Last January when the first rumblings of an economic slowdown were making themselves heard, I recall real estate purveyors trying to soothe frayed nerves with reports suggesting the market had “slowed but was holding steady.”
Despite the fact the real estate crisis south of the border was beginning to creep north of the 39th, there was this sense in the Okanagan that we were immune, untouchable even. After all, this is a highly desirable place to live – we certainly couldn’t anticipate the same challenges as Pilot Butte, Saskatchewan, or Wawa, Ontario.
I was well acquainted with the hopeful sentiments as we were preparing to list our home. We simply couldn’t imagine the white hot real estate market in our area could turn stone cold in short order.
Yet, now a year later, the average price of a family home in Kelowna has been dropping at an alarming rate and people in need of selling are helpless as their precious equity circles the drain. Our house still isn’t sold and it’s now listed for almost $100,000 less than realtors originally suggested we ask for it.
Where am I going with this – aside from lamenting my own sad story? Well, I’m now wondering what the future holds for the wine industry, particularly on the local front.
Much has been written on the subject in recent months – but the reports have been contradictory. Studies indicate that wine consumption in most parts of the world, including Canada, is actually up, but others suggest that wine sales are down, which doesn’t seem to jive.
It all made sense when I came across some numbers from Wine.com – an online U.S. retailer that moves a tremendous amount of product. It reported that the number of bottles it sold in December 2008 was 15 per cent higher than what was peddled the same month last year. But – and it’s a big one – the average price of a bottle of wine sold in December 2008 was 17 per cent below the average price of one sold in December 2007.
So Americans seem to be drinking more, but what they’re drinking is quite a bit cheaper.
If this same trend also spreads north, that unfortunately doesn’t bode well for the B.C. wine industry. Since 1992, the average cost of a bottle of VQA wine has virtually tripled. It will now cost you $17.83 for a wine that typically retailed for $6.86 17 years ago.
Those consumers with loyalty to all things local may simply opt step down a tier and buy more wallet friendly B.C. products – perhaps driving prices down. That would be the best case scenario. The worst case would be if wine enthusiasts looking to save a buck simply switch to cheap and cheerful imports without giving the domestic market a chance to correct itself.
There has already been a softening of the once incredibly buoyant local wine market. The dollar value of VQA wine sales rose four per cent in 2007/08, but that was entirely due to price changes. The volume of sales actually dropped by three per cent. This is following double digit volume growth in six of the seven years leading up to this period.
In an industry where owning a winery seemed like a license to print money, this slowdown may come as a shock to local producers, especially if we haven’t seen the worst of it. Many of the more exclusive vintners have become accustomed to their wines being in high demand, selling out long before most people get a taste. There’s a certain headiness to that power. But enthusiasm seems to be dwindling. Indeed, I’ve noticed more and more elusive bottles lurking on retail shelves – selection is better than ever.
Despite all the doom and gloom, two major events are coming up that will thrust B.C. wines into the spotlight. The Vancouver Playhouse International Wine Festival, one of the world’s oldest and most respected wine events, has selected B.C. as this year’s theme region. The event, scheduled March 23-29, is expected to attract some 25,000 consumers and trades people globally. These are individuals with substantial buying power and, assuming the wines show well, sales should be brisk.
B.C.’s selection as the theme region is to whet appetites for local wine in anticipation of the other event I want to mention – the 2010 Olympics. I expect visitors for the games will snap up B.C. bottles simply out of curiosity, given that the local industry is largely unknown in other parts of the world.
Speaking of the Playhouse Festival, consumer tickets go on sale Tuesday and are known to sell out fast, particularly for signature and key events related to the theme region. Call 604-873-3311 for more information or visit http://www.playhousewinefest.com/.
Wine Notes
Burrowing Owl 2007 Chardonnay
Aromas: Baked apple, vanilla, butter, orange peel, mineral, spice
Flavours: Apple, nutmeg, vanilla, citrus, butter, peach, mineral, lime
Body and Finish: Quite luscious on the entry with good weight on the midpalate, mouthcoating but clean on the finish
Overall Impression: Lovely effort without the overkill of oak.
Would I Buy It? Yes
Cellaring Potential: Drink now, but could cellar a couple years
Score: 88/100
Price: $25
Availability: Winery, some VQA shops, private retailers
Twist Tree 2006 Syrah
Aromas: Black fruits, meaty, pepper, orange rind, black vanilla, earth
Flavours: Earth, ripe black fruits, citrus peel, pepper and vanilla
Body and Finish: Ripe fruit entry with a weighty palate and a long slightly hot finish and good acidity
Overall Impression: Nicely done and a reasonable price for Syrah.
Would I Buy It? Once in a while
Cellaring Potential: 2-5 years
Score: 87/100
Price: $25
Availability: Winery, private retailers
