AABALAT, founded back in 1995, experienced the US wine boom first hand. “Back in 1998, wine was just beginning to gain mass appeal and more and more people began collecting wine for either personal enjoyment or investment. By the beginning of 2008, we could barely keep up with demand for the 2005 vintage Bordeaux, large formats, and other ultra fine wine. As a result, prices dramatically increased over that 10-year period,” says Bob Orlandi, owner of AABALAT Fine & Rare Wines (http://www.aabalat.com).
In the second half of 2008 wine retail prices began to drop. Retailers began aggressive promotional campaigns, putting all inventories on sale or offering reduced shipping rates. Live-Ex 100, a fine wine index operated by a British company and includes 99% French wine, reports a 20% drop in value of the index since June 2008. In early 2009 wineries, distributors, and consignors began slashing their prices. Collectors that are particularly worried about their cash positions have flooded the market with inventory.
Despite the decreased wine prices, wine sales have not increased. It seems that everyone has been affected by the poor economy, even the affluent buyers of fine and rare wine. And lower prices are not enough of a motivator to overcome current cash-conscious consumers. Research shows that many wine retailers reported decreased sales starting in October 2008, with no rebounds, even during the holiday season.
AABALAT believes the bleak situation has a silver lining. “Unlike the stock market or commodity trading, wine is finite. Once a vintage is produced, you can’t make anymore. Therefore the laws of supply and demand apply more rigorously. Using western Europe as an example of a saturated wine-buying market, it is likely that countries like the US, China, and Russia will continue their demand growth for many more decades. Yet Bordeaux is not making any more first growth wine (like Lafite or Latour), and no other wine growing region can yet match the endurance and reputation of France’s finest chateaux. Therefore, the price of today’s investment-grade wines should only continue to skyrocket, and our customers will eventually have the disposable income to jump on these deals.”
About AABALAT Fine & Rare Wines:
AABALAT Fine & Rare Wines, founded in 1995, is a Petaluma, CA based internet wine retailer. Specializing in Bordeaux, Burgundy, and CA wines, AABALAT maintains a temperature-
Contact:
Karen Orlandi, VP Marketing
AABALAT Fine & Rare Wines
(707) 781-0619
http://www.aabalat.com
