Wine prices 2018: Price creep, price confusion, and crappy wine that costs more money
Wine prices 2018 will be even more confusing than wine prices were in 2017, and that was confusing enough. This year, expect producers and retailers to use even more sleight of hand to get us to pay more money for the same quality wine — or even wines of less quality. My look at wine trends in 2018 is here.
There are four reasons for this:
1. The end of standard pricing. Traditionally, a wine cost about the same at every retailer in the country, whether it was $10, $20, or $50. No more. Today, as long-time reader Rex Warburton and I discussed, “the price spread is incredible. This is not a big problem for regular wine drinkers, but a nightmare for beginners or occasional buyers.” Which is the point. Expect to see a wine at $11 cost as much as $18 elsewhere (which was the case with the Ferrari Carano fume blanc I reviewed in the fall).
The reasons revolve around consolidation in retailing and distribution, and which are too complicated to explain here. It’s enough to know that the biggest retailers get incredibly better pricing than a neighborhood independent or even a small chain, so they can afford to sell wine for much less money. The catch for consumers is that the big retailer’s pricing is a one-off, and there is no guarantee it will sell the wine again, let alone at the same price.
2. Price creep. Or, when a $10 wine costs $12 for no particular reason. It’s not necessarily a price increase, since the wine can still be found for $10 elsewhere (and most retailers remain reluctant to raise prices). It’s just a retailer testing the market.
3. Price positioning. Look for wine to be made so it will cost a certain amount, probably between $15 and $20, and not because the wine is worth that much. This is not new for expensive wine, but it has started happening in the past couple of years with cheap wine.
The textbook example, which should be studied at every business school in the world, is E&J Gallo’s La Marca Prosecco. It’s probably $10 or $11 worth of wine, but its average retail price is $14 – and consumers are happy to pay it, turning La Marca into the top-selling Prosecco in the world.
I saw the same thing recently with a cabernet sauvignon from California’s Lodi region, listed at $17. This is twice what it was worth (and about six or seven times what the grapes cost), but the producer figured the consumer would bite. Because wine has to cost more than $15 to be good, doesn’t it?
4. Price confusion. This is more of what grocery stores and the World Market chain have been doing for years – three, four, or even five prices for the same bottle of wine. This is called fake front end pricing; the producer suggests a retail price that is artificially high so that the retailer has lots of room to “cut” it. My Kroger, for example, listed the Layer Cake rose for $21, and then put it on “sale” for $10, when $10 should have been the price all along. This practice will expand to other retailers, and it will be almost impossible to believe any wine price listed in a supermarket or World Market.
Finally, as a corollary to all this pricing foolishness, availability – already awful – is going to get worse, and it will be more difficult to find interesting wines at a fair price. First, the biggest retailers prefer to buy from Big Wine, since it’s more cost effective, and most quality cheap wine comes from smaller companies that don’t sell to grocery stores. And grocery stores sell more than half of the wine in the U.S.
Second, the biggest retailers can demand exclusives for national brands (though that’s technically illegal), further reducing availability. Finally, private label wine – those wines only sold at one retailer – will become even more common, and they will take up shelf space that might have gone to more interesting wine.
In the end, all of this will amount to price increases without there being any actual price increases. Aren’t we lucky?
Illustration courtesy of Fix.com, using a Creative Commons license