Thread

1. dluan · 1790650752 · focus · HN ↗

   Because of years of trade war, American wine industry is taking a beating around the world and a lot of Australia, NZ, and South Africa is picking up that slack. Even niche producers like Chinese and Japanese wine industry are very quickly maturing into real home-grown industries. The biggest market for California has always been Asia, and it's been near impossible to stumble into Opus One the way you used to be able to in Tokyo, Hong Kong, Beijing, etc.

   Old world has always been able to be flexible, eating these kinds of punches by pivoting into NA or brandy during gluts, and demand has less fluctuations. This contraction, like a lot of everything else happening in the US, maybe was already coming because of some trends overlapping, but policy threw gasoline onto a combustible and fragile situation.

   1. hattmall · 1790651047 · focus · HN ↗

      Ok, so does this mean prices in the US will go down? I keep seeing stuff about countries shifting away from US goods but prices seem to continue to rise.

      1. johnnyApplePRNG · 1790651863 · focus · HN ↗

         Don't count on it.

         Prices and costs generally increase as the quantity sold decreases.

         If they're buying fewer bottles for example, bottles will cost them more per bottle.

         And if they're "losing money on international sales", often times they'll try to recoup that elsewhere. Like jacking up their own prices in justification.

         1. vlovich123 · 1790655113 · focus · HN ↗

            There was a time not too long ago that Napa wineries still had free tastings and cheap bottles. As demand went up, so did prices. As demand goes down prices also go up? This seems disconnected from the supply/demand curves we learned about in econ 101.

            1. jjk166 · 1790658362 · focus · HN ↗

               Higher demand incentivizes more production, increasing supply which drives prices down. Demand increases only drive up prices if supply is constrained.

               Very likely wine demand was not going up, and price increases were instead due to increasing costs and inflation.

               1. bruce511 · 1790660236 · focus · HN ↗

                  Wine has the advantage that it keeps really well, and in some cases improves (becomes more valuable with age.)

                  So when demand softens it may be advantageous to hold back the excess rather than lower prices. Yes, there are cash flow issues when this approach gets out of hand, but financial interests can cover a lot of that as well.

                  1. toyg · 1790684555 · focus · HN ↗

                     > it keeps really well

                     Eh, not really true for the cheap end of the market. A lot of wine sold in supermarkets, for example, is meant to be consumed a couple of years after bottling, tops. And storage can be a significant problem.

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