The Season of 23
One year has passed since our 2022 blog post, "Disruption, and Inflation, and Recession, Oh My!" So, where do we find ourselves now?
While the economy may not be officially in a recession due to falling GDP, we continue seeing; price inflation, rising interest rates, the continued war in Ukraine, and the failure of three major U.S. banks, First Republic Bank, Silicon Valley Bank, and Signature Bank.
Despite these economic challenges, there are some positive counterbalances. These include declining unemployment rates, lower inflation figures, and consistent wage growth. As the threat of a recession looms, the World Trade Organization advocates for re-globalization to help drive growth, development, and price stability. With this global integration, where one nation may lack resources or capabilities, another can step in, capitalizing on opportunities and bolstering trade prospects, even as technology transforms traditional trading dynamics.
This scenario serves as a reminder of the imperative for collaboration between central bankers and the trade community. By fostering an environment in which nations uphold market conditions and commitments, the credibility of central banks is fortified. A thriving global trade arena contributes not only to the prosperity of financial institutions but also to the overall well-being of economies worldwide. It underscores the importance of maintaining open and predictable international markets, underpinned by a robust rules-based trading framework.
Turning to the current landscape of 2023, the U.S. wine industry grapples with a slowdown in international trade. The aggregate volume of wine sales has dipped by 5 to 6 percent over the past eighteen months. Notably, the premium wine segment (priced at $15 or higher per bottle) exhibits growth, while the lower-tier wine category (below $11 per bottle) faces decline. Given that this lower-tier category constitutes a substantial 70% of the volume, the dip in sales is conspicuous.
As September dawns and we reflect on a year marked by uncertainty, we glean insights into strategies to mitigate the specter of recession and foster robust, consistent growth. Collaborative efforts across borders, characterized by the free flow of concepts, individuals, goods, and services, coupled with an emergence of re-globalization, lay the foundation for a cohesive worldwide economic landscape.
A peak into the 2023 harvest. Veraison seen in St. Helena, Napa Valley on August 16, 2023. 1st day harvest on white grapes started August 23, 2023.
Sources:
Aiyar, Shekhar, Llyina Anna. "Geo-economic fragmentation and the world economy" Centre For Economic Policy Research. Mar 23, 2023. https://cepr.org/voxeu/columns/geo-economic-fragmentation-and-world-economy (31 August 2023)
McMillan, Rob. "2023 State of the Wine Industry Report" Silicon Valley Bank. Jan 18, 2023. https://www.svb.com/globalassets/trendsandinsights/reports/wine/svb-state-of-the-wine-industry-report-2023.pdf (30 August 2023).
Okonjo-Iweala, Ngozi, DG. "Jackson Hole Economic Policy Symposium — Structural shifts in the global economy" World Trade Organization. https://www.wto.org/english/news\_e/spno\_e/spno39\_e.htm (26 August 2023).
Wachter, Laurie. "An Uncertain Economic Vintage: Wineries Navigate Consumer Demand Challenges Amid Recession Concerns" Wine Industry Advisor. https://wineindustryadvisor.com/2023/08/31/an-uncertain-economic-vintage-wineries-navigate-consumer-demand-challenges-amid-recession-concerns (31 August 2023).
Cheers,
Nicole Djobadze
Collaboration Wine Exports LLC