In 2007 my financial advisor, anticipating the coming recession, sent me an article analysing how various economic parameters rise and fall in a recession. The main point was that the stock market recovers early, before anyone is aware of the coming end of the recession; unemployment, on the other hand recovers late, after the recession is officially over. The article featured numerous graphs from past recessions charting the courses of these events in various lines. As it so happened the great recession of 2008 precisely followed the predictions of this article.
There was one item missing from the analysis: wine prices. I am sure someone has done a comparative economic analysis of the subject through the years, but I am not aware of any. It seems to me that wine prices fell late, while we were already in the worst of the recession, and are likely to recover slowLY; in other words, paralleling unemployment.
Case in point: here we are, with the Dow above 10,000, and widespread predictions of prosperity for 2010; at the same time 2005 Bordeaux is on sale everywhere! This was the famed, overhyped vintage which hit our shores just when the recession started and, along with the unfavorable exchange rate, commanded ridiculously high prices. Now K & L, a Bay area wine store chain, has Pichon Lalande, a “super-second”, powerhouse name and a consistently good wine, at $89.99 per bottle. Wine House, a San Francisco shop, sent me a huge list of ’04 and ’05 Bordeaux on sale. I couldn’t resist and helped myself to some, especially ’04 Right Banks which were so good in that vintage. I secured some Larcis Ducasse, one of my favorites at $43 per bottle. Beats Napa prices for the quality, for sure.
Truth be told, it was time for Bordeaux to come back down to earth. Now we’ll see how long it takes for it to recover. In the meanwhile, for Bordeaux lovers, it’s time to stock up on more.