The 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.
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.
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.
Quarantinis are driving a spike in alcohol sales