Sunday, November 16, 2008
Fall in wine prices- indication of global economic slow down
I was reading the new on the BBC website and I came across this article and thought it was pretty amusing. The article talked about how the pieces of the world’s most revered wines are falling as a result of the global economic slow down. The latest indication of the global crisis, they said was that the crisis was hitting the spending power of even the most wealthy which is evident in the decline of the prices of certain fine wine by close to a quarter since the summer.
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4 comments:
It is interesting to hear that wine is an indication of global economic slow down. As wine is considered as luxury goods as compred to other drinks, the demand of this item can be quite elasic. I also read this article where they said Spam is an indication of global economic slow down. As Spam can be cheap source of meat, ther is an increasing in demand for Spam, during economic hardship. As a result, factories for Spam are going to increase their production by running the factory full time by having multiple shifts of labor.
Interesting article. I also have not thought of wine being an indicator of the economy. The prices of the wine they talk about in this article are unbelievable, and even thought investing in wine would diversify any portfolio, I cant see doing it any time soon.
It is very interesting indeed. But I still can't believe those incredibly rich people would cut back on their wine/drink spending. I think it is because many millionaires went bankrupt so the quantity demanded went down, thus, the price of these wines went down.
Kind of similar to this, a couple of weeks ago Sotheby's (the auction company) had disappointing, below-expectation numbers for an auction of high-profile paintings, Van Gogh landscapes among them. I guess no one and no company is immune, even those catering to the wealthy.
Except maybe Spam. I think Casey made an interesting point there of how luxury goods and inferior goods are indicators of economic activity.
Wine sellers may be sitting on losses in the cellar right now, but I agree with the last interview in the article how over time the value of rare wine will just shoot up again. I could actually see the reasoning behind investing in wine now. Especially if you don't want to put it in the stock market but you don't want the cash to just sit in your account losing value. If I had 7,500 pounds to spare I'd probably buy a case and wait a few years until the value rose again, maybe even higher than the peak of 10,000 pounds. It's not like the wine will go bad in the meantime.
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