Tag Archives: wine prices

Has the next phase of the wine slowdown started?

wine slowdownToo many grapes, younger people who don’t drink alcohol, and slowing sales among all age groups are signs of a wine slowdown

Call it a tipping point if you don’t mince words or an easing of momentum if you do, but the results are the same. It looks like a major change in U.S. wine consumption is underway. Call it the post-recession wine slowdown.

Know four things:

• California wineries, faced with an oversupply of grapes from yet another bumper harvest and lagging sales, don’t seem to be buying as many grapes this year. In fact, their attempt to get out of grape-buying contracts in some parts of the state is causing controversy and bad blood.

Wines sales have slowed, so that even an industry cheerleader termed growth for this year at a “sluggish 0.2% projected pace.” These numbers, from the company that publishes the Wine Spectator, confirm what has been reported elsewhere many times – U.S. sales by volume won’t exceed the increase in the drinking age population for the foreseeable future.

• One of the world’s biggest spirits companies expects that the “low-[alcohol] and no alcohol cocktail movement will increasingly shape the bar world” in 2019. The report went on: “What is most notable, though, is the differing consumption habits of the younger demographic, with 46 percent of people under the age of 35 likely to order a mocktail (non-alcoholic cocktail), versus just 16 percent of over-35’s. “

Rob McMillan of Silicon Valley Bank, one of wine’s leading statistical gurus, says the industry is at that tipping point. McMillan says there will be more grapes than are needed to meet slowing demand, and that the industry must come up with a Plan B to sell its product in this more challenging environment.

In other words, we have too many grapes, younger people who don’t necessarily want to drink alcohol, and slowing sales among all age groups. But the industry is hellbent on selling more expensive wine as if none this was relevant – if it was still the heyday of scores and wine magazines in the 1990s and that post-recession premiumization would go on forever.

Consumers – and that includes most wine drinkers – vote with their debit cards. You can only sell overpriced and lower-quality wine for so long before they put their debit cards away. If that is happening now, and I think it is, then we have a wine industry selling something fewer people want to buy. And that is not a recipe for success.

Wine value 2018: Where we’re at today and what could happen next year

wine value 2018Six things to know about wine value 2018

Wine value 2018 has become perilously close to an oxymoron – a contradiction in terms with little real meaning. Even the Australians, who are famous in most of the world for their cheap exports, are lamenting premiumization and the disappearance of value.

Why this is happening has been well documented, here and elsewhere. Whether it will continue is a point of much contention. The wine business is betting its future that premiumization is here to stay, and that consumers will happily pay $20 for wine that used to cost $10. Others, meanwhile, who are looking at data instead of wishfully thinking, see a wine world with an unsustainable pricing model.

Know the following six things about wine value 2018, where value is defined as wine that is well-made and fairly priced and usually costing less than $15:

• Yes, value still exists – in Spain, parts of Italy, and some of southern France. Many of these wines are still made to reflect terroir and treat their grapes accordingly. Use the category menu to the lower right to search for wines from these countries.

• It’s almost impossible to find value in U.S. wine for $15 or less, save for a brave few brands that are almost single-handedly holding out (and even they have occasionally wavered).

• Producer consolidation, which I once thought would keep prices in line, hasn’t. We’re this much closer to an oligopoly pricing model, where a handful of large companies decide what to charge and everyone else is happy to follow along. Remember, three out of five bottles on the grocery store Great Wall of Wine likely come from just three mega-wineries.

• Pricing is starting to devolve into three tiers. First, cheap and poorly made wine, costing $12 or less, marked by cute labels and gushy winespeak. Second, gimmick wine, often red blends with manly names that are sweet but are passed off as dry, costing from $12 to $18. Third, “collector wine” at $20 and more, labeled as better than anything else and priced that way – even if neither is true.

• Most of the Winestream Media don’t care about any of this, and so don’t write about it. Instead, we get point scores – all remarkably in the high 80s or low 90s – for what seems to be every wine, regardless of quality or price.

• Producers will intensify their focus on premiumization next year, which means two things: First, new, higher-priced brands, and two, price increases for established brands. There has been much more of the former than the latter since the end of the recession, and it could mark as sea change in the wine business if producers can make price increases stick.

More about wine prices and wine value:
Has all the value gone out of California wine
Restaurant wine prices 2018
What is value in wine?

American Airlines wine – is it really worth $9 a glass?

Add American Airlines wine to the joys of post-modern airline service

american airlines wine

I don’t much care for the new logo, either.

Dear American Airlines:

Charging $30 to check a bag requires chutzpah. Making your seats smaller to cram in more people so they can pay $30 to check a bag is chutzpah taken to the next level of chutzpah. But you know what may be worse? Paying $9 a glass for American Airlines wine.

It’s one thing to pay $9 for a glass of wine in a restaurant, even if it’s marked up four times and it wasn’t that much of a wine to begin with. At least it’s in a restaurant, where there’s food and a table and someone waiting on you and a glass for the wine and maybe even a comfortable chair. Which, of course, is the exact opposite of post-modern airline service.

Your three $9 wines – a red blend, a rose, and a sauvignon blanc – are apparently private label. I couldn’t find the wines listed for sale anywhere, including Wine-searcher and CellarTracker. Hence, the wine likely costs you about $2 a glass – a markup to delight even the most markup-conscious restaurateur.

And none of this takes into account the quality of American Airlines wine. There were a scattering of reviews on Vivino; the rose write-up (3 stars out of 5, which translates to a 60- to 70-point wine for those who care about that sort of thing) didn’t fill me with confidence: “However, the finish has a lot of steel/metallic elements … quite abrasive.” Yummy, huh?

The other thing that’s annoying? You serve real beer, including Fat Tire and Goose Island. What did the beer drinkers do to deserve that? Do you think they’re better than wine drinkers? Or smarter in some way?

And yes, I understand you can do this. In our “unregulated, nuts to the customer because we’re an oligopoly and there’s nothing you can do about it post-modern airline world,” you can charge as much as you want, be it for baggage, fares, meals, or wine. But that doesn’t mean I have to like it or drink it. Bring me a Fat Tire, please.

So understand my job is to tell my readers about overpriced wine.  I can’t do anything about $30 to check a bag, but I can do something about this.

Yours in the battle against overpriced wine,
The Wine Curmudgeon

More about wine prices 2018

wine prices 2018

In what reality is $30 wine affordable?

Wine prices 2018: Are too high prices unsustainable? Is a bubble forming?

Twice in the last week, completely unbidden, a retailer and an importer complained to me about too high wine prices. No one was more surprised than I was.

After all, the Wine Curmudgeon is supposed to care about this, not people who make their living selling wine at what I consider too high prices. But the wine world is so upside down in the second decade of the 21st century that even this is possible.

So yes, a small sample size. But I’ve been doing this a long time, and those things just don’t happen. It’s a man biting a dog story – it happens so infrequently that it’s news when it does, even with a small sample size.

Specifically, the two men were complaining about too high red Bordeaux prices, the wine from France, and how they have screwed up the marketplace. Their point: When the most prestigious are priced too high – $800 for a bottle of Cheval Blanc, anyone? – that raises the price for every other red Bordeaux, regardless of quality (the economic theory of substitutes). Plus, it also props up the prices of prestigious red wines elsewhere in the world, as well as less prestigious wines.

You and I see this every day when we buy an ordinary bottle of red French wine. Or, rather, when we don’t buy one because the prices are too high. I paid $18 for a delightful red blend from the Languedoc, Chateau La Roque, which should not have cost $18. It’s from a minor region and made with grenache, not cabernet sauvigon. But the substitute theory prices it at $18 because “better” wines cost $25 and $30. It’s the same reason all those syrupy, over-ripe California reds cost $18. It’s not the land cost or the quality of the grapes, but the substitute theory.

So what does it mean that the importer and the retailer complained to me about this? Is it an indication that a bubble may be forming and this kind of pricing is unsustainable? There seems to be evidence for this. A highly respected economist who studies the wine business has told me twice this summer that U.S. sales are flat and he is not optimistic about the future. And then there is the Wine Curmudgeon sample index – not very scientific but which seems to make more sense every year. This spring, for example, a PR flack pitched me “affordable” $40 wine – a Twilight Zone version of reality that only someone in the wine business could believe.

So we wait and see. And hope for the best.

More about wine prices 2018
July update: Wine prices in 2018
Restaurant wine prices 2018
Expensive wine prices in the real world

July update: Wine prices in 2018

Wine prices in 2018Wine prices in 2018 aren’t necessarily going up, while premiumization may be taking a huge hit

Is premiumization – the idea that we’ll buy expensive wine just because it’s more expensive – wearing out its welcome? That may be the case after looking at what’s going on with wine prices in 2018.

In fact, higher wine prices in 2018 (as well as next year) don’t seem nearly as certain as they did six months ago. That’s when I wrote: “Look for wine prices 2018 to head upward, and not just because of premiumization.” No one is happier than I am that I might be wrong.

What has happened to change all of this?

• Continuing flat wine sales. Every time I see the numbers, I’m reminded of the Wine.com study that says everything that needs to be said: “With little to no organic industry growth, it’s all about battling competitors for market share. Brands swap from one wholesaler to another, and wineries and wholesalers have been consolidating through [mergers]. But these moves are largely just shuffling the deck, rather than growing the total pie, and do very little for the long-term health of our industry.”

• Trouble for Big Wine. How about this bombshell from Constellation Brands, the second-biggest wine company in the world? Its growth in volume for the previous 52 weeks through July was higher than its growth in dollars – the exact opposite of premiumization. Is this a sign consumers are cutting back? Note, too, that neither of the increases was impressive, and the dollar increase was a whopping 0.6 percent.

• Surprising consumer reluctance to spend money on more expensive wine. I see this every time I shop for wine, whether grocery store, wine shop or liquor store. Consider this the other day, from a Dallas Aldi. A man was buying six bottles of the chain’s knockoff, $8 Prosecco, and not the $12 La Marca you can get at the Walmart down the street. Meanwhile, the woman in line in front of me had organic chicken, a couple of organic dairy products, and three bottles of $3 Winking Owl. What does it say that she was spending a substantial premium for food but doing the opposite for wine? Yes, a small sample size, but I see it over and over.

Something is going on, and despite other pressures – inflation, the weak euro – consumers are holding the line on their wine purchases. Will the industry recognize this and adjust accordingly with lower prices?

Restaurant wine prices 2018

restaurant wine pricesSome restaurants are moving away from traditional wine pricing, and selling wine at prices we can afford to pay

There’s actually some good news surrounding restaurant wine prices 2018 – which is especially welcome after 2017’s higher prices and, not surprisingly, flat consumption.

I’ve talked to a number of restaurant officials in different parts of the country over the past two or three months who are being more aggressive with pricing. That includes extended half-price wine nights, half-price wine happy hour promotions, and even – as difficult as it is to believe – lower markups than the traditional 3 ½ to 4 times wholesale.

Yes, this is a small sample size, and there remain too many restaurants that consider charging $30 for an $8 retail bottle of wine their inalienable right, just like freedom of speech and assembly. But good news is good news.

Perhaps even more important: The restaurants that are cutting wine prices are seeing impressive results. An Italian restaurant owner in New Jersey told me his second biggest wine night of the week is half-price Monday, second only to Saturday night. Ordinarily, Monday is one of his worst days for wine sales.

In New Orleans, meanwhile, the general manager at a popular French Quarter restaurant said half-price wine happy hour has done the impossible – keep his restaurant busy between lunch and dinner, usually a dead spot. In this, he said, given the choice between a packed dining room and traditional wine pricing, he’ll take the packed dining room every time.

A few other notes from my reporting and research on restaurant wine prices 2018. Unfortunately, in these cases, the more things change, the more they stay the same:

• A Dallas seafood restaurant that caters to the city’s social and political elite has about one-third more red wines on its list than whites. And the markups remain mostly 4-1.

• The restaurant business’ leading trade magazine recently ran a very basic story about how to put together a restaurant wine list, the kind of thing I might write for the blog. One would like to think that anyone reading that magazine would already know how to do that. That the story still ran speaks to the need for basic wine list information – which, actually, shouldn’t be surprising. Also not surprising: the story didn’t mention pricing at all.

• Where are the young people? No matter where I eat (and not just in Dallas, where wine is still seen as exotic by many diners), I don’t see enough Millennials and Gen Xers drinking wine. I’ve been coast to coast this spring, and most of the wine was being consumed by older white couples – even in restaurants where where there were lots of younger people. One more reason why I fear for the future of the wine business.

More about restaurant wine prices:
The John Cleese Fawlty Towers guide to restaurant wine service
Restaurant wine prices explained: Follow the money
Winecast 28: Bret Thorn, Nation’s Restaurant News

Disconnected from reality: How the wine world thrives on hyperbole, assumption, and exaggeration

Napa Valley wine

If it’s expensive, then it must make me a better person.

Most of us will never drink pricey Napa Valley wine, but that doesn’t stop us from assuming that expensive wine is the only kind that matters

Two recent postings in the cyber-ether show how disconnected the wine world is from reality: First, a comment on the blog last week asking how California could have a record grape harvest this year given the Napa Valley wine fires in 2017. Second, an article on Wine-Searcher.com declaring: “The simple truth is that if you don’t have Napa on your label people just aren’t that into you, and winemakers would be forgiven for throwing their hand in and becoming whiskey makers instead.”

The fact everyone is overlooking here? Napa Valley wine accounts for less than five percent of California’s production.

This is not to denigrate Napa’s product, which is some of the best in the world. Rather, it’s to note how hyperbole, assumption, and exaggeration continue to power the U.S. wine business. Most wine drinkers in this country will probably never taste a Napa Valley wine. First, Napa prices are two and three times the national average, so cost eliminates all but the most devoted. Second, the majority of the grocery store Great Wall of Wine, where as much as three-quarters of wine is sold in some states, is not from Napa. So we couldn’t buy it even if we wanted to.

But there are wine drinkers, and then there are wine drinkers.

That’s because, as the two Napa items demonstrate, only expensive wine matters. This has always been a problem, and explains how I got started doing this. But it has become more prevalent given premiumization. I did a tasting several years ago where a 40-something man refused to drink anything that didn’t cost at least $20 because he knew it was awful. And how did he know that? Because the Winestream Media told him anything cheaper than $20 was awful, saving him the trouble of tasting it himself.

Second is the idea that people who drink expensive wine are somehow better than the rest of us. You can see this in the comments on the blog’s Barefoot posts. This attitude baffles me. I vote, I pay my taxes, I’m nice to my dog. Why does my choice of wine speak to my quality as a human being? What difference can it possibly make to someone else that I don’t drink the same wine they drink?

Those are also two reasons why cheap wine quality has fallen so far since the end of the recession. What’s the point of making decent wine for someone who doesn’t deserve it? After all, as the Wine-Searcher article said, none of the wines we drink matter. Hence, the increasing difficulty in finding quality and value for less than $15.