Spend Management Heads to the Wine Cellar: Time to Stock Up

The great thing about wine is that it's not only fun to drink -- it's also a store of utility and potential investment value as well (especially if your collecting habits tend towards first-growth Bordeaux and Burgundies, some of which cost more than my first and second cars combined did). In fact, many high-end wine portfolios have significantly outperformed the market in recent years, showing double-digit growth. Nearly all of the collecting (and drinking) money in the wine world during the recession, however, seems focused on the very high-end, mostly old world vineyards, leaving average top-end producers with an empty glass, so to speak. Their crises can be your gain, if you take advantage of the market to get on mailing lists or buy that $50 bottle at a serious discount (I've recently stocked up on some Parker 93-96 Chateauneuf du Papes at roughly 50% or less of the original price).

The market is so bad that it's unfortunately bankrupting many producers. This recent article from the Calgary Herald suggests that "as many as 10 wineries and vineyards in Napa will change hands in distressed sales or foreclosures this year and next, up from none in 2008," according to Silicon Valley Bank. If you’re thinking of buying that vineyard, now might be a good time: "Land values in Napa, home to about 400 producers, have fallen 15 per cent from the 2007 peak, driven in part by slumping demand for high-end wine." Much of the reason for this is that "the recession has set in motion a 'secular change,' with budget-conscious consumers trading down to less-expensive wines," according to one expert quoted in the article.

Still, we're not cutting back our consumption. Despite a 3.3% decline in the US wine market in 2009 (which is still a $29 billion sector), overall consumption "increased 1.9 per cent to 323 million cases last year," the article suggests. The challenge is that "Sales of super-premium bottles priced more than $15 declined 10 per cent last year, and those over $30, defined as ultra-premium, fell at least 15 per cent." All of this suggests to me that Spend Management types with the budget and enthusiasm for building their cellars (not to mention spouses who encourage such behavior) have an opportunity of a lifetime they could uncork in front of them -- Lisa, are you listening? ;-).

Jason Busch

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