The "New" global economy and its effect on Port purchases

[Roy Hersh]

Given the state of the economy throughout the world, it basically sucks big time ... how will it impact your Port buying strategy for the near term (meaning 2008 Q4 through the end of 2010?

Do you think it will have a serious effect on the quantity of the Ports you will buy or are able to afford? How about consumption of Port?

Will the economy have you considering lowering your sites on what you will drink in terms of Port ... say going from VP to LBV instead? Or no change on the horizon in your drinking pattern?

What are your thoughts on this?

[simon Lisle]

In my humble opinion not being a country squire Port has increased dramatically in the uk.

[Glenn E.]

My wife and I are lucky enough that the current economical situation probably won't affect us much. Oh, sure, it will impact our retirement accounts, savings, etc, but unless things get much much worse it shouldn't affect us day-to-day. We still have plenty of time until we retire, too, so the impact on our accounts won't even be that bad - we'll just have to continue saving longer than we'd originally planned.

That said, the economy probably will affect my Port purchasing because I suspect it will causes prices to come down. So I'll probably wait on large purchases until I see some sort of drop in prices, and THEN invest in some of the older Ports that I've been eyeing.

My day-to-day Port consumption probably won't change, which means I'll continue to purchase 20-yr old Tawnies pretty regularly.

[Luc Gauthier]

The "new" global economy seems to have slipped under the radar of the SAQ , for the moment !!
But then again , why should I be surprised
As lons as this monopolistic behemoth remains a cash cow for the Québec government , the SAQ wont change Its marketing strategy .
So to answer your question , what was it , Oh , yah , no my buying habits haven't changed .
Although the SAQ did say that they are going to modify there buying strategy and change the way they will distribute their wines . ( this will only take effect in 2009 ) I'm not holding my breath

[Tom Archer]

I don't think this upset will affect my personal drinking habits, but across the fine wine market as a whole, the outlook is looking pretty grave.

The appetite for self indulgence has taken a nosedive, and even those who have no particular need to make economies seem to be hunkering down.

The word from the wine merchants is that they are resigned to the worst Christmas season in living memory.

The overall consumption of wine may not dip by that much, but it seems inevitable that a great many will downsize on their target pricetag when selecting a bottle from the shelves.

And while actual consumption may not fall that much; sales (especially at the higher end of the spectrum) are likely to fall severely, as those who have casually over-bought in the past elect to drink through their stock rather than buy more.

The secondary market is also likely to be heavily over-supplied, as many past investors find themselves in financial difficulty, and need to liquidate their assets.

For the port producers, I envisage some lean years, with reasonable sales of standard ports, but a severe fall in special category sales.

For the Douro wine producers, I fear carnage..

Douro table wines may be good, but the region does not have the standing to weather a storm. A wine merchant recently told me that quality Portuguese wines were a waste of time, because the clientele will never pay more than ten quid for a bottle of wine made in Portugal. A day or so later I was in the Wine Society's shop and noticed that only the cheapest Douro wines are stocked.

I wonder if there has been some collective delusion over the prospects for these wines - using wine-searcher to look up the much hyped Douro Boys 2005 results in just three hits worldwide - all of them in Portugal..

With relatively high production and transport costs, the Douro is not well placed to compete at the bottom end of the table wine market.

There has been an immense investment in Douro wine production over the last few years, much of it, no doubt, funded by cheap (but variable rate..) finance.

I fear that many of the producers may now struggle to find a viable market.

Tom

[David Spriggs]

It might impact it. It's made a dramatic impact in my purchases of table wines. I've cut WAY back on those. For Ports, I'm still buying! I am buying and enjoying more LBVs and will continue to buy those. With the rise in the dollar, buying in the UK is looking better... and I expect transPORTation costs to be less than they were just a few weeks ago. I'm waiting to see what deals materialize. I guess I would say that my list of Ports will focus more on the ones I really want, and not just good deals.
-Dave-

[Frederick Blais]

On my side I don't think it will impact my buying strategy as I don't rely on stocks funds for my retirement and the company I work for is not affected by such a change in market.

For the Portuguese right now it is a nightmare. Some companies and distributors are having problems with credits making them sell their stocks at lower prices to get the cashflow in again very fast. Others are simply abandonning the local market and focus on large export markets to cut down on prices and simplify their business. There is a big mutation in the market of Portuguese wines at the moment. Some players will have to leave and new comers having funds and less need of credits will arrive.

It will be interesting to see this take place.

BTW Luc, port is no longer big in Quebec. Sales are decreasing by 20% so far this year. Many importers are desperate about the sales of port. Colheita and cheap tawny is the way to go at the moment. LBV and Vintage are not as appealing as they use to be

[Eric Menchen]

Realistically, I'm with Glenn on this one.

More imaginatively, I'm thinking I should buy some more ports soon since prices may be down. At the moment I have more confidence that I'll be happy with those investments in the years to come.

[Tom Archer]

Glenn and Eric will be pleased to know that prices are already tumbling in the secondary market.

I've an invoice just arrived from Christies for two dozen Warre '58's - for little more than a third of the retail price..

..anyone tried one recently?

Looks like I've a few to share..

Tom

[Moses Botbol]

I think retailers will have awesome deals this holiday season.

As long as I am employed at the same rates, I do not see my port buying slowing much into 2009.

[Alan Gardner]

I'm with Uncle Tom.
Time to explore the auction market for some of those 'treasures' you weren't able to afford before.
After all - it'll be a more enjoyable return than in the stock market!
(PS just picked up both 1795 and 1899 Terrantez at auction - but don't want to alert too many bidders for old Madeiras!).

[Roy Hersh]

Alan,

I "wanted" to delete your comment about Madeira, but will be a nice guy and hope there are few that will be reading this thread that care less about Madeira. Shhhhh!

Although the UK market will not support the Portuguese table wine sales, here in the USA it is a very different story and a VERY different marketplace. Here in the USA, no one is really looking for the cheap $5-$15 Portuguese wines. Besides, there are not that many of them that are worthy. OTOH, the upper end of Douro wines are "hot, hot, hot" and as fast as these "cult" wines hit our shores, they are scooped up by collectors/drinkers and disappear from the marketplace. I am talking about $30-$100 bottles of Douro wines and even some from other regions which are gaining more popularity too.

You can't help but open a Wine Spectator, Decanter, Wine Enthusiast magazine these days without seeing a feature on Portuguese wines and maybe it is just "en vogue" here in the USA at the moment, but Portuguese wines are catching on. Sean C. is at the Portuguese tasting in Boston today. I bet there are people 10 deep at the tables waiting to sip the Ports and many other fine wines from Portugal there. It will be interesting to see.

I think that the pricing for the next two months will not deteriorate much, as the dollar somehow manages to continue to improve against both the Euro and the British Pound. I can't explain why, but obviously we don't have the worst economy in the world ... and personally, I think a lot of what is going on has to do with the price of crude oil, which has dropped below the "all important" benchmark of $70 per barrel today for the first time in ages. This will help the US economy and we'll see if this has been manipulated or remains a trend for awhile.

If I were going to plunk a thousand dollars or five thousand dollars into Port wine, I'd wait to see if there are big holiday sales, keep a keen eye on auctions and private sales by individuals and retailers ... PLUS, I believe the biggest drop in pricing will be from January to April of 2009. Just a hunch.

[Luc Gauthier]

Roy , I hope your hunch is right . . .
But then again the SAQ dances to a different tune