Entrepreneurs should not look for the glamorous stuff
The rise in consumption of wine has led to a vast increase in supply from many countries. In London, our restaurants can buy wine from more places than any other city on earth – the competition here is astonishing. Unfortunately, the recent recession has hit demand. Countries such as Spain, the world’s third-largest producer, are suffering. According to a report in the Spanish newspaper El Pais, 34m hectolitres of the country’s wine remain unsold – much of which will have to be converted into industrial alcohol. Wine is a serious, long-term play that is vulnerable to variables such as fashion, climate and exchange rates. Amateurs too often imagine a beautiful lifestyle and the pride of producing your own vintage, ignoring all the challenges. Many discover it is a volatile, boom-bust game. I fear some vintners fail to remember that you should only ever make business decisions when you are stone-cold sober.
With restaurants, with films, with wine: there seems an inexhaustible supply of dumb money that thinks it sounds fun not just to consume the output – but invest in it. I am sure it is much easier to remain disciplined when considering deploying capital in the chemical industry or in building products. But the romance and the buzz of being involved professionally in the more glamorous sectors seem to overcome all normal objections, and even hard-headed capitalists end up making beginners’ errors. So, in spite of all the current woe in the wine trade, I am sure that at the slightest whiff of an upturn, rich men will once again plunge in so they can have their name on a bottle.