Why the credit crunch is good news for game birds

By Associate Editor David Stevenson Aug 15, 2008

David Stevenson
Wildfowl in flight. Credit: US Fish and Wildlife Service, Aaron Drew

Grouse - and other wildfowl - can breathe a sigh of relief

An important date in the City's social calendar went almost unmarked this week.

Tuesday, the Twelfth of August, marked the official start of the grouse shooting season. It's easy to see why amid the war in Georgia, and fear of recession in Europe, people might have had other things on their minds.
But in today's politically correct day and age, with the demise – legally at least - of fox hunting, it's almost a miracle that thousands of heavily-armed grouse hunters still take to the moors of Scotland and northern England each August.

Yet while hunting opponents have been unable to negotiate a ceasefire, the cold realities of economics may prove more successful in silencing the guns…

Grouse shooting is big business. The industry is worth £1.6bn to the UK economy. It generates the equivalent of 70,000 full-time jobs, while ensuring the management of two-thirds of the UK's rural land.

But like almost every other British business, it's under pressure. Costs are rising. Both fuel and ammunition are getting more expensive. What's more, the weakness of the US dollar – even allowing for the recent bounce - has pushed the cost of a day's grouse shooting in Scotland to around $13,300. That's enough to make even high-rolling American hunters think twice about whether they can afford another trans-Atlantic trip.

However, the real concerns in the grouse shooting world run rather deeper. Much of the demand for shooting comes from the City and corporate business. So if the Square Mile's hot shots aren't gunning for a day on the moors, that could be bad news for shoot organisers. 

This year's season will probably be OK, says Christopher Graffius, director of communications for the British Association for Shooting and Conservation. Most bookings were paid for at the beginning of the year, "before the credit crunch really hit."

Yet a study by specialists Fox Harris has found "some signs of softness in the market", says Martin Waller in The Times. One unnamed banker told him that "in today's climate, taking large numbers of clients to shoots costing as much as £30,000, was probably a non-starter on PR grounds". Another agent spoke of a dearth of corporate customers, and warned that some who've paid deposits may walk away. "We're aware of shoots normally full and difficult to get into that are now offering days. There will be some days coming back on the market discounted."

"It's not going to make any difference for the guys that come in their own private jets, but certainly at the lower end of the market there seems to be a bit of a slow-down", says Russell Hird, who runs grouse-shooting expeditions on the Isle of Lewis.

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Other birds may find they have fewer bullets to dodge this season. John Bingham in The Telegraph reports that "pheasant shooting - which gets under way in October – [is] thought to be particularly vulnerable to the downturn," with "the number of birds expected to outstrip the number of shooters". Even clay pigeon shooting has become more expensive due to the rising cost of metals.

Now, I can almost see the tears welling up and hear the wails of sympathy from some of you about the dreadful deprivation being suffered by the City's amateur hunters.

But this isn't an exercise in schadenfreude. (even though the economic problems we're now facing have been largely caused by a lot of the people whose fun is now being curtailed).

What it shows is that the view that the 'crunch' won't affect the 'top end' is complete nonsense. When economies turn down sharply very few people escape unscathed.

And investors in premium brands are starting to realise that.

The FT revealed last month that inflation in the luxury goods market has halved in the last year, "indicating that the wealthy are watching the pennies as much as anyone else".

Even down in Saint-Tropez, retailers are reporting a "dramatic drop in takings as the number of yachts dropping anchor is down 50%", reports AFP.

The rich are having trouble paying their debts too. "The wide-ranging effects of the US housing downturn are highlighted by the worsening of credit quality in American Express' affluent card member base," wrote Oppenheimer analyst Meredith Whitney in a recent client note.

It all spells bad news for the luxury sector. In the year to July, the sector and luxury-brand dedicated funds fell between 15-20%, reports Funds Europe. Luxury goods makers are pinning their hopes on the newly wealthy in emerging markets. But decoupling has already been shown to be a myth, as China's economy slows alongside America's. Eastern millionaires will be no more inclined to keep spending than their counterparts in the West.
It's yet another sector for investors to avoid – and if you do hold any luxury goods stocks, now would be a good time to sell them.

With the economic downturn picking up steam, prospects don't look great for many sectors, in fact. But MoneyWeek contributor Stephen Bland reckons investors should take a longer-term view of things. To read his take on why you shouldn't be worrying too much about the current volatility, see: Don’t panic - the world isn’t ending

Our recommended article for today:

How the old guard continues to make economic policy
Economic trends don't just come and go as governments change. And the Bush administration's financial bail-outs will be difficult - perhaps impossible - to reverse. In the long term, the dollar will suffer.

Published in Stock markets | More articles by David Stevenson

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