Demand and Supply in action - Champagne affected by the recession

Saturday, October 10, 2009

As a luxury good it is probably unsurprising to hear that the sales of champagne have dropped significantly.

A fall in demand has led to a number of retailers having to slash prices to as low as £10 a bottle. In terms of demand and supply analysis, the demand curve has shifted to the left due to a fall in average incomes.

Sadly, however this does not mean that we are likely to see lower priced champagne in the long term. French producers have said that next years harvest is to be cut (decrease in supply) in order to increase prices.

This article gives some of the figures.