Wine prices 2019 update: Are prices coming down despite premiumization?

wine prices 2019Way too many grapes and continuing flat demand may lead to lower wine prices 2019

At the end of the summer, I was talking to an official for one of the big grape grower trade groups. I asked what he thought wine prices would do through the end of the year, as well as into 2020.

“Wine prices are coming down,” he said. How can that be, I asked. Because, of course, premiumization — its reason for being that wine prices are never going down again.

He laughed. “That may be,” he said. “But when you have too many grapes, which we do, and flat demand, which we do, wine prices come down. There’s nothing premiumization can do about it.”

The trade group official was not alone in his take on wine prices 2019. Whenever I interview a retailer or producer, I always ask about business. And their responses over the past nine months have not been nearly as optimistic as the last couple of years – and certainly not as optimistic as the official wine business position: “Ever more wine sold at ever high prices!”

The consensus: Business may not be bad yet, but it’s certainly slowing. And, no, this isn’t a highly scientific survey process, and yes, it’s overwhelmingly anecdotal. But, like the Wine Curmudgeon Wine Sample Index, it rarely steers me wrong. Because other signs point to the same thing:

Reports one trade website: California “supply levels remain higher than ideal and therefore the market remains favourable to buyers, with wineries quoting the lowest bulk wine prices in 5 years.” In other words, lots of grapes in the supply chain, and not too many buyers, so lower grape prices.

And that’s because the 2018 harvest was record-breaking, and the 2019 harvest may be equally as gigantic.

• And we all know about flat demand. In 2018, about one-fifth of regular U.S. wine drinkers were older than 65, compared to 16 percent in 2015. But the youngest regular wine consumers, ages 21-24, are decreasing, dropping 13 percent from 2015.

• Canceled grape contracts. Large producers are refusing to buy grapes they agreed to buy, ostensibly because of smoke damage from the 2018 wine country wildfires. But there’s a suspicion that the wildfires had nothing to do with the cancellations; rather, it’s because the producers already have too many grapes and don’t need any more.

• Wholesale alcohol inventories, measured in dollars, are at an all-time high, according to the U.S. Census Bureau. This could be nothing more than a side effect of premiumization – the same amount of wine in warehouses, but since it costs more, its value is setting records. Or it could mean there is a lot of wine stacking up because no one wants to buy it.

Last week’s tariff news should only make things worse, since it will raise prices for many European wines, while most cheaper French and Spanish wines could disappear from U.S. shelves. Which will further cut demand and increase the overall supply.

If, in fact, wine prices are coming down, will it happen in time for the holidays? Probably not, though I’m willing to bet we could find terrific deals as producers, distributors, and wholesalers try to get rid of select wines they have too much of.

The real selloff may come at the beginning of next year, and especially if the holiday season is as slow as it looks like it will be. And then, finally, we could be able to see the beginning of the end of premiumization.

More abut wine prices 2019:
Wine prices 2019
2019 SVB wine report
The biggest factor in California wine prices

Photo: “Wine section of a supermarket” by piropiro3 is licensed under CC BY 2.0 

3 thoughts on “Wine prices 2019 update: Are prices coming down despite premiumization?

  • By Rusty Gaffney MD -

    Excellent review of the situation. I only follow Pinot Noir but I cannot think of a single premium California or Oregon Pinot Noir winery that has lowered their prices. If anything, I have the impression that prices have increased and there are more domestic Pinot Noirs out there now more than ever selling at triple digits. So, although the frenzy over Pinot Noir fueled by ‘Sideways’ in the mid-2000s has definitely subsided over the past couple of years, my impression is that prices remain unaffected to date. Oregon Pinot Noir sales are soaring year over year. There are still Pinot Noir vineyards being planted. Not a week goes by that I don’t hear of a new domestic Pinot Noir producer entering the race. Only time will tell if the situation is maintained.

  • By John Doe -

    I guess I don’t understand the last bullet point regarding tariff news. As a “Cali-centric” based article regarding the oversupply in this state, how do you riposte into a tariffs on imported European wines, especially “cheap wines are going to contribute to the glut”? If anything, this seems counter-intuitive and that the tariffs results may exacerbate an increased demand for California wine due to the ability to out-compete cheap imports. I just don’t see the connection to glut and that specific bullet point.

    • By Wine Curmudgeon -

      Hi, John. Loved your movie 🙂

      The point about the tariff: Many importers told me people won’t buy the more expensive wine, either domestic or imported, that will replace the $10 French or Spanish wines. One Italian importer laughed when I asked him the question. Who is going to buy $12.99 pinot grigio? he asked me. So the more expensive wines will sit on the shelves, adding to the glut.

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