Is $30 wine the new $20 wine?

$30 wineWine prices haven’t increased overall in two decades, so why does it take $30 to buy a bottle of nice wine?

Expensive wine – the kind you buy to drink with a nice dinner – used to cost $20 and came from all over the world. Today, those kinds of wine cost $30, and even then you’re not going to be quite sure about quality from some regions.

Once, you could buy California wine like the Newton Claret for about $20 and know you were getting something worth $20. Today, even if those wines are more or less the same price, the quality isn’t. Gone, too, are $20 red Burgundies and red Bordeauxs that are even remotely values, as well as Champagne and high-end Italian wines.

How did this happen? When did the value go out of $20 wine? I’ve spent the past six weeks asking retailers, winemakers, distributors, and my colleagues why spending $20 doesn’t guarantee a top-flight bottle of wine anymore. Because it should – as has been noted on the blog many times, 95 percent of us will never buy a wine that costs more than $20. In addition, wine prices overall have barely changed over the past two decades; a $10 wine 20 years ago is still mostly a $10 wine.

The answer, unfortunately, isn’t complicated. It has much to do with the bifurcation of the wine market, which I’ve written about before. Wine today is increasingly made for two audiences – those who will spend more than $20 and the rest of us, and never the twain shall meet. But within that premise, there are other important points — after the jump:

The increase in California land prices, and especially in Napa and Sonoma. You can’t afford to make quality $20 wine if you paid $500,000 an acre for your land, leading to what Rob McMillan of Silicon Valley Bank has called the conundrum of entry level wine from the Napa Valley: The region is almost at the point where its entry level wines are too expensive for entry level wine drinkers.

• The increasing popularity of less known regions, like Lodi in California. Rich Cook, who runs several wine competitions in San Diego, made a telling point when I asked him about this. If Lodi is selling zinfandel for $18, and has convinced wine drinkers to pay that much for it, then producers in more prestigious appellations will try to raise prices because they don’t want to sell their wine for the same price as something from Lodi.

• Big Wine, which has taken the profit out of $10 wine for any producer that doesn’t have Big Wine’s economies of scale. That means even wineries with affordable land can’t compete with Big Wine in the $10 category, so they’re forced to make more expensive wine in order to stay in business, even if they don’t necessarily have the grapes or skill to do so.

• The demand for prestigious European wine from China and elsewhere, which has raised prices out of all consideration for what you get. I tasted two red Burgundies (pinot noir) for this post – one I bought for $23, and a $23 sample. The former had almost no Burgundian character and was so fruity and boring that it could have come from Big Wine in California, while the sample had unripe fruit, green flavors, and poor winemaking – hardly what you’d expect from one of the world’s great wine regions.

So what’s a wine drinker to do? For red wine, $20 to $25 still buys value in Spain, as well as parts of the French Rhone and Oregon. Though, sadly, I’ve tasted an increasing number of wines from those two regions that were overpriced, as if producers there were trying to catch up to the rest of the world in cutting value. In Italy, look for less known regions where the wine is made with native grapes, though some red blends with international grapes remain values. Banfi, for some reason, does the latter very well.

The situation is a little better for white wine, since the hipsters and wise guys don’t consider it as important as red. New Zealand, with producers like Spy Valley, still offers tremendous value, and there are $20 white Burgundies from Chablis and Macon that are delicious and fairly priced. And there are $18 to $25 Australian rieslings that are worth every penny.

Finally, the one constant that almost everyone I talked to brought up – the zinfandel blends from Ridge in California, which are usually less than $30 and remind us how nuanced, layered, and sophisticated California wine can be at that price.

More on wine prices:
Has all the value gone out of California wine?
2017 update: Are wine prices rising
Premiumization follow-up: Wine prices in the real world

4 thoughts on “Is $30 wine the new $20 wine?

  • By Jason Haas - Reply

    I think you’ve hit on something important here, at least in California. Because land, at least near the coast where the climate is best, is very expensive here compared to most Old World wine producing regions, to make wines in the $10-$20 range wineries have to both find underappreciated vineyards/grapes and/or live with high production. I broke down the economics of it on our blog a few years ago, and everything is the same except that land is more expensive and because the economy is better it’s harder to snap up grapes at a bargain.

    http://tablascreek.typepad.com/tablas/2010/03/the-challenging-economics-of-making-high-quality-inexpensive-california-wine.html

    Last year, we had to raise the suggested retail price of our Patelin de Tablas wines from $20 to $25 because the slow creep up of grape prices in areas we wanted to source from meant that if we kept the sell price we had to choose between switching to less desirable regions or making the wines as a loss leader.

    I would submit that while under $20 is a tough place for California, there are a lot of really nice wines being made here between $20 and $30.

    Thanks for the thought-provoking piece.

    • By Wine Curmudgeon - Reply

      Thanks for this, as well as sharing your numbers. They’re always well done.

      The scary thing about land prices forcing up wine prices is that wines get priced not for demand or what the market wants, but because that’s the only way the winery can stay in business. The long-term implications of that are not good for the wine business.

  • By linda brooks crandall - Reply

    Wondering if part of the reason for price increases might be the increase in wine clubs? It has seemed to many people i have talked with as if, to be able to provide the deep discounts offered to wine club members, wineries with clubs have had to raise their overall prices and, as some wineries raise their prices, others follow the trend and do so as well. Even with the new prices, members of the wine clubs do save some money because the discounts can be ‘deep’ – although they maybe not be saving as much as they think – or getting the values they want. Customers who are not members are the big losers in the short term because, to be able to try your wine i now have to spend $4.00, $5.00, or even $10.00 more… and as i am buying it i am wondering – is it worth it? Because of this, in the long run wineries will be the biggest loser (i think) because many customers will buy a bottle or two of a nice $30.00 wine, but most of us can not afford that kind of wine purchasing on a regular basis.. so we won’t buy that much – we will switch instead to some nice more affordably priced craft beer, locally produced and be happy to be following the newest trend. 🙂

    • By Wine Curmudgeon - Reply

      A lot of wine club pricing is phony, in much the same way grocery store wine prices are phony. Those “deep” discounts exist because the wines are rarely sold at the list prices.

      Also, winery wine club sales, though growing, are still a tiny fraction of overall wine sales in the U.S.

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