Report says 'flight to value' to continue for wine consumers

NORTH COAST -- This year is shaping up to be another challenging one for the wine industry on the North Coast as signs of recovery in the U.S. economy and consumer spending slowly take hold, according to an economic report released today.

"The health of U.S. consumers will improve in the near term but is still some distance away from a full recovery," wrote Ed Martinez, senior economist with Moody's, in the industry report prepared for the Sonoma County Economic Development Board.

Key indicators of that health are retail sales, personal savings rate, consumer confidence, stock market indexes, home prices and household net worth. They have improved from the depths of the recession a year ago but remain below levels at the start of the economic recession at the end of 2007, according to the report.

For example, the savings rate for the first two months of this year was 3.1 percent, which was lower than the 3.9 percent average for the first half of 2009.

"However, expectations of weak-at-best economic and labor improvements weigh on any outlook for an end to consumers' flight to value in the near term," Mr. Martinez wrote.

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