The belt gets tighter. Rising energy costs and inflation mean that most if not all of us need to pinch our pennies and that in turn also means that we might not be able to spend as much on wine as we would like to. That is, of course, just one interpretation of the changing economic news, and less might be more. The words of an inveterate optimist, you might say, but always remember what Eric Idle sang at the end of the Life of Brian. Anyway, before we get carried away, here is the latest edition of the JollyCellarMaster Weekly:
U-Turns, Downturns and a Coronation
When it rains it pours
Given the constant turmoil the British government has been producing of late, you may be excused if you struggle to stay on top of things. With the recent reshuffling off the top positions and the several U-turns off budget proposals, an important story may have slipped past your attention.
I won’t bore you with stories about old and new prime minister and chancellors, but in the latest of a series tax plans and amendments hides something that has a significant impact on the wine world, too.
Among several reversions of his predecessor, the new Chancellor, Jeremy Hunt, has reversed a planned freeze on alcohol duty tax as part of the latest change of government plans. As a result, the price of wine and other alcoholic drinks is very likely to go up.
It comes at a rather inconvenient time for the wine sector considering already quickly increasing prices due to inflation, the war in Ukraine, the resulting energy crisis, and an overall shortage of resources such as cork, glass, or other packaging materials.
Only yesterday, the wine buying manager, one of the UK’s biggest supermarket chains, said that “Retailers should keep retail inflation on wine to an “absolute minimum” as consumers are less prepared to pay for price increases in wine than in other categories as grocery inflation hits highest point in 14 years”.
Now remember that the UK is an important part of the global wine trade and if its citizens are to spend less on wine, it means bad news for each of the regions that is sending its wine to the British Isles or had planned to do so. Only in 2020, United Kingdom imported US$4.35 billion in Wine, which made itthe 2nd largest importer of wine in the world. You see what I mean?
The End of the Party
Is it though? The end of the party, I mean. Well, it’s probably a bit drastic but it certainly gathers a bit of attention and there is, of course, an element of truth in it.
Only recently, we pointed out that there seemed to have been a change in narrative with regard to the prospects of fine wine. After it initially appeared to have withstood the general market downturn around the change of the year, it was even presented as one of the few alternatives in dire times for investments.
Yet, over time the tone got only ever so slightly a touch darker and while there had been suggestions that price momentum on the secondary market could cool, British merchants, for instance, reported strong buyer demand this year and the sector is known for re.
Well, take that in light of what was just said in the previous section plus the latest data from Liv-ex and things look differently: while quarter-on-quarter the Liv-ex Fine Wine 50 rose 1.3% and thereby out-performed other assets such as global equities and commodities, even without factoring in the cost of inflation there can be no doubt that we find ourselves in difficult times. In its quarterly report for Q3, Liv-ex said that we witnessed “unnerving three months but ones that reflected the increasingly severe headwinds that have been worrying the market since the latter half of Q1”.
Trying to keep an optimistic tone, its deputy chairman said that “whether the market can continue to hold steadfast as major global economies fall into recession remains to be seen,” clearly emphasising the potential trouble that lies ahead.
All hail the German Wine Queen
Ending on a more positive note, Germany has a new wine queen.
Her name is Katrin Lang from the region of Baden and she is the 74th in a long line of wine royals going back to the year 1931, when the Palatinate as the first German wine region crowned a queen.
Back in the day and explicitly during the Nazi regime, the candidates appeared to have been selected based on their looks, according to quotes on Wikipedia.
Nowadays, that view couldn’t be more wrong and has fundamentally changed over the course of time, rightly so. Strong wine knowledge paired with business acumen and language skills rounded off with eloquence and wit might be a better description of required faculties and that became more than obvious during the selection process before and during the gala evening that culminated with the decision taken by the jury together with the outcome of public voting taken by spectators.
Together with the two other candidates that made it into the final round and who were crowned wine princesses, Luise Böhme from the Saale-Unstrut wine region and Juliane Schäfer from Rheinhessen, the trio will now face more than 300 appointments over the coming year around the world to represent German wine.
Long live the queen and princesses!
And that is all for today. However, if you have an interesting story to tell or simply want to chat about wine as a guest on the Podcast, connect on Twitter or drop me a line. And if you want to stay in the loop about things happening at the JollyCellarMaster and the world of wine, make sure you sign up to our newsletter.
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