Has the death of $10 wine been greatly exaggerated?
by Wine Curmudgeon Posted On
The death of $10 wine, according to the wine pundits, is just around the corner. That corner, though, looks to be in a completely different part of town.
How else to make sense of U.S. sales figures for the 52 weeks ending Jan. 24, where 19 of the top 20 selling brands cost less than $10? And that eight of the top 20, all selling for less than $10, showed double digit sales growth in a market has been essentially flat for the past three years?
In this, what is happening with wine sales shows again the divide that has developed between the top end of the market and the wine that most of us drink. The Winestream Media and the analysts can talk all they want about the growth of wine that costs $15 or more, but that they continue to ignore what’s happening at $10 speaks to their wishful thinking. Barefoot, at $5.59 a bottle, is the best-selling wine in the country, selling almost 10 million cases last year, according to these sales figures. That would make it the seventh biggest winery in the U.S. if it wasn’t part of E&J Gallo; how can analysts continually dismiss this as the exception that proves the rule?
Also big sellers: Black Box, the boxed wine that is the equivalent of four bottles, up 18 percent at $5.01 a bottle; my beloved Bogle, up 14 percent at $9.49 a bottle; and 14 Hands, up 14 percent at $9.79 a bottle.
So why the $10 wine blind spot?
? Too many wine writers are snobs about cheap wine, and look for sales data that supports their bias. So if sales at $15 and more are growing more quickly, even if it’s from a smaller base that was depressed during the recession, it’s evidence that the stuff they think is beneath them is going away.
? Let’s hop on the Millennial bandwagon, because they are going to spend more money on wine than their parents did. This is about as wishful as it gets, as Rob McMillan at Silicon Valley Bank has shown, but it still gets recited as gospel.
? These are grocery store wines, and grocery store wines don’t count. Would I buy most of the wines on the top 20 list? No, but that doesn’t mean there isn’t quality for the price, including Bogle, 14 Hands, and Chateau Ste. Michelle.
Yes, wine that costs $5 and less is seeing sales declines, some significant, but this has less to do with price than with demographics. The audience for those wines is aging and doesn’t buy as much as it used to, in the same way the big beer brands are seeing significant sales declines as their audience drinks less. My guess is that the Millennials are buying Black Box instead of their elders’ Franzia, and it’s probably not a coincidence that a craft beer costs about as much as a Black Box bottle. But who in wine wants to believe that?
More about wine sales trends:
? Big wine growth 2016
? Is the U.S. wine boom over?
? Wine prices in 2016
Well said Wine Curmudgeon. I couldn’t agree more. The highly publicized death of “cheap wine” is real, but “cheap wine” needs to be more succinctly defined as wines under $5, not under $10. The $7 -10 category is not dying – at all, granted a few major successful performers (some that you mention) are mostly responsible for its stability. But, so be it. It is a highly competitive category, and naturally the well capitalized, highly distributed and consistently good brands will rise quickly above the fledgling competition to capture market share. Ultimately, that is what success is in a category that isn’t really growing – it’s market share.
So back to the dying part….California wines below $5 are dying for one very simple reason. Economics. It simply isn’t economical for the “average” vineyard in California (we are obviously talking Central Valley) to sustainably produce wines for under $5. Can you do it with an above average vineyard? Yes. But by definition, this is only half the vineyards out there. When you see data indicating that well over 30,000,000 cases worth of imported bulk wine lands here annually, we are simply being out-economicked (I know, that’s not even a word.) by foreign competition.
California can (and is going to) continue producing very affordable quality wines. You are just going to see a lot less of them priced below $5. The Central Valley of California that was primarily responsible for wines under $5 in the past is now going to be largely responsible for wines under $7. Likewise, Lodi, which has largely been responsible for wines below $7 in the past is going to be the anchor for the $7-10 category with lots if grapes making it into bottles above $10. The examples of premiumization continue through the coast as well…..
What I am describing is a simple shift of utilization over time. But with that comes quality improvement and consumer satisfaction. You can’t take something that was previously sold for $3, put a $7 price tag on it and call it good. There has to be a modification of quality and/or variety/suitability for the region. It can be done, and it is being done. Besides, who really wants to be known for “cheap wine” anyway. Let the foreigners have that title…..
Hmm interesting article. To be honest I never tried wine which cost less than $10 but after reading this I think I should try one. Can you suggest me one?
The Rene Barbier red and white are about $6, and the red is the $10 Hall of Fame. The Segura Viudas cava is about $8.
That should get you started.
As part of a project I am working on, I retried Bogle a week ago and continue to be amazed at the quality and for less than $10. I also bought two bottles of TBC, a Shiraz??? (California??? what is ole Fred up to now?),, and a Cab, for blind tasting. Found an Owl’s Lair Cab/Syrah blend from Mendocino – 2011!!! – at Trader Joe’s which was amazing for the price. TJ’s buys up large lots of wine from vintners with cash flow problems and given the vintage I believe that is what happened…sad, because once it sells for that price, all is lost for the winery.
I think the industry is missing a way to get people to trade up: first, stop knocking TBC and understand that most peoples budgets do not allow for $20-25 wine. Stop telling them what is ‘good’ wine because what Parker likes is NOT what I like nor most people, especially millennials! Instead, suggest to them that they drink whatever inexpensive wine they like during the week and like a ‘date night’ experiment with a different wine $10-20 or higher if budgets permit on the weekend. Make them understand that the most overpriced wine is the $15-20 wine at their local restaurant…I saw a Prosecco on a menu for $40!!! Sparklers are always worse because they figure you are celebrating something. Call ahead and see if you can bring your own and pay a corkage! At least you will be getting a wine you like rather than settle for something inferior
All good points, Bill. As I like to point out, four $25 wines a month is almost half a car payment, which most people would rather have than four $25 wines a month.
And I thank the wine gods every night that Bogle remains devoted to the cause.