While you were celebrating New Year's Eve, spare a thought for the wine companies, particularly the French ones.
People making the most of New Year's Eve were enjoying cheap champagne. Champagne bottle prices have fallen more than 50%.
Much of that is caused by the recession. People simply can't afford to lash out on expensive drink anymore. But at the same time, producing champagne is expensive. Wine makers have massive costs because the additional time and labor involved in getting all those bubbles in, as well as the heavier bottles and more complicated closures required. To make a profit on a bottle of champagne selling for say $12 or less usually means you have to have volume and lots of it. And you can only have big volume if you have production on a large scale. Which means the smaller wine makers are struggling.
At the same time, wine companies around the world, and not just those who specialize in sparkling wines, are struggling because of the recession and big retailers like the Wal Marts and Tescos of this world screwing them on price.
The only hope wine companies of recouping their costs is by developing other lines of drink, like spirits. And they should also target Asia now shaping up as the world's biggest growth market for wine.
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