Hi, this is my third post and after having great support from IH community, I decided to launch a newsletter. Reddit also gave me a great response.
Here is the post below:
Can you believe, in 2010, 3 bottles of 1869 Château Lafite Rothschild were sold for $230k each at a Sotheby’s auction in Hong Kong?
Wine is certainly one of the most competitives markets at all. Look at the supermarket and see how many different countries and bottles you can find. It’s been around since 6000 BC, when it was first found in Georgia (Eurasia)! Certainly there is high demand for wine. Even though in this fierce market, Château Lafite Rothschild was able to be endorsed by the likes of Louis XV, the King of France and Thomas Jefferson. How was it possible? An intersection of quality at its finest, the right connections, distribution channels, resilience during the war and The Great Depression of 1930s. Everything a product needs to succeed.
The company has been creating a stronger brand every step along the way and nowadays, the average price for 750ml, standard bottle, is $911.
The so-called influencers like Maréchal de Richelieu, presented the wine to King Louis XV.
Louis XV gave his seal of approval, certainly attracting other “influencers” and the wine became known as King’s wine.
Thomas Jefferson was also a frequent client, after visiting the Château, studying the Bordeaux style and techniques applied to create the finest wines.
To differentiate from competition, they bet on their relationship with Versailles, and won the King’s appreciation.
In 2020 the wine segment will finish with an estimated size of USD 323 Billion (COVID-19 already factored in) with the biggest markets being the U.S., France, China, United Kingdom and Italy. The market share of the five biggest companies combined is 10%, which means the industry is highly fragmented. 9.8% growth is expected from 2020 to 2023.
In the U.S., the industry two folded since 2002, from USD 30 Billion to USD 60 Billion. The number of wineries has grown by 50%, to nearly 10,000 in the same period. How has this growth possible? First, the producers applied what Steve Jobs once said “People do not know what they want until you give it to them”. Using their knowledge, wines were created and present to experts and influencers. The aim was to please those influencers. They are the ones driving most of the sales, with wine scores attached to bottles. From there, consumers started to share and felt educated about good wines to drink.
Some restaurants like Spago Beverly Hills are selling their fine wines to make ends meet. Meanwhile in India, the government imposed 70% tax on alcohol purchases in an attempt to reduce long queues not respecting the social distance after the lockdown relaxation on May 4th.
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