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Monday, December 14, 2009

How Accurate Was the Outlook for 2009?

Last year, I posted an Outlook for 2009 on December 31st. Excerpts of this post show the following expectations:
1. Oil Prices
Forecast: Oil prices finding an equilibrium higher than $60.
Reality: They stayed between $60 and $80 most of the year and currently hover near $70.
2. Interest Rates
Forecast: Low interest rates and tight credit.
Reality: This forecast was spot on.
3. Bottled Water
Forecast: Lower bottled water sales and more tap water orders.
Reality: Absolutely correct! Tap water rules in 2009.
4. Regional outlook
Forecast: Slow economy in regions with a high banking or government weight.
Reality: This is especially true in areas where the banking and government sectors had a major impact on upscale dining operations.
5. Alcoholic Beverage Trends
Forecast: More beer and less wine.
Reality: In absolute dollars, this prediction is true. What actually happened is consumers down shifted from higher priced beverages to mid-range and budget alternatives. The downshift occurred in both beer and wine.

Many of you will get a true read out on the economic future as the holiday season ends. Expect oil prices to find an equilibrium price higher than current levels. Grain prices will continue to track oil since most gasoline now has a 10% ethanol blend. Interest rates are very low allowing many businesses and consumers a chance to refinance. Credit remains very tight. Bottled water sales are in decline and tap water is becoming a popular restaurant beverage choice.

Rather than using 2007 or 2008 as your compass, try to put together a logical forecast for your region. If you operate near a major banking center, the layoffs could completely change your business model. Anyone in the Mid-West may see an increase in economic activity as stimulus dollars reach the automobile manufacturing companies. State and local governments have less revenue. If you are located in a capitol metro area, you can expect less traffic.

Americans are consuming more beer. You may want to slow down your wine list expansion. Turn a portion of your wine inventory into cash by selling slow movers by the glass. Don't be afraid to accept a higher cost of sales on these bottles. Your shelves are filled with frozen cash.

Stay tuned for the 2010 Outlook at the end of the month.

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