Category:Wine news

Wine prices 2021

wine prices 2021Wine prices 2021 will defy the law of supply and demand, and we’ll suffer with more overpriced, mass-market wines

This is the first of two parts looking at wine prices and wine trends in 2021. Today, Part I: Wine prices 2021. Monday, Part II: Wine trends 2021.

Anyone who says they know what wine prices 2021 will do is guessing, at best – the Wine Curmudgeon included. How else to explain a wine world which continues to deny the existence of the law of supply and demand?

That’s because we saw demand continue to decline in 2020, supply continue to increase, and prices refuse to follow along. In fact, some prices increased, and that had nothing to do with the tariff, but producers and importers trying to take advantage of the last gasps of premiumization.

Or is this premiumization’s last gasp? I’ve been writing about the end of premiumization for a couple of years (and I’m not the only one), but it’s still with us in all its irritation and aggravation. I’m beginning to think that the oligopoly structure of the post-modern wine business, with a handful of companies controlling production, wholesaling, and retailing means that prices will do what the oligopoly wants, and not what they should do. If the oligopoly wants premiumization, then we’re going to have premiumization, and that means more overpriced, mass-produced, flabby, and boring supermarket-style wines.

And it looks like the oligopoly does. How else do you explain paying $15 for Italian wine, which isn’t included in the tariff, that costs one-third that much in Italy? Or $15 and $20 California labels, where the bulk grapes used to make the wine may have cost as little as $1 per bottle? Or $20 Washington wines when the state is awash in bulk grapes? Or all those French roses that cost two and three times as much as something like this – even though the former have much the same grape cost?

So if I had to make one prediction for wine prices 2021, it’s not to expect any price relief. For one thing, the tariff isn’t going away any time soon. That not only raises the price of most French, Spanish, and German wines, but gives producers elsewhere an excuse to raise their prices. Ironically, I asked several experts about this possibility when the tariff took effect in 2019, and was told no producer would be stupid enough to raise prices to take advantage of the tariff. Once more, the experts were wrong, and the wine business demonstrated yet again why I worry about its future.

So not much good news here – save for the caveat that if I have been as wrong this time as I have been before, then we will have some good news. Just don’t count on it.

More about wine prices:
Wine prices 2020
Wine prices 2019
Wine prices 2018

SVB wine report 2021

svb report
SVB report 2021: The wine business must find a way to reach under-40 consumers.

The good news in SVB wine report 2021: This year should be an improvement over 2020. But don’t get your hopes up for 2022

How about some good news in the SVB wine report 2021, Silicon Valley Bank’s annual state of the wine industry effort? It would be a welcome change from the gloom and doom of the past 10 months, as well as the past couple of years of SVB reports.

So rejoice.

“I think the news will be measured and good,” says Rob McMillan, the report’s author. We exchanged emails in the run-up to the report’s official release and webcast yesterday.

“I think we have a bounce ahead of us,” he says. “And going back to history, I remember having data that showed a massive growth in wine consumption in 1945, then a drop in 1946. I do expect a bounce in 2021 – maybe not like 1945. Call it a rolling celebration that will span 2021 and into 2022 as occasions and delayed celebrations come back.”

The report reinforced that good news – assuming the pandemic gets under control and the wine business doesn’t do anything stupid:

• Expect a bounce in demand if tourism and restaurants come back. The report sees an increase in wine sales gaining momentum in 2021, but it may not be sustainable next year.

• Wine demand this year did not increase, no matter what others are saying. Instead, says McMillan, what happened is what’s called a channel shift — we bought less wine at restaurants and more wine at supermarkets and on-line, but the overall total didn’t change. In this, restaurant wine sales have not recovered and may still be down as much as two-thirds over the same time last year.

• Premiumization is nearing its peak, but will continue this year thanks to that pent up demand and the industry’s efforts to reduce the wine supply. The 2020 California harvest may be the smallest in a decade.

• Retailers who understand on-line sales and e-commerce – even without more loosening of three-tier laws — “will have a strong 2021.” The report says on-line sales could represent 20 percent of an average winery’s sales within five years – an impressive figure, given those are in the mid-single digits now. And e-commerce sales during a three-month period in 2020 increased as much as the previous 10 years.

Not all was good news, of course. What else would we expect after 2020? Wine’s growth rate, even with premiumization, has declined across all price segments for years, and there is no reason to expect a long term change unless the wine business changes tactics in how it sells wine. In addition, as Baby Boomers continue to drink less wine, the industry must find a way to reach under-40 consumers. Which, as we know, it has failed miserably at.

Winebits 680: Drink Local, pandemic wine, wine tariffs

drink localThis week’s wine news: Supermarkets embracing Drink Local during the pandemic, plus one more study about pandemic drinking and wine tariffs

Drink Local thrives: Supermarket News reports that “Retailers deepened their relationships with local beer brewers and winemakers in 2020 to satisfy customers and support their local economies.” Which, of course, is something those of us who have long believed in local wine are very glad to see. The story looks at one California grocer, where virtual tastings with local wineries have far exceeded expectations.

One more study: The Wine Curmudgeon has been keeping close track of the various pandemic drinking studies, if only because the results show hat we’re drinking less, drinking more, and passing out in front of the TV set – or all three.. The latest study comes from a browser app that offers retail discounts; its findings seem just as reliable as any of the others, which is to say not necessarily reliable at all. There’s no methodology in the release, for one thing, and it claims rice wine sales have increased 37 percent – more than any other kind of wine, more than most spirits, and more than something called “imported craft beer.”

Whoops: About 10 days ago, U.S. trade officials said they would extend and increase tariffs on a variety of French products, including much wine that had not been taxed in October 2019. Then, at the end of last week, they said they wouldn’t up the tariff, after all. And then maybe they did, depending on news reports this week. Don’t worry if you’re confused. So am I, and even the normally reliable BBC seems confused in the story in the link. Just know that the situation remains the seem as it was before the end of the year, awaiting the new administration.

2021 $10 Wine Hall of Fame

2021 $10 Hall of FameGood news, and just when we need it — nine wines entered the 2021 $10 Hall of Fame

Somehow, nine wines entered 2021 $10 Hall of Fame. That’s the most since 2017, which also had nine.

How is that possible, given the Trump tariff, premiumization, and supply shortages caused by the pandemic? I’m not sure. Chalk it up to a bit of good fortune, as well as a variety of far-sighted importers and retailers who saw an opportunity in a market glutted with overpriced, supermarket-quality plonk.

All was not good news, of course. Some of  the greatest cheap wines in the history of cheap wine dropped out. France’s Chateau Bonnet red, white, and rose now cost as much as $20 each, while the importer for Italy’s much beloved Falesco Vitiano dropped the white and rose and limited distribution of the red. Two other wines dropped out — New Zealand’s Matua sauvignon blanc and the Australian Yalumba Y series rose, both for quality.

Meanwhile, availability became an even bigger problem last year. A half dozen more wines were Hall quality, but weren’t readily available, so I couldn’t use them. And even the ones I did add might be more difficult to find now than they were when I tasted them in 2020. There are still too many wines and not enough distributors, and the distributors that remain are so big that they don’t want products from the smaller, niche producers who make the most interesting cheap wine.

Still, given how cheap wine quality has plummeted over the past couple of years, and how pitiful last year’s Hall was, any good news is welcome. The inductees include the 2021 Cheap Wine of the Year, the MAN chenin blanc from South Africa; the Campuget and Masciarelli roses; the Italian Tenuta Carpazo sangiovese and La Valentina Montelpuciano; a vinho verde, the Aveleda Fonte; the Spanish Balnea verdejo; the French Le Paradou viogner; and an old friend, the Mont Gravet carignan.

The complete 2021 $10 Wine Hall of Fame is here. You can also find it at the Hall of Fame link at the top of the page. The Hall’s selection process and eligibility rules are here. I considered wines that cost as much as $13 or $14 to take into account price creep and regional pricing differences.

You’ll be able to print the Hall as either a text file or a PDF. Look for the printer icon on the upper right hand corner of the post.

Winebits 679: Nutritional guidelines, expensive wine, wine taxes

wine and health
Damn, I’m good — I’m suffering from “quarantine 15” even though Americans are drinking less alcohol.

This week’s wine news: The WC’s beloved New York Times screws up a wine and health story, plus the eminent Jancis Robinson laments overpriced wine and wine tax relief

Even the Times: The Wine Curmudgeon has nothing but respect and admiration for the New York Times, which regularly reminds us what great newspapering can be. But the Times, apparently, has the same weak spot as the rest of the media – wine and health stories. In a story last week about new federal nutrition guidelines, Roni Caryn Rabin writes: “Confined to their homes, even those who have dodged the coronavirus itself are drinking more and gaining weight, a phenomenon often called ‘quarantine 15.’ ” I can’t speak to the weight part, but as we’ve noted on the blog since the pandemic started, Americans are probably drinking less. U.S. alcohol sales, as near as can be told, have declined during the pandemic, which would make it difficult for us to be drinking more. How this unsubstantiated sentence got into the Times – and past its topflight copy desk – is beyond me.

Too expensive: Jancis Robinson, one of the most respected wine critics in the world, agrees with the Wine Curmudgeon that wine costs too much money. She writes: “I’m not thrilled that prices for the established trophy wines of France, Italy and California have skyrocketed in recent years, putting them out of the reach of most wine drinkers, but I understand why. They are in relatively short supply and there are more and more billionaires in the world who need billionaires’ drinks. … But it does stick in my craw to see four- and even five-digit prices being asked for bottles with hardly any reputation at all.” When Jancis Robinson and I agree – and our wine worlds and perspectives have little in common – then wine really is messed up.

Tax relief: The wine business did get some good news in 2020. At the end of the year, Congress passed a law extending excise tax cuts that would have expired otherwise. The bill makes permanent a variety of credits and reductions aimed at helping the small producers who make up some 90 percent of the more than 10,000 wineries in the U.S. These days, these producers can use all the help they can get. I’ll do a podcast later this month with Michael Kaiser of the Wine America trade group, who was instrumental in getting the legislation passed.

Winebits 678: Icewine, World Market, and Manischewitz

icewineThis week’s wine news: Icewine, already rare and expensive, is getting more rare and more expensive. Plus, Bed Bath & Beyond dumps World Market and something else.

Icewine is even pricer: Canada’s Niagara region, one of the world’s most important for icewine production, is looking at one of its smallest harvests ever. One large producer may make one-quarter less wine, and smaller wineries are reducing production even more. Ironically, it’s not climate change forcing the cuts, but the pandemic. Since tourism has all but ended, winery officials say there’s less of a market for the product. Hence, prices may go up into the mid-triple digits for the best wine.

Dumping World Market: Bed Bath & Beyond, which bought Cost Plus World Market and its extensive wine retail operation in 2012, has sold the chain. The purchase didn’t make much sense then, even to amateur retail analysts, and new management at Bed Bath has finally figured that out. Selling wine and housewares isn’t that much of a fit. Ironically, Cost Plus’ wine operation is not the cheap wine heaven it was at the time of sale — these days, it’s mostly overpriced private label and Big Wine brands. The new owner is a private equity firm, and that usually means store closings and layoffs. As noted in the post I wrote in 2012, I wish this had worked out. That it didn’t may mean more bad news for Cost Plus.

The ultimate in wine nostalgia? Seth Stevenson, writing in Slate, tells us everything we need to know about Manischewitz, the Kosher wine that is known for being sweet and not very drinkable unless you like very sweet wine. He discusses its post-Prohibiton origin, its popularity in the Black community — Billy Eckstine, no less — and that it remains the best-selling Kosher wine in the country. The latter is stunning news, given that today there are Kosher wines that taste like wine. Which, of course, Manischewitz never really did.

Photo: “icewine grapes3” by Rivard is licensed under CC BY-SA 2.0

Winebits 677: The year-end supermarket wine edition

supermarket wineThis week’s wine news: Supermarket wines could account for almost half of the wine sold in the U.S. Meanwhile, Kroger says sauvignon blanc was a 2020 hot trend and southern California retailer Gelson scores with its private label wine.

How important is supermarket wine? Pretty damned important, if this study from the American Association of Wine Economists is accurate. Its numbers show that the 30 biggest wine brands in the U.S. – all mostly supermarket labels costing $10 or less – accounted for 49.8 percent of the wine sold in the U.S. by volume in 2019. Think about that: There are more than 10,000 wineries in this country, and just 30 labels make up half of the wine sold. But that’s just part of the study. Barefoot and Franzia sell about one of every seven bottles, and their wineries, E&J Gallo and The Wine Group, control almost one of every three bottles sold. And people doubted consolidation matters? The other bit of news about this study? It’s not really news – just a slightly different take on the numbers than the annual Wine Business Monthly report, which will be released in a month or so.

Bring on the sauvignon blanc: Kroger, which ranks among the biggest wine retailers in the country, reports that sauvignon blanc – yes, that sauvignon blanc – was the fourth biggest food and drink trend in its 2,800-store national chain this year. That put the white wine between flavored potato chips and heavy whipping cream, and ahead of chocolate (No. 8) and coffee pods (No. 9). The pandemic and people drinking at home instead of restaurants no doubt accounted for the high ranking, but let’s not overlook relaxed rules on wine shipping and delivery. As noted last week, Kroger has the money and chops to flex its political muscle to keep many of the changes permanent when the pandemic ends.

Private label wine: Southern California grocer Gelson’s Markets expanded its private label wine collection in 2020, taking advantage of the wine glut to offer pricier wines than the stuff in the first item in this post. The chain added four reserve Napa wines, products that can cost as much as $100 with a winery name on them. Gelson’s is a high end retailer with a big wine commitment; about half of is 27 stores have wine bars.

Photo: “Barefoot Wine Display at Ralph’s” by JoeInSouthernCA is licensed under CC BY-ND 2.0