Tuesday, October 20, 2009

OND has lost it, Don't Panic!

Once upon a time, wine sales, as were many retail item sales, were driven by OND. OND or October, November & December, the last sales quarter of the year, historically represented 40% of annual sales. It is when companies were made or broken. Many retailers didn't go into the profit column for the year until black Friday (you know, the day after Thanksgiving). Last year, OND, or lack thereof, killed many businesses,and just about every one's business plans. The remaining inventory clogged up the 1st half of 2009 wine sales. Now, 2 weeks into OND, what is happening out there? Nothing. Seriously, nothing. Sales haven't picked up yet. In fact, they probably won't pick up that much.It's been years since the "O" in OND meant anything except everyone talking about how the season would be.
As a wine culture, we've changed forever. The economic downturn only clouds people perception of wine sales trends. Here has what has happened to kill OND:

1) Wine Gift Giving has decreased-There was a time when everyone gave bottles of liquor or wine at holidays, that has gone away quite a bit. And with corporate tightening, the big companies that used to buy dozens of cases of Jordan or Ferrari Carano to give as corporate gifts has also dried up.

2) Wine seasonality is changing!- Americans now drink wine everyday, and this is a great thing. Wine is no longer the domain of special occasion only. Americans have grown their wine consumption "JFMAMJJAS" (that doesn't exactly roll off the tongue does it?), or the other months of the year so much, that the expert predict the growth to be constant, and the fact is, people already drink wine routinely, they're not going to drink extra wine on Thanksgiving. We are reaching good velocity through the season change that the increase, while existent, is not dramatic. When the last time you went to a big party on New Years and really whooped it up?

3) Wine purchasers have lost their bearings, and as a result, their "balls"-As a result of buyers failing to recognize point #2, they have over purchased, over projected,and in general been their own worst enemy. Buyers do 2 things when times are weird, they either try to buy themselves into higher sales, often jumping on closeouts,which in turn knocks down their avg sale and profitability. Or they flat-out stop buying. Keeping their inventory in check, but now are relegated to stock monkeys. If a buyer doesn't buy, what is their job? Advice to all wine buyers, please plan accordingly in the future, budget less seasonality into your annual plan, and prepare your bosses for the inevitable disappointment come November, regardless of the economic conditions.Your sales will continue to grow,just be cool. Nationally, we are still growing wine consumption around 5%, it's not the 10% it was a few years ago, but it is still growth.

In this business, people's memory's are very short. I have vivid memories of 2001 OND when everyone said things would never be the same, and they weren't, we grew this industry faster between 2002 and 2008 than any other 6 year span in the last 50 years. In the late 90's all of the money spent was on obnoxious high end cabs, now it has been converted to dozens of different categories. Americans have never been more sophisticated,and are only getting more interested in wine. everything will be fine, just don't panic!

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