Winebits 282: Wine prices edition

? Is cheap wine profitable? Jamie Goode, the respected and award-winning British wine writer, argues that cheap wine will never make anyone any money. He compares it to the cell phone business, noting that if one carrier offered cheaper rates instead of what he calls the almost cartel-like pricing structure in use, then ?all profitability will be sucked out of the market. ? That ?s the opposite of the wine business, he writes, so no one must be making any money with cheap wine. His reasoning, though intriguing, misses a couple of points. Wine is not the cell phone business, which is limited by spectrum availability (as one comment to the post points out) and that lack of spectrum raises prices and margins. In addition, Goode overlooks the elasticity of cell phones vs. wine. We ?need ? cell phones; we don ?t need wine. Hence, there is little incentive for cheap cell phone plans. Finally, I think Goode doesn ?t understand the incredible marketing skill of U.S. producers like The Wine Group, which can create demand for cheap wine like Cupcake and still make money.

? Restaurant pricing: Says Chris Nuttall-Smith at Toronto ?s Globe and Mail: ?There is perhaps nothing more galling than flipping open a restaurant ?s wine list to find a $15 bottle that you know and love listed for more than $50. That ?s been happening to me a lot lately; where many Canadian restaurateurs are loath to price their chefs ? cooking at levels that would make it profitable, they show no such restraint with wine prices. It ?s in-your-face enough to make some diners want to stick with Diet Coke. ? The Wine Curmudgeon couldn ?t have said it better. Is it any wonder that restaurant wine sales have never really recovered from the recession?

? When are wine sales illegal? When you ?re in a state that forbids them. Like Wisconsin, which enforces a 1939 law that sets minimum prices for many retail goods. The story does a good job of explaining why Wisconsin wine prices can be 20 to 30 percent higher than in neighboring states, and how the World Market chain had to correct its Wisconsin advertising and sales offer to comply with state law. Note to Wisconsin residents: Drive across the border to Illinois. Wine is much cheaper there, and maybe even worth the price of the gas for the trip.