CWBD: Doom?

V

VLM

VLM
From the paper of record for the Israeli/Palestinian conflict:

"The price of single-family homes fell 18 percent in October from a year earlier, according to the closely watched Standard & Poors/Case Shiller Housing Index. All 20 cities reported annual price declines in October; prices in 14 of the 20 metropolitan areas surveyed fell at a record rate.

A glut of unsold houses is weighing down the market, and housing is likely to deteriorate further in 2009 as the jobs picture continues to weaken. Unemployment is now at 6.7 percent, its highest point in a decade, and economists predict it will rise to 8 or 10 percent next year."

What do folks think this means for the wine business? Most of the importers currently doing such fine work today were not around during the last big recession. Do they have the experience to survive this one? I'd love to hear from Eric Salomon on this subject.

I'm pretty worried as I have many friends ITB and a brother who owns restaurants. They are all very frightened and we live in an area that is doing relatively well (large universities, lots of health-care related stuff).

I also worry that it could be self-fulfilling in that folks could get panicky and react as irrationally in a downturn as they did in the bubble.

I know this is a time to be thankful, but I feel like most human endeavor is doomed to failure because of our own weakness and stupidity.
 
originally posted by Brad L i l j e q u i s t:
How about you ask, what does this mean for those of us in the housing industry?
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Sorry. I'll pray for you, too.

Oh and if you look at the Case-Shiller, Seattle is doing better than the average. But I'll still pray.
 
The builder I work with on zHome went from 50 to 10 employees in four weeks. And they are one of the really good ones. Construction alone accounts for about 15% of local direct employment...
 
originally posted by Brad L i l j e q u i s t:
The builder I work with on zHome went from 50 to 10 employees in four weeks. And they are one of the really good ones. Construction alone accounts for about 15% of local direct employment...
Click to expand...

On a brighter note, if Janszen is right again, you are perfectly placed to get on the next bubble.

Note: The preview function was used to check the HTML on this reply.

Note: The edit function was used to correct the above note because the preview function is fucking stupid.
 
originally posted by VLM:
And then there is the effect on divorce.

I don't know whether to laugh or cry after I throw up.
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A similar effect on labor mobility--can people afford to move to take a new job?

And then the exotic--a friend in NYC who is still moderately rich says that he gets hit on by wives of fired male bankers, lately. Of course, he's subject to self-delusion, so I wouldn't build it up too much.
 
De De Tomasco's sister sold my house in New Jersey.

And it's nice to think that the recession is keeping marriages together. I hope they all work it out and live happily ever after.
 
originally posted by VLM:
originally posted by Brad L i l j e q u i s t:
The builder I work with on zHome went from 50 to 10 employees in four weeks. And they are one of the really good ones. Construction alone accounts for about 15% of local direct employment...
Click to expand...

On a brighter note, if Janszen is right again, you are perfectly placed to get on the next bubble.
Click to expand...

Yes, alternative energy and carbon credit markets are teeming with the kind of pie-in-the-sky hopes and information assymetries that would make a super bubble.
 
originally posted by VLM:
CWBD: Doom?From the paper of record for the Israeli/Palestinian conflict:

"The price of single-family homes fell 18 percent in October from a year earlier, according to the closely watched Standard & Poors/Case Shiller Housing Index. All 20 cities reported annual price declines in October; prices in 14 of the 20 metropolitan areas surveyed fell at a record rate.

A glut of unsold houses is weighing down the market, and housing is likely to deteriorate further in 2009 as the jobs picture continues to weaken. Unemployment is now at 6.7 percent, its highest point in a decade, and economists predict it will rise to 8 or 10 percent next year."

What do folks think this means for the wine business? Most of the importers currently doing such fine work today were not around during the last big recession. Do they have the experience to survive this one? I'd love to hear from Eric Salomon on this subject.
Click to expand...

Since 1990, there is almost no correlation between volume of wine sold and the major income and wealth measures, and only a modest one between dollars spent on wine and those same indicators. A number of economists have drawn strong parallels between our current situation and Japan in the 1990s, a time when wine consumption increased in that country. On the other hand, the current recession is almost surely impacting wine drinking demographics more severely than the last two (during which sales of wine rose). The data on consumer and trade sentiment that I've seen looks pretty positive for wine in general, but very grim for restaurants. Grocery and larger liquor store data was holding up pretty well through the Fall.
 
originally posted by Christian Miller (CMM):
On the other hand, the current recession is almost surely impacting wine drinking demographics more severely than the last two (during which sales of wine rose).
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I'm inclined to believe Mr. Miller on this one, seeing as how he has access to real numbers, knows the wine business thoroughly* and has been immersed in all levels of the wine business long enough to be able to put those numbers in medium-to-long term context.

However, my concern lies not with the wine drinking demographics, but with the wine buying demographics.

The anecdotal evidence that I'm seeing around the country is that restaurants and retailers are cutting way back on their overall wine inventories. Where they'd once replace wines that had sold out, they now leave the slot empty and work at selling down what's already on the retail sales floor or in the restaurant's cellar. When they do buy, they'll order smaller quantities of a given wine, buy at a lower pricepoint, or simply wait for good wines to go on closeout. This discounted price is usually reflected by a lessening of the price the consumer pays, making them more value-conscious and making it harder to sell wine at the previous levels.

The result of all of this is that the distributors aren't inclined to order recently bottled releases, thereby crimping the liquidity (so to speak) of the producers, most of whom still need to pay for grapes, barrels, bottling, etc. Sales are declining at the direct-to-consumer level and for most labels, marketing is the first expense to get the old heave-ho. With a lot of producers falling behind in their payments to vendors, the ripple effect has become very noticeable down here in the trenches. I've had five friends ITB given the boot by their employers in the last two days (HAPPY NEW YEAR, AND DON'T LET THE DOOR HIT YOU ON THE WAY OUT, SUCKAH!!!) and my client roster has declined by about 40% over the past two months. Some of this was due to natural attrition, but most was because their revenue streams vanished.

I'm ever the optimist, but even I am having to stretch to see the end of this tunnel. With high end consumers drinking their cellars, low and mid-level consumers dropping down a notch (or three) in the price points they select, it's no surprise that nobody's inclined to allocate money for restaurant dining. I just finished reading Malcolm Gladwell's "Outliers" and I'm trying to figure out if we're entering into any cycle that presents unseen opportunities, or if we're in a situation where there's nothing but bleak tinged with glimmers of gray, and we're all hosed for the foreseeable future.

-Eden (at least my condo is holding its value for the moment)

* despite the use of the word "varietal" on his website.
 
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