No wonder figuring out wine prices is so confusing

No wonder figuring out wine prices is so confusing

Or not, as the case may be.

On the one hand, a news story citing several legitimate sources predicts “bad news for wine-drinkers, as California wine production is likely to go way down this year, and therefore already steep prices are going to rise.” On the other, a news story, citing a legitimate source, predicts an oversupply of European and especially Spanish grapes, with the resultant pressure on pricing. No wonder figuring out wine prices is so confusing.

How can both be possible? Three reasons:

? Parochial journalism, and especially in the first report. If most of the Winestream Media has difficulty understanding the economics of the wine business, imagine how difficult it is for non-wine writers, who don’t know the wine business or economics. One of the most important lessons for any journalist is that what happens elsewhere can affect you, even if that doesn’t seem intuitive. Because, given the law of supply and demand, cheap wine imports will mitigate higher domestic prices almost every time.

? Conventional wisdom. This is lazy journalism, in which a story is passed around as truth so often that it doesn’t matter whether it’s true or not. That’s how we ended up with the harbinger of doom story in 2012, epitomized by the infamous Time magazine headline, “Panic! Wine Prices Due to Rise.” Which never happened. Conventional wisdom, given that Internet journalism relies on links to other stories, which have relied on links to other stories, is particularly annoying in wine these days.

? The post-modern wine world, also known as the internationalization of wine, and where none of the old rules apply. Once upon a time, it was possible to predict wine prices despite parochialism and conventional wisdom. But that changed about 15 years ago; unfortunately, not enough people who write about wine prices understand what happened.


5 thoughts on “No wonder figuring out wine prices is so confusing

  • By Rob McMillan - Reply

    Jeff –
    Thanks for bringing up that Time article. Hyperbole at its finest but thats what sells [ink, bytes, zero’s & ones].

    Its consistent with your comment above about urban myths getting repeated over and over until nobody knows where it came from, but it must be true … like the sound bite that Millennials are driving growth in wine sales, which isn’t true either, but its been repeated enough that everyone thinks it must be true, but lets not get off topic.

    In context, the State of the Industry report that year was talking about the recovery of the US Wine business off the disasterous recession, and consistent with our comments, grape prices shot up at the same time reflecting a shortage because we were coming off two weak harvests, and at the same time the bubble of wine in the channel from the recession had pushed itself through. Small price increases were in fact taken that year.

    The Time article went on to quote me as saying:

    ???I think the consumer for the past five years has been used to getting really fine quality wines at a good price,??? said Rob McMillan, founder of the bank???s wine division. ???But as the balance evens out, you can???t expect the producer to sell at a loss, which is really what they were doing .???

    All that was sensible and true. Wine producers were paying more for fruit and with an improving economy, producers would want to pass on some of the price increases to the consumers. Nowhere did we suggest rampant or aggressive increases … but that doesn’t sell [ink, bytes, zero’s & ones]. Consistent with two unpredictable back to back record harvests and a subsequent slowing of the recovery, the past three reports have suggested the industry would have a difficult time raising prices which I’m sure is music to any Wine Crumedgeon’s ears!

    • By Wine Curmudgeon - Reply

      Thanks for the kind words, Rob. When I learned journalism, there was a professor named Dick Haney who was a curmudgeon and a half. He taught us much of what is in today’s post, and would be glad to see from your comment that I learned something in his class.

    • By Dr Jerry Perrone - Reply

      Prices in 2014 are going to remain in line with 2013.

      There will be plenty of nicely rounded reasonably priced wines. There will be lots of low cost wine in the market place and a few wines way over hyped and way overpriced.

      The “gross sales; world wide” is predicted to rise slightly in 2014.

      The biggest popularity gainers in 2014 will be the new US grape growing areas and their supporting wineries. These are regions that are under 20 years in production and have filed for AVA or are recently approved. These areas are just beginning to come on line and are almost exclusively planted with hybrid or cold hardy varieties.

      It is going to be a great wine year.

      • By Wine Curmudgeon - Reply

        Your’re prescient, Jerry. I have a post set for later this week about trying to figure out the next big wine region.

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