It’s Wine Time

Wine GlassesThe headline read, “The Price of Wine is Dropping Fast.” Being a wine drinker, I wondered what was the reason for this downward price spiral and it turns out that it’s due to a surplus of California grapes. (Note: this story broke before the COVID-19 Pandemic. I’ll have an update on how that’s impacting wine sales at the end of this article.)

In this case, the law of supply and demand says when an oversupply of grapes exceeds demand., prices will fall.

From the moment they plant a new vineyard, vintners tell us it takes up to five years to bring wine to market. Only five years ago, demand greatly exceeded supply, causing vintners to begin planting a plethora of new fields. It seemed like a sure bet, because this growth in demand had been steady for the past two decades, until it vanished. The sudden slowdown caught the wine industry by complete surprise.

Supply & Demand

Any business that wants to see the price for its goods or services go up, knows that it benefits when demand exceeds supply.

For vintners, the first part of their problem was growing too many grapes, but the second part was seeing the consumption of wine drop for the first time in twenty-five years delivering a one-two punch to the wine grower’s gut.

Boomers

The generation that was fueling the growth in wine consumption were the Baby Boomers. And let’s face it, we Boomers aren’t going to live forever.

The problem the wine makers are having is best demonstrated by looking at two couples dining out. One couple is in their twenties and the other is in their sixties. If you were to ask a server to bet on which couple would be ordering wine, twenty years ago, they would have chosen the twenties couple, but today, they would bet on the older one.

Silicon Valley Bank’s wine division says it’s due to a failure of the wine industry to capture the attention of the millennials.

Does This Problem Sound Like Radio’s?

It’s no secret that the radio industry has been focused on increasing the number of signals it can put on the air in America. The FCC reports that as of December 31, 2019 there are 21,255 AM, FM, FM Educational, FM Translators & Boosters and Low Power FM radio signals on the air. Ten years earlier that number was 16,649, and twenty-five years earlier (the same amount of time that wine began its 25-year growth cycle) there were only 2,281 radio signals beating America’s airwaves.

So, like the growth in the number of grapes produced over the past twenty-five years, the number of radio signals grew almost ten times over that same period of time. Also, like wine, radio was dependent on Boomers to make their numbers. Younger generations are moving away from beer and wine for beverages, and away from broadcast radio for their audio consumption. Radio people and vintners have good reason to both want to drown their sorrows.

Former WLW programmer and air personality, Darryl Parks, tweeted the situation out this way:

More stations mean more avails to sell, which in turn means lower rates. Never understood how those running the big box broadcasters don’t understand the simple law of supply & demand. There’s no other way for this to turn out. Death by a thousand cuts.

Universal Laws

I believe that some laws are universal, in that they transcend all areas of life.

In the area of my college major, physics, Newton’s 2nd Law says, “for every action there is an equal and opposite reaction.” Zig Ziglar, the great salesman and motivationalist, put it this way, “you can get anything in life you want, if you will just help enough other people get what they want.” And the Bible says, “as you sow, so shall you reap.”

Botanists know that pruning plants causes new growth. Forest fires, while appearing destructive on the surface, actually are part of the natural cycle of woods’ growth and replenishment, clearing dead trees, leaves, and competing vegetation from the forest floor, so that new plants can grow.

For the radio industry to grow and prosper, it needs to stop choking off its own growth and prosperity by thinking more and more radio signals will be to its benefit.

To serve their communities of license, it’s time for less radio signals, that do more for the communities they are licensed to serve, while being economically viable.

Why not pour yourself a glass of wine and start working on meaningful solutions that don’t try to counter life’s universal laws.

COVID-19 UPDATE

Quarantinis are driving a spike in alcohol sales

US sales of beer, canned cocktails, wine and spirits have surged in recent days as people stocked up on drinks to see them through quarantine and pub closures. Experts predict the increase will be short-lived as many households will prioritize more pressing expenses if emergency measures remain in place. Some experts have raised concerns about the risks of increased alcohol consumption during the pandemic — a fear that has driven officials in several countries to ban the sale of alcoholic beverages entirely.

 

 

 

4 Comments

Filed under Education, Mentor, Radio, Sales

4 responses to “It’s Wine Time

  1. aaronread1

    Uh, a major reason why Millennials drink less alcohol is simply because alcohol is expensive and, broadly speaking, Millennials have a LOT less disposable income.

    Also, simply reducing the number of signals won’t make any difference at all. The problem isn’t too many signals, it’s too little diversity of ownership. Simply reducing the number of signals will concentrate ownership even more than it is now, only exacerbating the reasons why “nobody” young wants to listen to radio.

    Like

    • According to the WSJ: Americans bought less wine last year, the first such drop in a quarter of a century, as millennials opt for alternatives like hard seltzers, cocktails and nonalcoholic beer. … The trend was ascribed to a generational shift as the number of millennials surpasses baby boomers, who drove strong demand for wine in America.

      So, wine consumption being down with millennials isn’t due to cost. Wine growers weren’t marketing to them, while other beverages were.

      The number of signals trying to survive by being advertising supported by local businesses (that are losing out to big box stores and online shopping) has reached a breaking point.

      As I drive around, I find signal interference on the FM band to be intolerable. You keep a signal for a short time before picking up interference from another FM station. When atmospherics comes in to play, it’s even worse.

      In 2012, the lead story on Business Insider was that 6 corporations now control 90% of media in America. So, I seriously doubt media ownership could be more concentrated.

      Going hand-in-hand with the reduction of signals, needs to be diversity of ownership and reinstitution of local community service to a station’s city of license.

      Unfortunately, this means trying to put the toothpaste back in the tube and we all know how that goes.
      -DT

      Like

  2. Hey Dick,
    Having been in the radio biz for many decades, I can remember the time, pre-consolidation, when every market had a couple of leading stations that made a killing, a few stations that made a living, and the remainder that either barely scraped by or lost money.
    For air talent and programmers, it was a seller’s market, as owners of loser stations tried to find the talent that could turn their fortunes around. There was a need to excel.
    Now that most of the viable signals are owned by basically two companies, the need to stand out and achieve has been replaced by the need for every station to get a piece of the pie. In other words, instead of a few stellar, creative stations leading the industry, we’re playing not to lose.
    As long as radio is bundled like a commodity, companies won’t make any bets on the kind of creativity that could re-engage the audience and bring in a new generation of listeners.
    Gary B

    Liked by 1 person

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