Wine Buying Patterns: Temporary or Permanent?

It is doubtful anyone would deny that the wine industry has been adversely impacted by the global recession. Supply and demand in any industry affects pricing and availability of many goods and services.

In previous recessions the “status quo”  returned, and then moved upwards. So is the current economic situation simply a normal cyclical pattern that once we have a recovery everything will return to normal and then start inching upwards again? Or has this recession, the worst the world has seen since the 1930′s, changed wine buying habits?

Certainly those that still have very large disposable incomes and are partial to wines that are in short supply at astranomical prices, will continue to purchase those wines. But unlike past recessions, there are questions about whether the same degree of “wealth” and disposable income will return to the middle class, those that have become wine drinkers and have been purchasing more expensive, non-cult wines.

Are wine drinkers “stepping down from what they used to spend per bottle, to a lower outlay”? This was a statement from one of the more recent articles from Reuters entitled “Wine drinkers lift glass to law of supply and demand”. There have been numerous articles on the subject including those from wine country itself such as the North Bay Business Journal’s  Wine: As consumers seek value, wineries adjust. All of these are suggesting this is not your normal cyclical pattern.

It is with this background that I setup a survey with a few simple questions. Now I can’t consider the survey a definite indication of what will happen since the response numbers were not significant enough to come to that kind of conclusion. However, I can at least share with you the response that I did get as follows:

Background Questions:

I first asked the participants to indicate their gender, age and location.  77% of the respondents were male and 23% female. Of these, 38.5% fell into the age group of 21 – 39 and 61.5% in the age group 40 – 59.

In terms of location, 38.5% indicated they resided in the Eastern US, 23.1% resided in the Western US, 15.4% resided in the Southern, US and finally, 30.8% resided in Europe/Middle East/South Africa.

Wine Purchase Questions:

The first question asked was “In the last 12 months has the number of 750ML bottles you purchase increased or decreased?” The response was that 67% have increased the number of bottles purchased and 33% have decreased the number purchased.

I then asked a question regarding purchasing pattern before the recession – “Before the recession in what price range did you buy everyday wines and special occaison wines?” The response was 38.5% purchased everyday wine priced $5 – $15 for a 750ml bottle, 53.8% purchased everyday wine priced $16 – $25, and 7.7% purchased bottles between $26 – $50 for an everyday wine. No one indicated purchasing wines for everyday consumption over $50.

For special occaisons, 7.7% indicated they purchased these between $16 – $25 per 750ml, 38.5% at between $26 – $50, and 7.7% over $50.  (Please Note: This was a single question with  multiple responses so that percentages will not add to 100%)

I followed the previous question with “Since the recession I now buy wines ….”. The response was that 69.2% are buying everyday wines in the $5 – $15 price range and 38.8% are now buying in the $16 – $25 range. None of the respondents indicated purchasing wines for everyday consumption beyond $25.

In regards to special occaison wines, the response was 30.8% are buying in the $15 – $25 range and 23.1% purchasing in the $26 – $50 range. None responded purchasing above $50 for special occaison wines. (Again, numbers will not add up to 100% due to multiple answers)

In order to keep the survey brief I asked only two additional questions:

The first was in regards to future purchasing plans following the recession. 30.8% said they would likely return to their purchasing winesas they did before the recession and 69.2% said they would continue purchasing the way they have during the recession.

The final question simply asked whether the respondents had any additional comments. Four of the respondents had additional comments as follows:

• “I think prices have increased as well with high cost of logistics from producer to open markets.”
• “My wine buying strategy is mainly influenced by vintages. As an Italophile this year the release of ’04 Brunello and ’04/’05 Barolo and Barbaresco kept me buying at roughly the same level/slightly increase. With the great ’06/’07 vintages comming up next two years, I’ll expect to be buying at a slightly higher level.”
• “People are now looking at lesser known regions and less well known varietals. This is all good as it will expand on wine knowledge in general.”
• “I have been more mindful of every dollar I spend – there are many good wines in the lower price point”

The data suggests that wine buying patterns have changed. This is consistent with many other industry articles as well as data collected from wineries, distributors and retailers. The question remains whether these buying patterns are temporary or permanent. At the very least these data would suggest that buying patterns will not quickly return as they have in the past, and for some buyers, may have changed permanently.