Tag Archives: wine prices

Winebits 411: Wine prices, Chinese wine, red blends


wine pricesExpensive wine prices: Or, as S. Irene Virbila wrote in the Los Angeles Times, a look at old Kermit Lynch newsletters finds a “…breathtaking change in wine prices over the years. Over the course of three decades or more, prices go up, of course. But 10 times in some cases?” Lynch is the celebrated importer whose name on a French wine label is reason to buy it regardless of varietal or region, and Virblia has tracked price changes for several of his wines since the early 1980s with depressing results. Given that cheap wine prices have not increased 10 times over 30 years (maybe doubled, at most) and that the cost of wine production has remained remarkably stable over that time, this speaks to the increased demand for high-end wines since then, and especially for wines with pedigrees from experts like Lynch.

So long, China: Remember when China was going to save the French wine business? Not now, says the Reuters news service. “Now wine is being sold below cost, some is going bad sitting for long periods in poorly maintained warehouses and decent Bordeaux wines are going for 15 yuan [US$2.50] a bottle.” Not that the Wine Curmudgeon warned the French about this, that raising prices to gouge the inexperienced Chinese had dangerous long-term consequences — but what do I know? The Chinese market has been hit by what passes for a recession there as well as the government’s continuing crackdown on corruption, in which wine bribes play a huge part. By the way, those “decent” Bordeaux wines that are selling for $2.50 in China cost 10 times that much in the U.S.

Red blends take over: The popularity of red blends — which means, in most cases, sweet red wine — continues to rise, reports Nielsen. They accounted for more than 13 percent of the $13 billion that consumers spent on table wine during the 52 weeks ended Sept. 12, 2015, up from 11 percent in 2011. How important is that change? As I have written before, it’s almost unprecedented, with red blends the third biggest seller in the U.S. behind chardonnay and cabernet sauvignon in U.S. grocery and super stores. Interestingly, the Nielsen report doesn’t use the word sweet to describe the red blends, since so many producers don’t identify the wines as such. But we know what’s going on, don’t we?

Wine prices up, wine quality down in 2016?

wine prices

“$12? Didn’t that wine cost $10 last year?”

Don’t expect good news for wine prices or wine quality in 2016, and it’s more than my curmudgeonly cynicism saying so. The wine industry’s best price forecaster expects price increases next year, while a wine blogger who has been spot on about decreasing quality over the last couple of years sees more of the same.

Wine prices, says Rob McMillan of Silicon Valley Bank, will go up slightly next year, citing what looks to be a reduced harvest in California over the past three blockbusters, low gasoline prices, and producer optimism that they can raise prices. In addition, says McMillan, the numbers so far this year suggest that prices have been increasing, even though overall sales have been modest.

Interestingly, he doesn’t use the word premiumization to describe what’s going on, given that McMillan was one of the first people to identify the trend, that U.S. wine drinkers are trading up to more expensive wine. In fact, he seems almost surprised that prices will go up, given that “the the world’s economies are still struggling and our own [economy] isn’t setting any record.”

McMillan doesn’t define slightly, but my guess is that we’ll see as much as a dollar or so on a $15 bottle of wine, not that it will be that obvious. Those $9.99 wines will go up to $10.99, but there will various discounts, like case and club membership, to soften the blow. Plus, we’ll see even more new wines in the $12 to $15 category, as producers entice wine drinkers to spend a couple of bucks more for the same kind of wine they bought before.

As to quality, let me quote my pal Steve McIntosh at Winethropology. “The wine world is going to hell in a handbasket,” he emailed me, citing this post, in which he details (and it’s excruciating) how California winemakers are bastardizing wines that cost as much as $20 so they taste the way a focus group thinks they should taste.

In this, his post dovetails with what I’ve tasted over the past year, as producers focus on manipulation to push wines in the focus group direction and paying less attention to grape quality and varietal character in the process. This has been the case not just for wines from California, but from France, Spain, and Italy. A distributor friend, who has been in the business for 20 years, said he has seen wine quality go backwards, toward where it was in the late 1980s and early 1990s. In fact, so many wines have been so poorly made that I’m thinking about posting negative reviews, something I never thought would be necessary. But these wines are so dishonest that someone needs to call them on it.

I expect a wine to taste like wine, and not what Steve calls cough syrup. But apparently that’s too much to hope for these days.

Update: Wine prices in 2015


wine pricesAt the beginning of the year, I wrote: “[T]he 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.”

The new brands bit was correct, but I missed on the stealth thing. Price increases this year, thanks to producers, distributors, and retailers eager to raise prices, have been anything but stealthy. They’ve been, plain and simple, price hikes like we haven’t seen in a decade. How about two Dallas-area grocery stores charging $16 and $18 for two French wines that cost $10 a year ago? Or a new Italian brand, priced at $12, that isn’t any better than the $8 Italian wine cluttering grocery store shelves? Or, and the saddest, a long-time Wine Curmudgeon California favorite that raised prices a little but also used much cheaper grapes to squeeze as much margin out of its product as possible?

Everyone I have talked to in the wine business has said the same thing: Get used to it.

• Forget the stronger dollar, which should make European wines cheaper. Producers are keeping the difference, and neither distributor or retailer is passing on any savings.

• Forget the past three record California harvests, which means none of this is about a phony grape shortage. In fact (and, as Steve McIntosh predicted in January), all those cheaper grapes are being used to cut costs, so that wine quality is suffering. I’ve tasted more crappy $12 and $15 wine this summer, bitter and unripe, than I have in years, and they’ve apparently been made with grapes usually used to make much cheaper wine.

• Forget the idea that consumers won’t spend money on something they don’t know. I tasted a $16 Spanish white, made with verdejo from the Rueda region, that tasted like pinot grigio, and I was the only one who thought it might not sell. I don’t know if arrogance is the right word, but I’m talking to a lot of producers who assume consumers will pay what they’re told to pay because the wine is so special. Special, of course, not having all that much to do with quality but with marketing.

Yes, producers can charge as much as they want for their wine. But there’s a difference between short-term gain and long-term profits, which is how the best businesses are run. When you run your business for short-term gain, you shouldn’t be surprised that wine sales have been flat for several years, or that consumers are more willing to try something besides wine, or that more than one expert is bemoaning wine’s future.

Just don’t say the Wine Curmudgeon didn’t warn you.

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