Keeping Wine Relevant: Part 3

The Economy

            Before I get into the bulk of this argument, I need to say one thing: I will not, and let me repeat, WILL NOT, make this section into anything political. While this portion of the series could easily go in that direction, I will not be letting it. So, if you expect something that favors left, right, center, or sideways, you will not get it.

            For several years now, we have been hearing about the recession. We hear about different companies going into bankruptcy or getting bailouts, people being out of work for long periods of time, and now, cities filing for bankruptcy. The world seems to be in a downward spiral with no definable end. People are counting their pennies more and more and not splurging on things as much as they were in the 90’s and earlier 2000’s. Young people are having a harder time getting jobs and saving money and debt is piling up. At this point, besides the possible feelings of doom and gloom that may be rushing through you, you may also be wondering what this has to do with wine staying relevant. Well, allow me to explain.

            With more people coming of drinking age due to the “baby boomlet”, the consumer base for alcohol is growing. With this economy, the average net worth of those new consumers has dropped. Currently, according to CNNmoney, the average net worth of someone 25-35 is a little over $8,000. Now, factor in rent, school loans, car payments, everyday expenses and we are not left with a whole lot of money to spend on those “extra” things. Those “extra things” include wine and spirits.

            Setting the money talk aside for a moment, let’s examine the consumption of these things. With all of the wine in the world, about 90% of it is made to be consumed within a year of it being bottled. Most younger consumers (being defined as the 25 to 35 year old age group in this case) won’t even wait that long, usually drinking the bottle that day or within a week of taking it home. If it is saved, many times it is not in ideal conditions and goes bad within a few years at best. Liquor, for the most part, has no expiration date, mainly because the higher alcohol levels allow for it to be opened and stay open without going bad. In fact, it is almost impossible to make certain liquors go bad at all. That higher alcohol content also means that a little will go much further than a glass of wine.

            All of that being said, we turn back to talking about all of this in terms of dollars and cents. According to Decanter, the average price of a bottle of wine has climbed to over $15 a bottle, up almost 80% since 2002. They also say that the average cost will continue to climb as much as 7.1% in the next 2 years. That is not an insignificant jump, especially when you consider that the average alcohol level per bottle is around 13%. Compare that to a bottle of booze; that same priced bottle of booze will carry an alcohol content in the 40% to 50% range, meaning that the likelihood of finishing a bottle in one sitting is slim to none. So, that bottle will last the consumer longer than the bottle of wine will, cutting their average spending on alcohol significantly. This also raises the question as to why people are consuming. Is it for enjoyment, understanding, to get drunk, or any number of other possibilities? This also helps dictate the amount of money that people are willing to spend on the product itself.

            So here is how I view this economy argument. For the average 25-35 year old, they are not thinking of wine as an investment, so the high end, collectable wines are out of the question. I won’t be cynical an say that all people in that age group are also drinking to get drunk, because I don’t think that this is the reason everyone drinks. However, I do believe that everyone, especially people in those age groups, are looking for value over anything. It is hard to argue that the value of a bottle of liquor or a six pack is less than the value of a similarly priced bottle of wine. Mathematically, it just isn’t. With all of this, how does one make the argument for someone buying wine over other alcohols of the same price?

            It is a hard argument to make, and often times one that does not make much head way. We are in a generation that flocks to places with great cocktails and beer lists rather than great wine lists. The thirst for more knowledge and understanding of these products seems to be far greater than that of wine. Some of this goes back to the first part of this series and the conversation of wine being approachable. Does price make it less approachable as well? I would tend to argue that is does and that, and until people have more liquid assent to spend on wine and exploring it, that the trend will stay that way.