Tag Archives: wine and the recession

Update: Wine prices and the recession

The weather has finally cooled off in Dallas, and one local sales guy asked me if that would help business. "Everyone's mood has improved, right? So they'll spend more money on wine?" Because, he said, it looked like he was going to need all the help he could get going into the holiday season.

The wine business has been eagerly awaiting the end of the recession, and almost every news story that has come out over the past nine months has been forecasting a return to the good old days, when the price of wine didn't seem to matter to consumers. The reports have been heralding every quarter-to-quarter increase in sales as soon as it has been reported, and you could almost hear the sigh of relief from retailers, distributors and producers.

But that enthusiasm seems to have been wishful thinking (and it has been even worse in Texas, oddly enough, since we've supposedly handled the recession better than elsewhere). More, after the jump:

2011 wine price update

Some thoughts to follow up on the December post about what the experts are calling consumer-friendly wine prices in 2011:

• Italy invented pinot grigio as a wine to sell in the United States, but the recession may have helped change Italy's pinot grigio dominance. Alfonso Cevola, the Italian Wine Guy, has done an analysis of selected U.S. pinot grigio sales for 2010, and California looks like it will replace Italy as the varietal's top producer. There are a couple of couple of caveats, says Alfonso, but his conclusion looks solid. And the reason California is passing Italy? Cheaper wines, such as Barefoot, which are replacing Italian brands that cost $10 or more. "Value wines still reign," he wrote.

How far have white zinfandel sales fallen? So far that Beringer, which is among the top two white zinfandel producers in the country, is not only price cutting, but marketing. And the last time anyone needed to market white zinfandel in the U.S. Never, probably. Beringer is giving away a downloadable single from crooner Michael Buble, and has teamed with Buble to pair wine, songs, and food. This is a lot of trouble to go to sell a $7 wine.

The Wine Economist blog has put much of what has happened over the past couple years in perspective, and has discovered consumer-friendly pricing in the process.  "As I am writing this, the neighborhood Safeway is offering an extra 20% off any wine selling for $20 or more," noted Mike Veseth, who posted that the sales increase in more expensive wines that has the industry so excited is almost certainly coming from this kind of discounting.

• A few Dallas-area, very consumer-friendly prices from the past couple of weeks of shopping: Rodney Strong chardonnay, about $15 list, for $10; Wente chardonnay, about $15 list, for $10; and House Wine, a very nice red blend from Washington state, usually $12 or $13, for $10. Looks like it's time for a House Wine review.

Winebits 152: Wine Trials, states and wineries, alcohol consumption

Wine Trials 2011: This is the third edition of one the best guides to cheap wine ever done. Robin Goldstein and his colleagues, using blind tastings, have found 175 wines for $15 and less that are always well worth trying. I'll have a full review later this month; it's enough to know for know that the book includes three Bulgarian wines.

State spending on the wine business: There was a very odd article in Bloomberg Business Week that detailed increasing state spending on regional wine. Why odd? Because the article inferred, given the budget crises facing so many states, that money spent on developing local wine was money poorly spent. Yet it never quite got around to saying that. Texas spends more than $3 billion annually; wine gets $2.3 million. The Wine Curmudgeon is an ardent supporter of regional wine, but I'm an even bigger supporter of good journalism. If someone at Bloomberg wants to say that state spending on wine could be put to better use, then say so, and let's discuss it.

Booze and the recession: Do people drink more when the economy is bad? That's the conventional wisdom, that we drink away the hard times. But it's not necessarily true, says a new study by a California state agency. The Board of Equalization, which deals with tax policy, found that U.S. spending on alcohol, before the 2008-09 recession, rose 2.4 percent. In contrast, during the 2008-09 recession, spending on alcohol declined by 1.7 percent. This is an especially relevant report, given that so many states are considering booze tax increases to make up recession-caused deficits. It seems to imply that if states are going to raise consumption taxes, they should do it when the economy is good, since new taxes will bring in more money.

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