment in fine wine. Economic recovery after the disruption occasioned by Covid was likewise a factor for optimism provided by lots of.
Surprisingly, the primary reasons given for a negative outlook appear more prescient, in hindsight. Sluggish financial healing post-Covid, an unfavorable geopolitical outlook, worldwide warming, and rising energy costs were the main reasons cited for a negative outlook. All were spot on, as it ended up.
A tale of 2 markets
Nevertheless, the report is likewise focusing on the fine-wine market which is a different monster to the bigger “customer” red wine market– individuals who buy supermarket white wine will tighten their belts by buying cheaper grocery store red wine; they were never ever buying cases of Masseto anyway, although they may have purchased a bottle for an unique celebration. Just how much longer many people will still have the ability to delight in even that little splurge is uncertain.
There are some strong premises for the great red wine sector’s confidence in the effectiveness of their market. Top-end white wine rates have been performing ebulliently on secondary markets over the past 5 or six years, with some (okay, Burgundy) displaying outrageous levels of cost inflation. There also appears to be a sustainable sufficient market currently to keep purchasing these white wines, so maybe the sector’s Pollyanna-ish method can be forgiven.
However, if there are Pollyannas in the great white wine sector, there are more than a couple of Cassandras in the broader wine industry. In the United States, the world’s biggest red wine market, Silicon Valley Bank’s Industry Belief Index took a sharp nosedive this month, falling from -2.08 last year to -15.76 now. Rabobank is recommending a “softening” in the international superpremium market in 2023. Red wine Financial expert blogger Mike Veseth has an excellent post explaining the perils ahead, too.
Moving the focus out even more, JP Morgan’s CEO Jamie Dimon is anticipating an US economic downturn in the next year, while the IMF is cautioning of lowered growth in the next year. Clearly, that will not hit everyone equally, however even some of the more upscale in society are most likely to be checking their outgoings.
One fascinating thing that emerges from these contrasting viewpoints, is that there is a clear divide now between the wider white wine market and the “fine red wine” market. One side can visualize their core market coming under pressure as the cost of living squeeze makes people think a lot more thoroughly about their discretionary expense, while the other is betting on a much smaller friend of wine buyers who are effectively recession-proof.
What the coming months of economic and geopolitical turmoil may well reveal is that the fine-wine optimists are best and the red wine world is dividing into 2, with the space most likely to grow in the future; that even the “fine” and “customer” wine markets are no longer parts of the exact same whole.
Or the future may simply reveal that, when the status rubber strikes the truth roadway, there might be a magnificent blowout. View this space.
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