The WC Wine Business Index: Four more signs the wine glut is upon us

grape glutThe grape glut means there’s lots of cheap wine on the market, from Aldi to Costco to Albertson’s

This is the first of two parts looking at the conundrum that is wine pricing today – we’re awash in cheap, often crummy. wine, while the prices of the world’s great wines are at all-time highs. Today, part I: The grape glut, and what it means for consumers. Part II: How we got to the point where no one but the ultra rich can afford the world’s great wines.

How do we know the wine glut is upon us? Because the Wine Curmudgeon’s Wine Business Index tells us so. How about $2 wine in many of Albertson’s California stores? An Aldi chardonnay where the bottle probably cost more than the wine inside it? Or a constant flow of samples this fall of cheap wine that I’ve near heard of before?

In other words, there are lots and lots of grapes in California, and neither the Trump tariff or increased on-line sales have done anything to fix it. And why do we care about a grape glut? Because if there are too many grapes, we’re going to see cheaper wine prices, thanks to the law of supply and demand. This doesn’t necessarily mean we’ll see lower prices on established wines; rather, what I’m hearing is that producers are “inventing” cheap wine brands or making private label wine to soak up excess grapes.

First, though, what you need to know about the WC Wine Business Index. It’s my attempt to overcome the contradictions, inaccuracies, and confusion that are inherent in most wine statistics. I interview retailers, producers, and marketers from around the country to see if I can outline where the wine business is and what it means for consumers.

Alive and well

And from what I’ve found, the glut is alive and well:

• Consider Albertson’s Sea Ridge wines, which have been marked down to $2.21 from $3.49 in many of the chain’s West Coast stores. At that price, the supermarket is more or less selling the wine at cost. (And a tip o’ the WC’s fedora to blog regular Nick Angel for sending this my way.)

• Aldi’s $8 Exquisite California chardonnay. It comes in a heavy bottle (about 21 ½ ounces) with a deep punt and a heavy foil cap. This is could well be a “shiner,” said one long-time Sonoma winemaker. That means the wine was bottled by another producer, but sold to Aldi at a discount. “I haven’t tasted it,” said the winemaker, “but it would have been produced by someone who thought they would sell it for $30-plus a bottle, but it became ‘albatross inventory’ and got sold real cheap.”

Costco’s Kirkland Sonoma chardonnay, which has sold for $7 or $8 for the past couple of vintages That’s an almost unheard of price, even for a deep discounter like Costco. It works out to about $3 a bottle for the wine (allowing for $2,400 a ton for chardonnay and 756 bottles to a ton). So, somehow, the cost of production and any profit has to come out of the other $4 or $5. (Another tip o’ the WC’s fedora to blog regular Walter Blood for sending this my way.)

• Sample after sample of wine costing $15 and less from producers I’ve never heard of. Typically, this only happens when there are excess grapes and chance to make a wine at high margins even at lower prices.

Having said all of this, one Napa winemaker told me she doesn’t expect the glut to last much after the 2020 vintage. This year’s harvest almost certainly won’t be as big as 2019’s, which will limit production. So the future for prices as we go into 2021 remains uncertain.

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