Consumers have been able to walk into wine stores over the past four years and find terrific bargains — displays of 2 for $10 and 3 for $20 wines that were well made and worth drinking, bins of marked down and discounted wines, and $40 wines that cost $20. Sadly, though, that all may be about to end.
Wine prices look like they're finally firming after four years of recession-induced declines. The changes are still tentative, they don't necessairly hold true for all parts of the business, and they may not be as noticeable in some parts of the country as in others. In this, it doesn't look like prices will be higher as much as the obvious discounting will end. But, after interviews with retailers, wholesalers, wineries and analysts, it doesn't look like $10 wine is the new $100 wine any more. Instead, there's a new paradigm: The search for value.
"Wine drinkers are going to have to look harder and wider to find deep deals on known items," says Christian Miller of California's Full Glass Research, who tracks wine prices and consumption. "There will still be values, but they won't be as easy to find. They're going to be in undiscovered wines."
After the jump, why this is happening and what it means:
The wine glut that has held prices down for the past couple of years hasn ?t completely gone away, and holiday wine prices — with a couple of notable exceptions — should remain competitive. Which means there will be bargains for shoppers willing to do a bit of work.
That ?s pretty much the consensus of the retailers, local and national, that I talked to this week, and it dovetails with the holiday wine reconnoitering I did in Dallas over the past five or six days. There is still significant price cutting going on, especially at grocery stores. There, says Polakoff, is where you ?ll find what he called the price busters — wine at cost or not much more, which the supermarkets use to to bring in customers. More, after the jump:
There is a titter of joy running through the California wine business as the 2011 harvest ends, and it's not because the quality of the harvest is particularly good. It's because, for the first time in several years, California growers are picking fewer grapes — by some estimates, as much as 10 percent less than last year.
This means that grape prices are expected to go up, which means that wine prices are expected to go up. Which means, after several years of flat and even decreasing wine prices, growers and producers see dollar signs on the horizon.
The weather has finally cooled off in Dallas, and one local sales guy asked me if that would help business. "Everyone's mood has improved, right? So they'll spend more money on wine?" Because, he said, it looked like he was going to need all the help he could get going into the holiday season.
The wine business has been eagerly awaiting the end of the recession, and almost every news story that has come out over the past nine months has been forecasting a return to the good old days, when the price of wine didn't seem to matter to consumers. The reports have been heralding every quarter-to-quarter increase in sales as soon as it has been reported, and you could almost hear the sigh of relief from retailers, distributors and producers.
But that enthusiasm seems to have been wishful thinking (and it has been even worse in Texas, oddly enough, since we've supposedly handled the recession better than elsewhere). More, after the jump:
? What makes a winery successful? It's not the quality of the wine, says a survey of winery owners. Instead, it's five factors that have more to do with controlling costs than anything else, according to a study done by two professors at Sonoma State University ?s Wine Business Institute. Winery owners are more concerned with things like selling wine directly to consumers and developing a strong business strategy. The first is especially interesting, since direct shipment is such a small part of the wine business — as little as one percent. And the lack of concern about quality? And the industry wonders why it's in such trouble.
? State stores mean higher prices: A Michigan think tank has found that liquor prices are higher in Michigan and in the 17 other states where government acts as a statewide liquor wholesaler — the so-called control states. The Mackinac Center report estimates that residents of those 18 states pay 6.3 percent more for booze than the rest of us. The language in the news release gets a little hysterical, and I'm not sure the methodology is as good as it could be, but the point is well taken. When there is no competition, prices are higher — and you get wine kiosks.
? Does cheap wine cause recessions? Australian newspaper columnist John Birmingham asks "whether the problem with the economy isn ?t structural or political but simply attitudinal. We ?ve talked ourselves into a funk. We ?re buying cheap wine, holding our dollars tight, because we ?ve convinced ourselves that ?s what we need to do." A couple of caveats: Birmingham is talking about the Aussie economy, which doesn't compare exactly to our faux-recession in the U.S., and lot of this is written with tongue firmly in cheek (and in Australian, which makes it difficult to decipher in several places). But his approach made me smile. Who knew that those of us who like quality and value had such a significant impact on the economy?
? French government weighs in: The controversy over skyrocketing prices for red Bordeaux increased this week when the French foreign minister said prices for the wines "are actually great value." The Bordeaux pricing mess has turned into great theater, especially since that's how most of us — who can't afford the thousands of dollars a bottle that the best wines command — get to enjoy Bordeaux these days. Can you imagine Hillary Clinton, the U.S. secretary of state, weighing in on Napa Valley cabernet sauvignon prices? But, to paraphrase F. Scott Fitzgerald, the French are different from you and me.
? HR 1161 update: Ignore the headline on the story that this links to, because it's not especially accurate. Instead, know that HR 1161, the direct shipping bill that everyone in the wine business loves to hate, is as dead as always. The bill has no sponsor in the U.S. Senate, which means that the Senate can't consider the bill. Which means it won't become law, and which means that those of you who buy wine directly from the winery in the 38 states that allow it will be able to continue to do so.
? China becomes leading producer: The Chinese wine industry makes more wine than the Australian industry does, which is just one more bad piece of news for the Aussie in a decade of what seems to be unrelenting bad news. The article, which is actually a video transcript, offers some interesting insights into the battle for market share between Chinese producers and the rest of the wine world.
? Certifying wine writers: Slate's Mike Steinberger weighs in on this winter's cyber-controversy about credentialing wine writers at the end of a longish piece about the value of earning the Master of Wine title. Says Steinberger, who does a better job than most of writing about the bits of the wine business that have nothing to do with tasting wine: "However, wine appreciation is an almost wholly subjective endeavor, and while some palates are more discerning than others, even the most experienced and knowledgeable critic is merely offering an informed opinion." Given Steinberger's stature, I guess I'm safe for a while longer from the certification police.
? Spanish bubbly sales rising: Which is not a surprise to anyone who has tasted the wines. Sales of Champagne in the U.S. are down more than 20 percent from 2007, according to Impact Databank. Know what has made up the difference? Cava, of course. Sales for the three biggest Spanish sparklers are up 12 percent since 2007, pretty impressive given the recession. In fact, says Impact, more cava is now sold in the U.S. than Champagne.
? Too expensive for Parker? An odd report from the French news agency AFP, in which it quotes Robert Parker, the most important person in the wine business, as saying Bordeaux wine prices are too high. Which would be like the Wine Curmudgeon saying $10 wine prices are too low and should be higher. Parker is the main reason no one, save the world's wealthiest people, can afford top-end Bordeauxs. In fact, if that's not bizarre enough, Parker says the top producers should cut their prices 10 to 20 percent, and should not rely on the Chinese market to boost sales. It was enough to make me reach for a bottle of cava.