Update: Wines prices 2021 – wine and the law of supply and demand

How long will wine prices continue to defy the most basic of all economic laws?

This is the second of two parts updating the wine prices 2021 post. Today, Part II: The pandemic, wine prices, and the law of supply and demand. Part I: The end of the Trump wine tariff and prices?

The only certain thing about wine prices, six months into the year, is that the situation is just as unsettled and just as contradictory as it was in January. That’s when I wrote: “How else to explain a wine world which continues to deny the existence of the law of supply and demand?”

On the one hand, there are what my friend Dave McIntyre at the Washington Post called pandemic-related shortages, where the “the crunch is probably coming in late summer and maybe — if all goes well — easing by the holidays.” Or, as some Wisconsin retailers are telling their customers, “Hoard! Hoard!” And we probably won’t see much relief from the end of the Trump wine tariff, and especially for the wines that most of us drink.

All of this, of course, should keep prices higher.

On the other hand, retail sales remain weak and unemployment is still too high (despite Texas’ attempt to force restaurant staff back to work so state officials can eat out more more easily). The economic surge that so many predicted, the post-pandemic boom, has not yet arrived.

In addition, there are worrisome problems in wine. Overall, demand remains flat, and restaurant traffic and wine sales have not picked up appreciably. And yet more studies have come out insisting that Americans won’t return to restaurants, opting for more meals at home.

Complicating matters firther, several leading wine analysts have said some grape prices are completely out of whack; read the story in the link closely enough, and there are hints that a pricing bubble could crop up – which would be disastrous for the wine business.

So when is the law of supply and demand going to kick in, bringing wine prices back into some sort of equilibrium? Your guess is as good as anyone else’s – after all, we’ve never seen an economic situation quite like this.

Me? I’m done guessing. We’re watching economic history being made, the kind of thing that’s written about in textbooks. And I’m not nearly smart enough to decipher that.