The Weekly Treasure, Week of September 18th, 2023

The Weekly Treasure, Week of September 18th
Ben Verschuere - Chief Investment Officer
September 21, 2023

Hi Treasure Friends,

Last week important economic news was the release of the inflation data which showed some reaccelerating of the price pressures (3.7% year over year) driven mostly by the rebound in gas prices.

What the Treasure Team is reading​

​​From the Treasure chest...

€200m to not drink wine: The French government will spend €200m destroying surplus wine in a bid to shore up prices and support struggling producers.  However, he warned that the industry needs to "look to the future, think about consumer changes and adapt". Demand for wine has fallen in this new era of high inflation, a cost of living crisis and lifestyle changes following the Covid-19 pandemic. That has led to a surplus of wine, which naturally pushes prices down. Some wine drinkers may welcome a fall in prices at a time when household budgets are being squeezed, but it has led to major financial difficulties for winemakers, threatening the future health of the industry.  Producers across the country are in a similar situation. Jean-Philippe Granier, the technical director of the Languedoc AOC, reported that the region is producing too much and the sale price has slipped below the cost of production, meaning vignerons are now operating at a loss. Responding to pleas for help, the European Union pledged €160m to pull up vineyards in France earlier this year. It revealed that wine consumption has fallen by an estimated 15% in France, 10% in Spain, 7% in Italy, 22% in Germany and 34% in Portugal. At the same time, wine production in the bloc increased by 4%, leading to oversupply.

Have a great week!

The Treasure Team

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