A few days ago, I sat in on a Zoom presentation discussing the latest findings of the Silicon Valley Bank’s annual state of the business wine report and quickly wrote a news story about it for the next day’s issue of the Drinks Business daily news feed. The first graph read:
American wine sales are predicted to continue their slow decline during 2024, although tasting room visits and DTC sales are expected to slightly increase during the year, as will premium wine sales, according to the 23rd annual Silicon Valley Bank wine industry report released on Thursday 18 January.
Much of the discussion by the panelists during the Zoom presentation centered around why this continued decline was happening and what could be done to reverse it, and my story reflected that. The tone was understandably similar to discussions centering around climate change – what in hell can we do about this looming disaster?
But I found myself asking: How concerned should we be about these declining sales – especially in sales volume – or should we be concerned at all?
For years, I have railed about how big investors in the stock market only value sales growth, even though that growth often comes with negative profits. Though not an economist, I did work from the early 1970s through the 1990s for a large industrial company, including editing the corporate annual report for a couple of years. Back in those days, growth was fine, particularly if you were launching a new brand or technology. But even more important was what we called “quality of earnings” or ROI – return on investment. Profit margins were holy, because this is what allowed you to invest in growth and to pay regular dividends to stockholders.
Alas, no more – new company launches, rings bell, hires people, has growth, stock goes up, market becomes saturated, growth stalls, investors flee, stock price drops, employees fired, company vanishes or is purchased by the carrion crows of private equity firms.
I feel somewhat the same way about declining wine sales in the U.S. Does this decline necessarily affect the things that I believe we should be concerned with? The decline is mainly in low-end wines and not in premium wines. And the decline is somewhat generational – some younger people are drinking less wine than we old folks did or drinking no wine at all. (I remember being similarly alarmed in the 1990s when no one was drinking cocktails, and some Bourbon producers, notably George Dickel, even mothballed their main distilleries. But I could still drink great whiskey. Could some things just be cyclical?)
To me, the important things are that great wines can continue to be made around the world, even if I can’t afford them, and that smaller, high-quality wineries can provide me with very good drinking at reasonable prices while their owners make a living. I’m not sure that the fact that the average American, who views wine as a commodity that he or she can have at dinner or not, is drinking less of it will ultimately make good, affordable wine and great, unaffordable wine from being made and being available to me and other wine lovers.
My greater concern is that the health mafia among government agencies and prohibition groups worldwide, with their questionable “scientific” studies, continue to legislate against wine and other alcoholic beverages or, failing that, socially shame drinkers the way lifestyle behavior was once shamed. Dry January is one example. While we should not pressure people to socially drink, neither should we pressure them not to drink socially if no health problem is involved.
Yes, I am aware that there are economic hardships when any industry slows down. In the case of wine, marginal vineyards start being abandoned or ripped up, sometimes bankrupting farmers, and sales and production workers get laid off, especially from large-volume producers. But that is the unavoidable nature of all economies and of all industries. Things become obsolete or go out of style or the competition wins, and investors, owners and workers all suffer (although workers generally fare worse than others). Those of us who believe in compassionate government try to help cushion their falls, whether it is through bankruptcy, tax credits, unemployment benefits or job retraining.
Those of us who were around during the wine boom years of the ‘70s, ‘80s, ‘90s and the early ‘00s were fortunate as wine collectors or wine journalists to feel like we were the center of the wine universe – and we were. It was fun being there. Now, we are less revered. Fewer people outside the wine world ask us what we are drinking, what they should be drinking or starting conversations with us by apologetically saying, “I don’t know much about wine….”
So as long as great stuff remains available to us and as long as it appears that it will be available in the foreseeable future, I won’t put down my wine glass to wring my hands.
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