Fine Wine Confidential Podcast
The Fine Wine Confidential Podcast tells the story of how the modern-day Virginia wine industry has progressed during the past forty-five years and is now achieving Thomas Jefferson's aspiration to produce world-class wine. Fred Reno interviews many of the Old Dominion's prominent winery owners, winemakers and viticulturists. In their own words, you the listener, will learn why Virginia is the most exciting wine-growing State in the country today.
The Fine Wine Confidential Podcast having chronicled the beginnings of the Virginia modern-day growth is now focused on the wines produced from the Norton grape as Virginia is its ancestral home. Look for All About Virginia Norton.
Fine Wine Confidential Podcast
EPISODE # 8 WINE BUSINESS IS A TRAILING ECONOMIC INDICATOR
Episode #8 is an insider's view of the Henry Wine Group Board Meeting in the fall of 2007, when I was President & CEO.
While reviewing some sales data for several of our top-end California producers, I noticed a disturbing trend that alarmed me. When I opened the meeting, I said, "Gentlemen, I have noticed some significant slowing down of the sales for a number of our most expensive California wines, and I believe something is happening that we should be paying close attention to.
My comments were dismissed mainly by the board, which was composed chiefly of Republican-leaning businessmen. Their response was to comment that the economy was doing fine, especially on Wall Street.
I opened the next Board meeting in March of 2008 with the following comment.
"Gentlemen, I wish I had been wrong back in September, but it appears my intuition was correct". Like good Republicans, they all looked at their shoes and would not look me straight in the eye.
I explain in this snippet why the Wine Business is a Trailing Economic Indicator not a Leading Economic Indicator.
Take a listen.
Thanks for being a listener to the Fine Wine Confidential Podcast. For more information go to www.finewineconfidential.com
EPISODE #8 WINE BUSINESS IS A TRAILING ECONOMIC INDICATOR.
Fred Reno
On Tuesday, September 25, 2007, as CEO and President of Henry Wine Group, I called our fall board meeting to order. Of immediate concern to me was a trend I quite honestly and inadvertently discovered while reviewing sales data for my favorite winery, Viader. I became the brand manager when Delia Viader brought her wines to us in 1999, and I always felt that being active in that role would keep me grounded and aware of developments in the high-end wine market. This was, in my opinion, perhaps a canary in the coal mine moment.
After some initial opening statements, I told the board members that day that I had spotted a disturbing trend in the marketplace. When I was reviewing sales data back in June and July for not just Viader but also other top-dollar allocated wines like Kistler, Shafer, and Cain vineyards. I was taking a particularly close look at restaurant accounts that always bought these wines when they were available, and I saw restaurants that might usually order two cases of Kistler each month that were now ordering one case a month, or even as little as one every six weeks. This trend appeared to be across the board for the other high-end brands we represented. So, something was going on when I brought it to the board's attention. For the most part, they all just pooh-poohed me and said, Oh, the economy was strong, and everything was doing great. I said, Gentlemen, I believe something is going on here that we should be paying attention to.
Fast forward to March of 2008, at our next board meeting, I opened the meeting with some remarks and basically said, Well, gentlemen, I wish I had been wrong in September about the economy, but I guess I was right. Like good Republicans, they all started looking at their shoes, and none of them would look at me directly. I just thought to myself, and these gentlemen were supposed to be good businessmen, not. While we all know what happened next, the economy went into the tank—and it took the government to save and bail out everything, including the automobile industry, the banking industry, real estate, and Wall Street. Well, Henry Wine Group was not immune to this economic downturn, even if we represented the best of the best. I look back at it now and realize what a lesson I learned in many ways.
However, the wine industry is a trailing economic indicator, not a leading one, because the last thing people change when times are tough is their drinking habits. They eventually will trade down. And then they found out that the $10 to $15 bottle of wine got them just as high as the $50 bottle. And you know what? It tasted pretty good. So, when times get better, economically. The first things they started buying were the things they put off the longest, like new cars, washing machines, clothes, and things for their kids. But because there is so little brand loyalty in the wine business, and they were introduced to wine that was really quite good at lower prices, it takes a long time for them to trade back up. Lesson learned, pay attention.