Wine 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.