After reading the latest issue of Practical Winery & Vineyard and seeing the term “trading down” misused by an un-named CEO no less than three times in one paragraph, I wanted to gouge my eyes out with my Dixon Ticonderoga 1388.
Stop using it. Just stop. Saying that consumers are “trading down” right now betrays a fundamental misunderstanding of what the entire “Trading Up” phenomena actually was. Silverstein, Fiske and Butman deserve better!
Here is the authors’ own definition of the term (emphasis mine):
“consumers who selectively trade up to better products and trade down to pay for other premium purchases“.
Consumers aren’t spending less on wine right now so they can pocket the savings and spend it on another luxury good. They are cutting back across the board. The economy sucks, and this happens every time we have a recession. We don’t need a hip new term to describe it.
Moreover, by using the term trading down, you show just how little you understood the forces that drove the massive shift to luxury that occurred during the 5 years leading up to the recession.
You come off like a parent trying to score street cred with their punk rock loving teenage son by telling him about how you and his mother totally used to rock out at the James Taylor concerts.
The sad thing is this CEO is not alone. People seem to think they can absorb important marketing concepts simply by osmosis.
Not true. You have to put in the time and actually read the books. Reeks of effort, I know. But it’s better than looking like a complete tool.
Photo by JanneM
Bob Avo
10 months ago
Sorry mate, but if your income decreases and you purchase less expensive wines (and lower quality), you are trading down.
Josh Hermsmeyer
10 months ago
Bob,
“Buying less”, “cutting back”, “seeking value”, or any other of the hundreds of terms people have used to describe consumer purchasing behavior during a recession apply, but not trading down, which is the opposite of trading up (see above definition).
David Honig
9 months ago
Bob, you’re not TRADING down, you’re just buying down. TRADING down involves, well, TRADING. Using exactly the same amount of money, you TRADE down on one good to TRADE up for another. That is the TRADE.
Swirl Smell Slurp » Wine Web Wednesdays
9 months ago
[...] We agree. [...]
1newopnion
9 months ago
This is an economic topic. In economics recessions change the demand and sellers change the price. Winemakers are the traders. All consumers can do is pay the price or not.
Naturally there are exceptions. New niche markets, without significant supplies, are Giffen goods. By example, the food CSAs do not reduce the price of anything. The green wave of consumers is larger than the supply in this recession.
In economics and consumer theory wines are Giffen goods. Wiki says, “[W]hich people consume more of as price rises, violating the law of demand. In normal situations, as the price of such a good rises, the substitution effect causes people to purchase less of it and more of substitute goods. In the Giffen good situation, cheaper close substitutes are not available. Because of the lack of substitutes, the income effect dominates, leading people to buy more of the good, even as its price rises.â€
Question, are you concerned about any economic issues? If so what grape variety? Pinot Noir?
Wine economist.
Kevin
9 months ago
I tell my wife the same thing ALL the time. I tell her that when she passes on(joking of course)that I am going to trade up! She say’s that she traded down the day we got married! 10 years strong, 2 beautiful children and still having fun! My wife and I are are doing it right in this recession, instead of “trading down” on our wine (we shall drink no wine before IT’S time) we decided to “trade down” on our dinner selections…Goodbye Filet, HELLO Sirloin!