Tag Archives: wine prices

Ask the WC 25: Three-tier reform, wine prices, wine scores

three-tierThis edition of Ask the WC:  Is the Supreme Court going to take a three-tier system case? Plus, what’s happening with wine prices and why does the WC dislike scores?

Because the customers always have questions, and the Wine Curmudgeon has answers in this irregular feature. You can Ask the Wine Curmudgeon a wine-related question by clicking here.

Hi, Wine Curmudgeon:
I really liked your post about buying wine illegally. Is there any chance we can get rid of all these stupid laws and buy wine like normal people?
On-line wine buyer

Dear On-line:
A variety of cases are wending their way through the legal system that could make it possible for us to buy wine from out-of-state retailers and on-line. They include my favorite, Walmart’s attempt to overturn a Texas law that says publicly-held companies can’t get a state retail liquor license. Talk about foolish. However, another case is attracting more legal attention — Lebamoff v. Michigan. Lebamoff, an Indiana retailer, sued to be allowed to sell wine in Michigan. In this, it directly addresses out-of-state retailer sales. Tom Wark, who follows these things in his role as executive director of the National Association of Wine Retailers, told me he thinks there’s a good chance the Supreme Court accepts Lebamoff. If so, it should decide once and for all whether Internet and out-of-state retail sales are constitutional. Having said that, there’s no guarantee the court rules in favor of direct retail shipping if it takes the case.

Dear Wine Curmudgeon:
What’s going to happen with wine prices? I thought they were supposed to go down, but all I see is $15 wine in the grocery store.
Cheap wine buyer

Dear Cheap:
Your guess is as good as mine. The grape glut is real, here and in Europe, and I’m working on a post about that for next week. But I agree — prices don’t seem to have responded to an excess of wine on store shelves. The tariff, of course, is one reason. I also wonder if supply chain problems caused by the pandemic are limiting the supply. A limited supply means prices won’t fall, even if demand has decreased during the pandemic. So we will just have to wait and see.

Greetings, Charmingly Grumpy:
I’m new to the blog.. How come you don’t use wine scores like everyone else?
Inquiring mind

Dear Inquiring:
Scores are one of the three or four worst things about the wine business (the others being corks instead of screwcaps, premiumization, and three-tier). They’re biased in favor of expensive wines, regardless of quality; they don’t give enough credit to “lesser” grape varieties or to white wine; and they reflect the critic’s taste and not necessarily whether the wine is any good. In this, they are a crutch for retailers, who can post 88 points and figure that’s customer service. I explain what the wine tastes like so you can make up your own mind.

Photo: “Dallas Food Truck Truck Festival – August 2011” by BetterBizIdeas is licensed under CC BY-SA 2.0

Update: Wine prices 2020

wine prices 2020Ignore the headlines — wine prices 2020 probably aren’t going anywhere

How can we have have excess supply and declining demand, and yet still see steady wine prices? Because this is the post-modern wine business.

Somehow, we’re at a point where the laws of economics don’t matter. Too many grapes and less consumer demand, as well as an uncertain economy thanks to trade wars, the U.S. election, and the coronavirus, should mean lower wine prices. We should see $15 wines cut to $12, $12 wines cut to $10, and so forth.

But not in this version of the wine business, no matter what the headlines say.

“Most people in the business haven’t a clue about very basic economic principles, such as supply and demand,” one mid-size California producer emailed me recently. “The $15 to $20 ‘sweet spot’ is not so sweet anymore.”

So what is going on here? Why is the wine business defying supply and demand?

First, thanks to consolidation, we have oligopoly pricing. That is, the producers, retailers, and wholesalers control such a large part of the market that they can afford to hold the line on prices. Prices may change, but they never change all that much or for all that long. One wine may be discounted, but then it’s replaced by another one, which is then replaced by another one. Case in point was a Dallas Kroger this week, when almost nothing was priced differently than normal — even previous vintage roses.

Second, we’re seeing the after-effect of premiumization combined with untenable cost structures. So many producers spent so much money establishing their brands at $15 or $20 or $25 that they can’t “afford” to lower prices. If they do, they will “ruin” their brands. In addition, production costs are so high for so many of these producers that lowering prices means they will sell at a loss, and then their bank won’t be happy.

So what will we see instead of consistently lower prices?

Lots of dumping and heavy discounting. Some of this has been going on for months, and it was one reason why Treasury Wine Estate’s stock tanked at the beginning of February. The company either threw the wine out or sold it at deep discounts, often through non-wine outlets. One Dallas dollar store was selling $8 and $10 Beringer supermarket wines for $2.99 and $3.99 at the beginning of the year. That’s the picture at the top of the post.

Also, new, less expensive one-off wines. This happened quite a bit during the recession, and it’s one way for a producer to protect a $25 brand. They’ll sell their wine to someone else, who bottles it under a different name for $10 or $12 or $15. I’ve seen this already, too. My local Aldi is selling a “reserve” pinot noir for $10. It’s almost certainly more expensive wine that has been relabeled.

So, in the end, don’t expect your local retailer to lower prices. That would make too much sense in a business that is not much connected to reality any more.

Ask the WC 23: Wine prices, rose, South African wine

wine pricesThis edition of Ask the WC:  Has the wine tariff pushed up wine prices? Plus, why isn’t rose sweet and whether South African wine is worth buying

Because the customers always have questions, and the Wine Curmudgeon has answers in this irregular feature. You can Ask the Wine Curmudgeon a wine-related question by clicking here.

Greetings, WC:
Have wine prices gone up because of the tariff? I can’t tell, but I buy the same wine over and over, so I’m not a good person to ask.
Watching my pennies

Dear Pennies:
The biggest surprise with the tariff — to me, anyway — has been retailer reluctance to raise prices, and especially for the wines we write about on the blog. There have been exceptions, of course; I was in the country’s premier “natural food” grocer the other day, and it looked like every French and Spanish wine had gone up exactly 25 percent, the amount of the tariff. But many of the other retailers I have visited or talked to are making an honest effort to hold the line. I’m especially seeing many retailers bring in similarly-priced labels to replace the tariff wines. Which, all things considered, makes me a lot less cranky about the tariff. Still, as one Dallas retailer told me, all bets are off when the new rose vintages arrive in the next month or so.

Dear Wine Curmudgeon:
Is rose supposed to be sweet or not? Some taste like white zinfandel, and others don’t. When did this start?
Pinked out

Dear Pinked:
Rose is dry. White zinfandel is sweet. This used to be cut and dried. But in the wine business’ ill-conceived attempt to woo younger consumers, they’re sneaking residual sugar into “dry rose.” Typically, most European pinks are still dry, so you’re safe with French, Spanish and Italian wines. One way to tell: If the dreaded word smooth appears on the back label, I wouldn’t be surprised if the wine was sweet. Rose is supposed to be fruity, not smooth.

Hello, Wine Curmudgeon:
Am I starting to see more South African wine in the U.S.? Is it worth buying?
Curious

Dear Curious:
The answer to the first part of your question is yes and no — yes, because sales have increased substantially, and no because sales are starting from such a small base. South African wines, save for a burst of popularity in the late 1990s, have been few and far between in the U.S. But quality has improved markedly since then, and it’s possible to find Rhone-style red blends, whites like chenin blanc and sauvignon blanc, and even dry rose at a fair price.

Photo: “a Bourgogne” by miss_rogue is licensed under CC BY-SA 2.0