They’re not going anywhere, no matter what you may read elsewhere. Some higher-end wines, like Napa reds, red and white Burgundy, and classified Bordeaux, may be able to take increases. Though, interestingly, Champagne is in a quandary over cutting prices.
But the cost of the wine that most of us drink will stay more or less the same.
Details are after the jump:
The pricing scare started last year, when the second of two “short” vintages in California led to over-the-top predictions about increases and the infamous Time magazine headline: "Panic! Wine Prices Due to Rise."
Those increases, save for some special cases, never happened.The two “short” vintages – wine industry-ese for a smaller grape crop – were still huge, the third and fourth biggest ever. In addition, as wine economist Mike Veseth noted (and he was one of the few who did), the wine business is now global. Higher prices for California grapes don’t necessarily mean higher wine prices; the biggest producers, who make most of the wine, can buy cheaper grapes elsewhere – and did.
That pattern, said the people in the retail, distribution and production sides of the wine business that I talked to, will continue this year. The 2012 harvest in California could the biggest ever, alleviating any shortage concerns in this country. And while bad weather decimated production in France, Italy and Spain, anyone who has bothered to look at U.S. wine consumption would see that Europe accounts for only 20 percent or so of the U.S. market.
Or that the euro crisis decreased demand in Europe, weakening the impact of the shortages there and making European wine less expensive in dollar terms. Or that the Europeans have been over-producing for years. Or that there are still plenty of grapes available in New Zealand, South Africa and Australia.
The other factor, which is just beginning to be understood, is that consumers are drinking more wine that is cheaper to make and can be sourced from anywhere in the world. Sweet red, for instance, can be made with almost any grape (even white ones) and doesn’t need an appellation like Napa Valley or Bordeaux.
Finally, and no one seems to have grasped this yet -- save for Veseth, who recently wrote a telling post about Big Wine and low price production. Big wine companies now dominate production in a way they never have, accounting for as much as 80 percent of the wine sold in the U.S. This means they can control prices in a way that we haven’t seen before. If they want to absorb higher prices to keep market share, they can afford to do it.
That’s why Beringer white zinfandel (made by multi-national Treasury Estates) was on sale at a Dallas Kroger for $5 over the holidays. Or that E&J Gallo’s Apothic was selling for $8, almost half off its suggested retail price, And, I was told, both retailer and producer made money on those deals.