Wine prices in 2017

Wine prices in 2017
Why raise prices? It’s easier to confuse us into buying more expensive wine.

Wine prices in 2017 aren’t going anywhere. How is that possible in this era of higher-priced wine?

Wine prices in 2017 aren’t going anywhere, and could even drop. How’s that for a bold prediction in this era of higher-priced wine?

How is this possible? Four reasons:

First, U.S. wine prices are tied to the California grape harvest. As long as there are enough grapes, it’s difficult for anyone to raise prices because there is so much wine. And there have been enough grapes for years, including the infamous Time magazine “Panic! Wine prices due to rise” harvest in 2011. Even smaller harvests are still gigantic in historical terms – the drought-reduced 2015 harvest saw grape prices fall more than 10 percent statewide.

Second, the weak euro, which has dropped almost 20 percent in the past year, will put a damper an price increases. Importers are passing along the savings from the euro’s decline, something that didn’t seem likely at this time last year.

Third, U.S. wine demand is flat as the 40-year wine boom comes to an end. Reduced demand also means it will be difficult to raise prices.

Fourth, increased competition, as the biggest retailers – Costco, Total Wine, and the grocery stores – exert more pressure than ever on prices. As one consultant told me two years ago – and which is even more relevant today: “Terms like ‘synergy’ and ‘economies of scale’ in wholesale and retail are sometimes code words for ‘beating the crap out of your suppliers.’ ”

So how will retailers and producers sell us more expensive wine, since premiumization is here to stay? First, festival pricing – in which there is not one price for a wine, but three, four, five, or even six – is also here to stay. The picture with this post, taken at a Dallas Kroger, shows how retailers will be able to raise prices without actually raising prices. Can anyone look at that picture and know what the wine price really is?

Also, wineries big and not so big, will focus on knockoffs of more well-known national brands, and retailers will continue to add private label and store label brands. These wines, costing between $12 and $18, will be made to take advantage of what’s trendy, the grapes that are available, and grape prices. Hence, some of them will exist for only one or two vintages. The goal will be to trade us up, selling us more expensive wine without raising prices.

So expect to see lots of pinot noir that doesn’t take like pinot noir; lots and lots of red blends, much of it sweet (even if the label doesn’t say so); and copycat wines – oaky chardonnay that resembles Rombauer, for instance, or high-octane zinfandels to trade on the success of similar wines from Lodi.

Finally, how could wine prices drop? What happens if the 2016 harvest, currently expected to be bigger than 2015, turns out to be a lot bigger? And what happens if the drought doesn’t shorten the 2017 crop and it returns to record proportions? Combine those possibilities with a glut of cheap imports and fewer Americans drinking less wine, and wine prices could decline substantially. There’s no guarantee this will happen, and the panic meisters are already talking about grape shortages, but lower prices remain a possibility.

5 thoughts on “Wine prices in 2017

  • By Airwine -

    Pricing power, except for Napa Cabernet and some brands of Pinot Noir (plus a few others) mostly ended about 10 years ago. This should be screamed at new small start-ups. Grape prices for the good stuff continue to go up and so do production and other “back end” costs as well. Not a good moment for new. small innovators as it was in the 1980s and early 90s. Not at all. Coming soon: wine glut panic redux.

  • By Mitch Cosentino -

    While the big picture could be as discussed, wines from Napa Valley will not be doing the same. In fact when it comes to Cabernet Sauvignon from Napa specifically, the private labels versions will disappear for at least a couple of years at least as demand for this is up and availability is not. Grape prices are up over $6,300 ton thru the 2015 harvest. Bulk gallon prices are running from $55 to over $100 per gallon. At this rate Cabs under $50 per bottle will be disappearing. With the spirits company Diageo selling off BV and Sterling wineries to a wine company will see their prices increase. Diageo used those brands as loss leaders for their spirits businesses, the new owners cannot continue that. This is the other side of the story.

    • By Wine Curmudgeon -

      Thanks for this. Napa, of course, is the exception to every rule. Land prices, and all that.

      The interesting thing will be if the price increases will stick.

  • By tew -

    We’re going to find out soon enough regarding the impact of higher volumes. The 2017 California harvest is going to be huge unless there are large areas that experience bad weather (post bud break frost, hail during the growing season, too hot / cold during the growing season, rain during harvest). The drought is over and vineyards are ready to produce!

  • By tew -

    On the other hand, 2016 is a disaster in most of Europe, so perhaps that will balance out the prospective 2017 California volume spike?

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