Wine & Money - the industry take
Some of you know some of you don't, I am currently a candidate with the Wine MBA program at BEM Management School. After reading the January 26th WSJ lead editorial on the Global Fed I could not help but think about the effects on the wine industry.
In our session last March Australian producers that were hedging currency were looking at $0.85 US to the AUS$ it is now at $0.8801. When we started the program in January of 2007 the Euro was at around $1.30 and now it is $1.48.
What does this mean, it means that the quality wine at reasonable prices that the American consumer has relied upon will be harder to come by in 2008. Europe and Australia have relied on the US and the UK for increased consumption and the US for relative pricing stability for over a decade, and that could be coming to an end. Wild currency flucuations will not be helpful for the wine industry. It has become increasingly global industry and this unpredictable financial future could truly hurt an industry that is just getting over severe wine gluts in France and Australia.
My one hope is that the american wine industry will learn how to properly export their wine instead of the situation we currently where tip number one for Decanter magazine's August 2007 issue is "Don't bother trying to find good value Californian wines outside the US." We are doing nothing to improve the image american wine abroad.
It will be interesting to see what the shake out will be from all of this.
