Sue and I have just returned from the 30th edition of the Unified Wine & Grape Symposium in Sacramento. The Unified is the largest wine industry gathering in the Western Hemisphere with about 12,000 attendees over three days and 900 trade show exhibitors. If you want to take the pulse of the American wine industry, this is the place to go.
So how is the industry’s health? Well, if you go by the economic indicators such as sales trends (more about this next week), the patient is in bad shape. There was bad news in the wine press and the expectation that more bad news was coming (it did).
Economic Pessimism
The situation reminded me of an essay called “The Economic Possibilities of Our Grandchildren” that the English economist John Maynard Keynes wrote in the depths of the Great Depression. “We are suffering just now from a bad attack of economic pessimism,” the essay began. “It is common to hear people say that the epoch of enormous economic progress … is over; that the rapid improvement in the standard of life is now going to slow down …
“I believe that this is a wildly mistaken interpretation of what is happening to us. We are suffering not from the rheumatics of old age, but from the growing pains of over-rapid changes, from the painfulness of readjustment from one economic period to another.”
I quote these lines here because I think that we are today also suffering from an attack of economic pessimism, both in the wine industry and more generally. We tend to look down and to look back, not ahead, and we avert our eyes from good news (about inflation or unemployment or, occasionally, politics) when it unexpectedly appears.
The only bright lights we allow ourselves to see (the Barbie movie, Taylor Swift) are ridiculously popular because of their novelty and scarcity. We look like the drab men and women of Keynes’s day. How sad.
I am part of this environment, of course, and because I am an economist and therefore a licensed deliverer of bad news, I am also part of the problem. I expected to meet a pessimistic wine industry at the Unified Symposium and that’s what I found. But only at first.
Cautious Optimism
Gloom and doom. But then in casual conversations Sue and I discovered a streak of cautious optimism that we didn’t expect. A friend we met at the registration counter who is involved in winery recruiting said she felt that hiring had turned a corner. Another friend who works in bottle closures was optimistic, too. He accepted the current problems but saw a path forward and was moving with confidence. This was not the first crisis he’d seen and he didn’t think it would be the last. Talking with him was a moment of quiet inspiration.
One winery owner was frustrated by all the bad news in the air because she worried about self-fulfilling prophecies. If we think the future will be dark and act accordingly then it will indeed be dark. Someone must turn on a light or at least acknowledge that the light switch is still on the wall.
Sue was working the trade show floor while I was moderating the State of the Industry session. She reported that it seemed like lots of business was getting done. There was a record number of trade show exhibitors and thousands of people in the aisles shopping for equipment and services or checking out what’s new. It was not a dismal scene, she told me. And it was still buzzing when I got there a couple of hours later after the press conference, even though a lot of people were at lunch.
Don’t Look Back!
What should we make of this uncomfortable combination of bad news and hopeful sentiments? In my remarks to the State of the Industry audience, I invoked the great American philosopher (and baseball pitcher) Satchel Paige, who warned, “Don’t look back, something might be gaining on you.”
How you see the future depends upon how you look at the past, which is your reference point. And that’s a dangerous thing because the past can be different depending upon your viewpoint.
If you look at today’s wine industry from the viewpoint of 2008 (as I discussed in last week’s Wine Economist), then you can’t help but be disappointed. The continued rapid growth that the industry expected then has failed to materialize in general. However, there are obvious market segments (thank you, New Zealand Sauvignon Blanc) that have grown beyond expectations.
But if instead, you look back 30 years, to the very first Unified Symposium, then your perspective is quite different. Seen from 1994, the wine market of 2024 is almost unimaginably prosperous. Wine has grown in every dimension: quantity, value, quality, number of producers and brands, global reach. It’s not where we thought we’d be back in 2008, but it is pretty damned amazing from the 1990s perspective.
The fact that the wine industry today is somewhere between the smaller market that they expected in 1994 and the much bigger one projected in 2008 should give us pause. There is a path forward from here; it is not without costs, challenges, and risk, but it is there for those who take it.
Don’t get me wrong. I am not denying the seriousness of the problems wine faces. Remember that I’ve been the frequent bearer of bad news for several years now. But cautious optimism is justified. The road ahead? Come back next week for more thoughts.
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Come back next week for more about what we learned at the Unified Symposium. In the meantime, follow this link for a pdf of Keynes’s essay.