Wine prices, wine sales and 2010

A few thoughts about what's going to happen to wine sales and wine pricing this year:

• No less an authority than Bonny Doon's Randall Grahm says the worst is yet to come. He apologized for being so pessimistic when we chatted on Olivia Wilder's Internet radio show before the holidays, but his assessment was frank. The wine business is in the same situation that the dinosaurs were in when the asteroid hit. When the recession ends, Grahm suspects there will only be two kinds of producers left. The biggest, whether the multi-nationals like Gallo or Constellation, or large U.S. companies like Bronco, which makes Two Buck Chuck, will survive. Also left will be a smattering of smaller wineries that didn't make the same mistakes that everyone else did. And the bigger will get even bigger, picking at the remains of the latter.

• Retailers tell me they are able to carry high-end wines that they were not allowed to sell. Case in point is cult winemaker Helen Turley, whose wines are typically sold only by mailing list. But two retailers in Dallas, who asked me not to use their names, carried Turley wines over the holidays. This is a stunning development. If Helen Turley's mailing list isn't working, then the system that powered the industry and its obsession with high-end wine for the past decade has collapsed.

• Some good news, at least from Dallas, comes from a couple of distributor types. They report that the Christmas season wasn't as bad as they thought it would be, and was actually good in a couple of areas. No one is quite sure why this was -- whether it was from aggressive discounting by retailers or renewed confidence from consumers. I tend to suspect the latter, since I saw so many $15 wines selling for $10 over the holidays that I couldn't keep track.

• Speaking of prices, we're going to continue to see deep discounting through the rest of this year as distributors and wineries continue to clear out back inventory.  This spring, producers should be releasing 2008 reds and 2009 whites, which they can't do until they sell all the 2007 reds and 2008 whites left from last year. So retailers will mark those done to move them out to make room for the new wines. Pricing, maybe, could return to what used to be normal at the end of this year, assuming supply doesn't continue to outpace demand. But since no one knows what normal is going to be after the recession ends, and whether consumers will continue to trade down, there are probably still more questions than answers.

wine sales, wine pricing, wine trends

Comments

[Matt]

It is interesting how now retailers can have better access to once allocated or restaurant only wines. It just shows how this economy is hurting some.

I agree about the big houses surviving though.

Thanks,
Matt
Buy Wine Online

[Jeff Siegel]

Actually, I thought I saw some Turley at wine.com before the holidays.

If the allocation system, which keeps prices high (along with limited production and high scores), has actually collapsed, a whole bunch of stuff is going to change in the wine business.