WINE: People Actually Drink Less In A Recession
Recent Western Cape Business News
It is a myth that people drink more in economic downturns, said Colin Collard, chairman of direct wine marketer, Wine of the Month Club. The club is the country’s leading direct wine marketer, with more than 30 000 regular clients on its books.
“Downturns, such as the one we are facing now,” said Collard, “act to drive people away from drink. When times are good, they drink more.”
He said that while the wine industry has been affected by the downturn – like many business sectors – he believes it is still ‘pretty buoyant and healthy”.
“I am taking a long term view and looking at the long haul. In the medium term, though, things are tough. On-consumption sales in restaurants are down significantly. Added to that, a number of restaurants are going out of business.
“In the case of off-consumption sales consumers are down-sizing-buying cheaper brands or buying less. Expensive and upmarket wines that were difficult to get hold of, or that were only available on allocation, are now more readily available.”
The export industry might also be under stress, he believes. “ We know of a number of local wine producers who have had export orders cancelled - because of low quality or bad service but simply because of difficult trading conditions in our main export markets.
“The market won’t halt completely, but there is certainly a freeze factor, where people stop buying simply because they think they should be cutting back. After a while they realise they may have overreacted and then they trickle back into the market. It then takes some time for momentum to build up again. I think sales will stagnate for a while and then pick up again.
“But there is still a market overseas for our wines. South African wines have never been better. The current harvest looks very good and our winemakers are on the ball. Overall, quality continues to improve and with the exception of one or two other producing nations we offer just about the best value for money you can find anywhere in the world.”
The Wine of the Month company distributes its wines all around the country but mostly in Gauteng, followed by the Western Cape, Durban and the Free State.
Collard said that while the company’s sales are down “that hasn't caused us to cut back or stop investing in the future”.
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