The Wine Economist’s World Tour will be back on the (virtual) road in the next few months. Here are preliminary details about upcoming events that might be of interest to readers of this newsletter.
The 7th edition of Wine2Wine, Focus 2020, will take place November 23-24, 2020. Usually held in beautiful Verona, this year’s program will be virtual. The wine business in the post-COVID-19 era is the over-arching theme.
Focus 2020 features a quite fantastic group of speakers and topics. The program is wide-ranging and of course economic topics are accorded due attention. I will be talking about the problem of unstable exchange rates in the new normal economic environment, for example, and another session will analyze the prospects of peace in the US-EU trade war, where wine is caught in the crossfire.
WineFuture 2021 is an ambitious event designed to help wine industry actors make sense of the perfect storm caused by simultaneous economic recession, COVID-19 pandemic, and global climate crisis. The event is scheduled for February 23-25, 2021. I’ll be speaking about economic challenges and opportunities. The list of speakers is a who’s who of the wine world, so I’m flattered to be invited to participate.
Although the official event is a few months away, the important issues that need to be discussed won’t wait, so WineFuture is organizing a pre-conference series of free weekly webinars on key topics. Rabobank’s Stephen Rannekleiv and I will analyze some of the key economic issues in the first webinar on November 4, 2020.
Unified Wine & Grape Symposium
The Unified Wine & Grape Symposium is North America’s largest wine industry gathering. Both the conference and trade show, scheduled for January 26-29, will be on-line in 2021. The program, still in development, will be released in a few weeks and I get the impression that it will be even more ambitious than in previous years if that’s possible.
I will once again be moderating the State of the Industry session and making brief comments about the global wine economy. I wish we could all meet up in person in Sacramento, but that’s not really an option this year. So I look forward to seeing everyone on-line.
Use the links above to learn more about these events and check back frequently to get updated information.
The Unified Wine & Grape Symposium is just a few weeks away (February 4-6 in Sacramento) and I am already excited. The Unified is North America’s largest wine industry event with about 14,000 in attendance for the trade show and seminars.
Bursting at the Seams
The 2020 Unified promises to be bigger and maybe even betterthan ever before. The event has been moved out to the Cal Expo fairgrounds for 2020 while the Sacramento Convention Center is expanded and remodeled — the Unified simply outgrew the old facilities. The one-year move means even more room than in the past for trade show exhibitors, including outdoor space for big machines and equipment. It’s going to be huge — literally!
And the program organizers have gone to some trouble to expand seminar offerings, too, with 110 speakers divided among about 30 sessions. Something for every need and interest with programs for growers and winemakers, marketing and business management. As has been the case for several years, some of the technical sessions are offered in both English and Spanish.
Labor cost and availability is an important issue in the wine business, so I am interested in one session that examines mechanization in the vineyard and includes a wine tasting. I’m guessing that the audience will be offered the opportunity to see if they can taste the difference between wines made with machine-harvested versus hand-picked grapes. Should be interesting.
State of the Industry
I’ll be moderating and speaking at the “State of the Industry general session on Wednesday morning. Danny Brager (Nielsen), Steve Fredricks (Turrentine Brokerage), Jean-Marie Cardebot (University of Bordeaux), and Jeff Bitter (Allied Grape Growers) will be joining me on the big stage. A great team with deep understanding of the wine market.
Jeff O’Neill of O’Neill Vintners and Distillers is giving the Tuesday luncheon keynote speech this year and I am looking forward to hearing what he has to say. These are uncertain times for wine in the United States and it is easy to be pessimistic about the future. O’Neill’s company has been remarkably successful in navigating the treacherous seas, taking advantage of favorable winds. Everyone will be looking for lessons and insights they can take back to their businesses.
This is important because one cloud hanging over the meetings is a structural surplus of grapes and wine in some categories. U.S. wine demand is plateauing, which is better than some countries where demand has been falling for years. Overall wine expenditures are still rising even if overall volumes have declined.
The surplus creates a problem that may take years to correct through a combination of rising sales in old markets, development of new markets, and adjusting production capacity. Heidi Scheid is leading a session that will address the issues directly titled Strategies for Managing Through Over-Supply. Should be a standing room crowd.
Trade Wars Shrink the Pie
Trade wars are another concern. President Trump has said that trade wars are good and they are easy to win, but the wine industry has found little to celebrate about being in the center of the battlefield. Having invested years of effort and lots of dollars opening up Chinese markets, for example, many wineries have watched hoped-for opportunities disappear with retaliatory Chinese tariffs on U.S. wines.
It looks like French wine producers have dodged a bullet, avoiding sky-high U.S. tariffs that were threatened as retaliation for France’s digital tax scheme. You might have expected U.S. wine producers to celebrate tariffs on wine imports because some buyers are likely to shift from imports to domestic wines. But this substitution effect is not the only impact the tariffs have.
Prohibitive tariffs on imported wine are more likely to shrink the wine market pie at every stage of the product chain. It is hard to see how retailers or distributors can justify investment in the wine category when overall sales fall and uncertainty about future conditions is high. The uncertainty effect looms especially large, despite the recent wine tariff trade truce. If wine was caught in the trade war cross-fire before, there’s no reason it couldn’t happen again. And truces are by their nature temporary and fragile.
When tariffs work to protect an industry they tend to do so only temporarily and at high cost (struggling Harley-Davidson is a good example of this). But they more often backfire. The recent tariffs meant to protect manufacturing jobs in the U.S., for example, seem to have only accelerated the decline of the manufacturing sector generally because of the complex international interweaving of manufacturing chains and other factors.