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Monday, October 6th, 2008
articles.php?which=TheEconomysBadLetsDrink
The Economy's Bad! Let's Drink!

Does feeling bad about the economy make you want to crack into a bottle of wine? Maybe. But isn't that also the case on a nice sunny day?

Leave it to the Wall Street Journal to whip up a non-story in today's paper centered on that trusty old cliche that when things get bad, people get boozing. Here's what they say:

"There's good news for the wine industry: Tough times can lead some consumers to drown their sorrows.

That was the general conclusion Tuesday when the world's biggest wine maker by volume, Constellation Brands Inc. of Fairport, N.Y., reported a 50% increase in fiscal first-quarter net income."

Except after a little digging into the facts, it's fairly obvious that Constellation's not just flourishing because things suck and people want to get drunk. First, alcohol (as the WSJ notes) tends to be unaffected by major shifts in the economy. People may lose cash, but they've always got a few bucks to spare on drink. Second, Constellation not only recently boosted prices, but they also acquired Fortune Brands—a company with popular wines like Clos du Bois. They also ditched some of their low-end labels in March.

But before you call me crazy, take a look at how some other wine producers have been doing. A spin on Google Finance shows that most winemakers have been recording typical profits without any major leaps. Willamette Valley Vineyards actually posted lower profits for the first quarter this year than last and Chile's Concha y Toro, a wine exporter, said it's first quarter profits dropped by 7.6%—although some of that's due to the weak U.S. dollar, they say.

But forget the numbers. I'm curious anecdotally—does a down economy inspire you to drink? We think the Journal is streeettttching for a story.

BEER

(Yes, we know this is former German chancellor Gerhard Schroeder drinking a beer. But it's the only appropriate image we came up with when we Googled "businessman drunk".)

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I think bars do better not so much the producers. I think people seek companions in despair.

Last night I was at El Gaucho and the bartender said business traveler bar business was way down. They had the same regulars but less "suits and expense cards" than any time he could remember.
bryanh
18:37, July 2nd, 2008



And here I had thought that booze was an economic constant. It is for me.
matteo
17:33, July 2nd, 2008



Au contraire, this guy might be on to something. Diageo, I believe, tends towards classier beverages. Constellation distributes the venerable Fleishmann's & Mr. Boston's lines of "value" spirits. There's also the alarmingly named Montezuma tequila, which I would be willing to bet contains no bramble berry. If those aren't the drinks of recession, I don't know what is.
benpirie
16:41, July 2nd, 2008



Forget about wine during economic downturn! The real money is in liquor and beer. Does anyone actually think that the cash strapped working class is going to spend for a bottle of wine that advertises its notes of bramble berry and forest loam? Diageo brands is a better play rather than Constellation, since it is more focused in the liquor and beer markets. Diageo, purveyor of household brand names such as Guiness, Captain Morgan, Tanqueray, Johnnie Walker, et al. is currently trading at a 2 year low on the NYSE. May be a good buying opportunity!
mjandri
16:13, July 2nd, 2008