The situation facing Champagne production is another symbol of how different the global economy has become. Two years ago, concerns over a Champagne shortage put plans in motion to expand the growing region. But as Champagne sales began to fall, the situation changed. Now as Decanter reports, Paul-François Vranken, head of Vranken-Pommery Monopole, one of the three biggest Champagne houses has called for yields to cut in half for the 2009 harvest. In the case of Champagne, the Comité Interprofessionnel du Vin de Champagne determines the maximum yield just before harvest starts after talking with growers and the major chateaux.

It’s the old case of supply and demand. With bottles still sitting in their cellars many producers may want to scale back production. This is bad news for the growers who are paid for the grapes they sell. It may also be short-sighted depending on which way the economic winds of change blow. Is it better to have too much product sitting in your cellars waiting for the buyers whose pockets are now empty or is it smarter to cut production and bet that the next year won’t bring a rapid increase in fortunes (and by association, Champagne drinking).

For years, Champagne sales were high as more and more of the world’s drinkers quaffed the bubbly. But by last October Champagne sales were down for the first time in a decade and it’s only gotten worse since then. Domestic sales were down by a third in the first eight weeks of 2009 and exports are down over 40 percent to both other European countries and the U.S. and Japan. Champagne always gets associated with the exuberance of fortunes, with extravagance and free spending and suffers in downturns as a result.

By Deidre Woollard | Source :: www.luxist.com

Slate takes an insightful look at factors contributing to the sharp downturn suffered by the Australian wine industry which depending on who’s reporting has seen exports to the US fall by 15 percent to 26 percent in value during the last year. While a number of a uncontrollable circumstances – fluctuations in the global economy causing inflation in the Australian dollar and unforeseen environmental factors – can’t be dismissed, the most influential player in this current spiral might come down to branding.

Due to the overwhelming success of Yellow Tail – a cheap and flavourful wine with an easily recognizable label – a number of competitors quickly followed with copycats of their own, flooding the market with low end entrants all hailing from Australia, leading to a widespread belief that all Australian wine was mass market and therefore unsophisticated. Which isn’t enough to kill an entire industry – overall sales in this segment are still fairly robust – except that now, Australia’s dominance in the low-cost category is being challenged by producers in countries like Argentina, Chile and South Africa.

At the same time that Australia is losing its advantage on the bargain side of the aisle, a similar issue is developing in their luxury wines, particularly their signature Shirazes. As Australia became known for producing best in class wines in this varietal, more vineyards began to move in this direction in the hopes of cashing in on the trend. This created a lack of diversity in the market that didn’t become apparent until consumers began to turn away from these Australian labels – citing one producer’s bottle being virtually indistinguishable from the next – and started to search for the next big thing elsewhere.

Which means that the industry as a whole finds itself in a difficult spot that will require some intelligent marketing as it attempts to reverse course and alter the public’s perceptions. Leveraging an advantage can certainly increase profits in the short term, but especially given the volatility of today’s markets, one note rarely leads to long term success.

By Scott Lachut | Source :: www.psfk.com