Penfolds Vintage Years Report
Despite the economic turmoil of 2008/9,research we prepared for Penfolds reveals the noughties were in fact the best decade of the last 50 years and 2004 was the vintage year of the decade.
These results are just some of the findings revealed in the Penfolds Vintage Years Report which looks at the last half century in the UK economy and identifies which years can be considered 'vintage' based on a selection of quantitative criteria. Commissioned by the iconic wine brand, Penfolds, the report was inspired by parallels in the wine world, where some years stand out as stellar vintages because the ingredients for success all align.
Using a uniquely created research model, each year of the last half century was given a Penfolds Vintage Years (PVY) score that demonstrated the success of the year in economic terms and ranked each year, and in turn each decade, based on their success. The key components identified to make a vintage year are economic growth above 2.8%, low unemployment, a rise in gross national disposable income of 1.7 points or more, RPI inflation below 5%, a widening tax base and profitable companies.
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So, whilst the noughties tops the research as the best decade and 2004 steals the crown for the best year on record, the Penfolds Vintage Years Report shows that every decade has at least one vintage year;
- The two highest-scoring Penfolds Vintage Years were in the middle of
the noughties boom, 2004 and 2003. 2004 experienced stable economic
growth of 3%, unemployment of 4.8% and record business profitability.
Downsides are apparent in qualitative factors; there wasn't a lot of
sun, crime was high, and the aftermath of the Iraq invasion, but
overall 2004 scored highest on the PVY Indicator.
- 2003 was sunny for the economy and sunny outdoors. Home ownership was
at its highest level ever (70.9%) and England won the Rugby World Cup.
The "dodgy dossier" and the preparations for the war in Iraq dominated
bad news, but at the beginning of 2003 the nation didn't know that, and
in terms of the PVY Indicator "we'd never had it so good". This is the
only time the UK has experienced two vintage years in succession.
- In 1997 the stock market was booming (LSE market capital was up 21%),
inflation was at 3.1%, the economy expanded by 3.3% and crime figures
were low. It also saw the birth of New Labour and Harry Potter.
- In the 80s, 1988 stands out as even better than most years in the
noughties boom. Unemployment fell by 2%, the economy grew by 5%, and
the rise in disposable income was the third-best over the last half
- Despite the 1970s being the least vintage decade - it scores lowest
overall in the PVY Indicator - 1972 and 1973 are identified as vintage
years with low unemployment rates (4.5% and 3.8% respectively),
increases in gross national disposable income (1.7 points and 2.5
points) and economic growth (3.7% and 7.2%).
- The 1960s was a vintage decade with an unbroken succession of strong
years, and 1964 stands out as its vintage year with 5.5% economic
growth, low unemployment and the birth of Beatlemania.
The Future? The Penfolds Vintage Years Report indicates that 2010 will be better but not without its challenges: but it will be an improvement on 2009 which is set to be one of the worst years on record. 2015 is set to be the next vintage year, whilst not returning to the boom of 2003/4, the best predictions indicate the worst effects of fiscal tightening will be behind us, and growth will have resumed giving 2015 the right ingredients for success and being the next vintage year to remember.
And The Worst? The Penfolds Vintage Years Report also measures the poor vintages, and 1974, 1980 and 1981 are the three worst-scoring years on the PVY Indicator before 2009. 1974 had a recession, the three day week, runaway inflation, the oil crisis and two elections, which made it even worse than 1980 or 1981. In those years the UK experienced another recession, high unemployment and less disposable income.
David A Smith, author of the Penfolds Vintage Years Report and Chief Executive at Global Foresight and Futures comments: "It doesn't seem like it now, but the noughties really is the vintage decade of the last 50 years, and in 2003 and 2004 we'd never had it so good! The Penfolds Vintage Years Report celebrates the vintage years in the UK economy, where much like a fine wine, all the ingredients for success align to create a year that is truly vintage."
Peter Gago, Chief Winemaker at Penfolds comments: "At Penfolds a lot of expertise goes into understanding what the components are that contribute to making a great vintage year for a Penfolds wine. Similarly the Penfolds Vintage Years Report identifies what are the ingredients for success in the UK economy and heroes the vintage years. Coincidentally, just as 2004 has been identified as the most successful vintage year in economic terms, it is also one of the most successful years in Penfolds' calendar of achievements due to the favourable vintage conditions which resulted in some excellent wines and several coveted wine awards. Most notably, the 2004 vintage of our iconic wine, Grange, is one of the finest vintages and showcases an impressive structure, depth of character and flavour intensity as well as cellaring potential until 2050."
Penfolds Vintage Years Indicator & Methodology
What is a 'Vintage Year'? Economically speaking there are a plethora of criteria to choose from. A full selection of the criteria that were considered can be found in Appendix One of the Penfolds Vintage Years Report. All of the criteria chosen are quantitative, and became our primary drivers, such as 'economic growth year-on-year'. Those that are qualitative and provide more of a rounded view of the year from the public's viewpoint are referred to as secondary factors, such as historically newsworthy events.
One important screening for the criteria was that there is an unbroken and long history of information available to support it - for this reason alone home ownership was ruled out as being a potential indicator despite its usefulness in assessing socio-economic change. Second, in order to avoid bias, we examined criteria through their relative year on year change, rather than the absolute figure to better understand the standing of the year relative to those around it. The raw data used can be found in Appendix Five of the Penfolds Vintage Years Report. To then form the model, it was necessary to adjust the data to some sort of nominative value as is described for the criteria in the table below. Without this latter step it would have proven impossible to assess for example, the relative importance of say a 5% unemployment rate against a 3.8% growth in GDP.
The Penfolds Vintage Report was written by David A Smith of the Global Futures and Foresight. In his 30 year business career he has held senior management positions in both large and small organizations and has gained real insight over that time on how visions of the future, if properly engaged, can help organisations achieve significant growth and change. He has been involved in public sector, commercial and financial markets and has held sales, marketing and general management positions in companies such as the UK based DRG group and Unisys corporation, the global US IT services business. Whilst at Unisys he held the position of Strategic Marketing Director for their $2bn global financial services business. Since co-founding The Global Future Forum in 2000, the Unisys global think-tank and now Global Futures and Foresight, a futures research business helping business better prepare for the future, he has worked with many leading organisations around the world including; Henley Business School, Chartered Institutes for IT(BCS), Marketing (CiM), Purchasing (CiPS) and Directors (IoD), Microsoft, NATO, INTEL, Siemens, Cisco, CSC, Royal Mail, HSBC, LloydsTSB, Reed Exhibitions, Lloyd's, RSA, More Th>n, DHL, ACORD, Mace and many other household names across a diverse set of industries. As a regular international conference speaker and writer he has become recognised as one of the most influential future thinkers in our nation. He is a passionate believer that we are not victims of what the future might hold if we prepare ourselves in advance. He has spoken on UK BBC, Middle East TV, German and South African radio and appeared on the UK ITN News channel discussing topical futures issues. His experience has shown him the powerful impact that glimpses of the future afford business and government alike as they seek to achieve their strategic goals.
Penfolds has been producing a diverse array of Australian wines since 1844. With over 165 years of history, the heritage, scope and depth of its wine offer sets it apart from other New World producers, and as creators of the iconic Grange, and winner of several coveted wine awards across their portfolio of wines at all levels, Penfolds can be regarded as one of the most prestigious winemakers in the world.
 Research was carried out by Tim Hancock begin_of_the_skype_highlighting end_of_the_skype_highlighting at Global Futures and Foresight and the Penfolds Vintage Years report was written David A. Smith, Chief Executive at Global Futures and Foresight.
 Economic growth year-on-year, employment/unemployment, gross national disposable income index, number of companies & market capitalisation, RPI, tax take, corporation tax rate (%), profitability of UK companies, total output for industries
 Penfolds Vintage Years Indicator table - see notes to editors