Wine prices in 2015 for the wine that most of us drink will do what they’ve done the past decade or so, which isn’t much. The exception will be wine that costs $20 or more, where there could be substantial price increases — as much as one-quarter to one-third, according to one distributor.
That’s because producers remain leery of raising prices for wine that costs less than $15, worried that those of whose drink those wines will switch rather than pay more. That’s the consensus from the experts who follow and work in the wine business that I talked to this week.
Hence the producer strategy for wine prices in 2015: Stealth increases — introducing new brands as well as new varietals and blends within existing brands to get us to trade up to a $15 bottle from $10, or to an $18 bottle from $15. In this, the people I talked to used terms like “sneaky” and “surreptitious” to describe the strategy. Not surprisingly, these new brands will have clever names, cute labels, and demographically-inspired marketing. How does “perfect for the woman who enjoys an active, healthy lifestyle but also seeks time to relax and rejuvenate” sound?
One retailer, who works for a 100-plus store chain, said he is already seeing this, particularly from Big Wine. His concern is that this approach could confuse consumers and ultimately backfire, and “prove damaging to the existing brands from whence they spawned.” In addition, despite the industry’s firm belief that consumers trade up, there has never been any evidence that it happens. We may splurge with a more expensive wine, but we tend to buy the same priced wine more often than not.
In this, you can forget all the foolishness over the past several years about grape shortages. The past three California harvests were the three biggest ever; combined with the on-going grape glut in Australia and a bumper New Zealand harvest, that more than makes up for shortages elsewhere. Plus, reduced demand from a poor economy and changing lifestyles means European producers need to keep prices low to compete in the U.S.
So there are lots of grapes available to do new labels. Said one consultant: “The number of ‘instant successes’ from new brands, concepts, regions. or varieties should make retailers and wholesalers more open to new and unusual wines. It might be easier to introduce a new wine at $10-15 with a good story than to raise an established brand’s price from $10 to $12 these days.”
The one exception for wine prices in 2015 is for wine that costs $20 and more, which is still struggling to regain pre-recession prices and market share.
“The perception is that the economy is doing well, gas prices are down, and there is more disposable income in folk’s pockets,” said the distributor. “The suppliers want to reach into that pocket and get some while the time is ripe. I think there are going to be more price increases than I would have originally thought.”
In all, good news, and it’s remarkable how wine prices are still about where they were a decade — or even two decades — ago. There’s just one caveat: I’m not the only one who has a sneaking suspicion that quality will suffer as producers keep the line on prices, letting their $10 wines suffer in favor of the new brands and new labels. But I’ll be around to call them on that next year.