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Recession pushes producers to 'new limits' - report

Published:  05 May, 2009

The last quarter of 2008 was the worst in living memory for wine producers, according to a report by a Californian bank providing commercial banking services to the industry.

The Silicon Valley Bank's State of the Wine Industry Report forecasts a flat market for fine wine through 2009 and only modest growth in high volume parts of the market.

The downturn will bring further consolidation, with smaller players been swallowed by more powerful producers.

Report author Rob McMillan said: "Wine businesses across the board are being pushed to new limits in the current environment.

"We believe we are at the beginning of a longer-term change in the fine wine market that will generally compress the pricing of wines and separate out high-priced cult brands that deliver consistently good quality from the me-too entrants.

"Inevitably this will lead to a certain percentage of wineries that will quietly exit the market at bargain prices in the next two years."

McMillan added: "The sustained negative market conditions will have an impact on high-end family wine businesses that will last well past the bottom of the present recession."