Tag Archives: wine prices

Wine history lesson 9: Wine is too expensive, 1972 edition

1972 Lincoln-Mercury ad
If you could afford gas for this car, high wine prices might not have been a problem.

“Something can be done about wine prices”

Some 50 years ago, when higher wine prices were “making many knowledgeable wine drinkers unhappy,” a writer named Robert McDermott suggested we buy certain wines – first, before they became popular, and second, from less well-known regions of the world to save money.

Sound familiar?

The story (this is the link to it) appeared in the Winter 1971-72 issue of a magazine called The Continental, which was distributed at what were then Lincoln-Mercury dealerships. As such, it focused on high-end wines, which even in 1972 – as McDermott notes – were out of reach of most wine drinkers. He cites $250 for a 1959 Hau-Brion (which costs 16 times that now).

Some of the piece is truly dated — $10 for Pommard, a red Burgundy, seems like a steal even then. But most of it makes as much sense today:

• “Exceptional bargains are uncommon among the well-known wines of Bordeaux and Burgundy.” Indeed. A very ordinary bottle of red Bordeaux costs $20 and Burgundy prices are even more out of whack.

• “A premium, large or small, is paid for the stature of French wines.” He suggests buying Italian sparkling instead of Champagne, which was such good advice that it’s one of the reasons for the popularity of Prosecco.

• He was an advocate for California and Chilean wines long before the rest of the world caught on, especially praising California’s cabernet sauvignon. Ironically, the four brands he mentions are mostly gone, gobbled up Big Wine (though Charles Krug is still making fine wine).

Ironically, McDermott also foresees the growth of Liv-Ex and the secondary wine market, where bottles are traded likes stocks and bonds. “The art of pleasurable and profitable wine buying in some ways parallels trading in securities. There are blue chips and there are wildly speculative issues.”

The only difference? There are no wildly speculative wines any more. They’re all expensive.

A tip o’ the WC’s fedora to John Bratcher, who found the story.

More wine history lessons:
• Wine history lesson 8: The evils of drinking
• Wine history lesson 7: When drinking alcohol was a good thing
• Wine history lesson 6: Was this California fortified wine one of the state’s first post-Prohibition efforts?

Winebits 782: Restaurant wine prices, consumer sentiment, glass recycling

restaurant wine list
“Yes, the wine costs more than the rest of your dinner. It’s restaurant wine, isn’t it?”

This week’s wine news: Why restaurant wine is so expensive, plus consumers want lower prices and Spanish producer aims at recycling

• More sad news: How does $17 a glass for restaurant wine sound? No, I’m not making it up. Rather, Esther Mobley reports in the San Francisco Chronicle, that’s the normal price of a glass of wine at Bay Area restaurants. She lists the increases at several of the region’s “affordable” wine list spots, and some are even more than $17. The reasons are familiar (inflation, high business costs), but the results show once again that wine in restaurants is increasingly reserved for aging Baby Boomers, tech moguls, and the rest of the one percent. That’s hardly good news for wine, is it?

• Lower prices: Kroger says “saving money is top of mind for shoppers.” There are some caveats to the results of this survey; it was conducted by a Kroger subsidiary, for one thing. But tits finding are still worth nothing: 56 percent said saving money is their top financial resolution for 2023, while almost tow-thirds are scaling back on non-essentials and just short of one-half are purchasing fewer items. This is more bad news for wine, which is not an essential and which can be given up to save money by people want to save money.

• Bottle recycling: Spanish producer Familia Torres is trying to set up a European system for reusing wine bottles. Torres has long emphasized green policies, and it even has an executive with the title “director of climate change.” The story says the company wants to establish bottle standards to work across the European Union – size and glass ingredients, for example, so that a German bottle could be recycled in France, a Spanish bottle could be recycled in Italy, and so forth. Are you listening to this, Big Wine?

Wine prices 2023

Woman lecturing
“Wine prices? How am I supposed to know about wine prices?”

Even the experts may finally have figured out that no one knows what’s going on

This is the first of two parts looking at wine prices and wine trends in 2021. Part I: Wine prices 2023. Part II: Wine trends 2023.

We’re anticipating that the drinks industry in 2023 will be operating in an unstable environment, making it challenging to accurately forecast.”
— Breakthu Beverage’s Kevin Roberts

The Wine Curmudgeon has been trying to parse wine prices for 15 years, and the one consistent during that time has been that the experts always know what’s going to happen. They may not agree, but they’re absolutely, positively sure what prices are going to do. It doesn’t matter what’s going on in the world – recession, pandemic, inflation, premiumization, supply chain woes. They know.

Until now.

The quote above, from a top executive at one of the biggest distributors in the world, is an acknowledgment that we’re in a place we’ve never been before. Frankly, that took some guts, since the rest of the people quoted in the linked story are absolutely, positively sure about what’s going to happen.

Hence, my take on 2023, after a couple of weeks of interviews, Internet sleuthing, and report reading: Prices will go up, unless they don’t. And they might even go down.

Yes, a bit of WC sarcasm. But we have lots of wine in the supply chain as well as lots of grapes that have not yet been turned into wine. Plus, demand remains weak (if not declining) and consumers – according to one report – are already trading down in the face of higher prices.

On the other hand, we have increased costs for glass and other raw materials that aren’t grapes, lingering supply chain snafus, and producers who are raising prices to maintain margins.

In other words, a wine pricing conundrum that’s fizzing and sputtering, getting closer and closer to an explosion. As one really smart analyst told me, “The law of supply and demand works, even for wine. It just may take longer to work itself out.”

So, in 2023, wine prices remain high. Wine sits on store shelves. Back vintages pile up. And, at some point, either later this year or early next, the fizzing and sputtering turns into an explosion and prices finally start to obey the law of supply and demand.

Unless they don’t.

Photo: “Lecture on energy security at the Pacific Institute for Climate Solutions (PICS)” by US Embassy Canada is marked with Public Domain Mark 1.0.

Update: Wine prices 2022 – have prices started to drop in time for the holidays?

sale price tag
Will retailers start putting discount prices on sales tags?

Three more signs wine prices may be easing

In August, I wrote – perhaps more hopefully than I should have – that the law of supply and demand could finally be catching up with wine prices. And now there might be evidence of just that.

The key here is that each harvest brings more wine, whether it’s needed or not. This is much different than manufactured products; if there’s no demand, the company just stops making the product. Wine doesn’t work that way. As my long-time pal and noted wine executive Dan Peabody famously said, “When the new crop of grapes comes in, you have to move out the old to make room for it. You just can’t keep it around and wait for it to sell.”

So far, as noted the last time, wine has been able to find a way around this problem. But maybe not much longer:

• Remember all those stories about poor harvests this year in France? Not really. The 2022 harvest will be 18 percent bigger than last year and four percent higher than the five-year average. Which means wineries need to move the current vintage out – even at lower prices – to make room for all those grapes.

• One of the leading wine consultancies says demand for the most expensive wines – which has propped up the market for the past several years – is slowing, and that slowdown will start around the holidays.

• Check out inventories, both at retail and on-line, and there are lots and lots – and lots — of older and previous vintages. The only way to move those wines is to reduce prices, and I’m already seeing a little of that. One previous vintage $25 Italian wine was half-off at one Dallas retailer.

Does this mean we’ll see lots of sales and markdowns over the next three months? It seems more likely than it did six months ago. Regardless, it looks like there mighty finally be a crack in the dam that is holding up higher prices.

Update: Cutting prices boosts sales, profits

Crowd in movie theater
“I never realized how much more I would like this movie when the tickets were half off.”

Movie theaters – hard hit by the pandemic – have discovered that discounts will bring customers back

A business hard-hit by the pandemic, changing demographics, and an indifferent product has discovered that cutting prices will bring customers back.

No, unfortunately, we’re not talking about wine.

The latest industry to recognize its problems is the move theater business, whose financial position is so precarious that one analysis says it has lost 8 percent of its customers forever. Which is even worse than wine’s shrinking market share.

So what did the industry’s trade group do? Cut prices, of course.

Are you listening, wine business?

The results were staggeringly good: A $3 movie ticket promotion in early September attracted 8.1 million customers, a nine percent increase from the previous week. And why did it work so well?

Because the No. 1 reason people are reluctant to return to movie theaters, according to one study, is not the pandemic, but the high cost of tickets – as much as $13 on average in New York City and even $12 in Omaha, Neb. To offer a little perspective, that’s almost twice the cost of a monthly subscription to Hulu and more or less what one month of Netflix costs.

It’s also worth noting that the high prices study found that almost two-thirds of movie-goers don’t go any more because “I’m not interested in films currently in theaters.”

Sound familiar, wine business?

We’ve written a lot on the blog about premiumization’s death grip on wine and how wine’s continuing decline in popularity can be linked to the steady increase of prices since the end of the recession. Which has happened despite the drop in demand and the seeming contradiction of one of the most basic laws of economics.

And, as also noted many times, other industries – faced with the same problem – cut prices to stimulate demand. And it usually works, doesn’t it, Walmart?

But not wine. Which explains why I have to keep writing these reminders and why I’ll keep doing it until it makes a difference. I’m not the Wine Curmudgeon for nothing.

Update: Wine prices 2022

pile of grocery store receiptsAre wine prices going do something rational, given continuing decreased demand and increasing supply?

In January, I wrote that wine prices were caught in a confusing economic muddle – continued premiumization, inflation, and supply chain pressures on the one hand, but slumping demand, continued high production, and increasing inventories on the other.

Hence, it was almost impossible to figure out what prices would do this year. But I think, just maybe, that a trend is developing – and it could mean lower wine prices.

So what has changed in the past seven months?

• The collapse of the euro (partly because of the Ukraine war, which has added its own complications). The euro is at parity with the dollar for the first time in 20 years; the dollar has also strengthened against the currency of a variety of other wine exporting countries, including Argentina and Australia. All of which should make imports from Europe and elsewhere less expensive.

• The beginning of the end of the supply chain crisis. Things are not going to return to normal soon – buy holiday wine now! — but the situation should improve next year. So lower shipping prices.

• Really, really bad news for wine consumption. One wine analytics company predicts total sales volume in the U.S. will fall in 2022 for the second year in a row, which is almost unprecedented since the 1980s. In addition, SipSource, which tracks sales from wholesalers to restaurants and retailers (called depletions), says wine depletions were down 8.2 percent in the first five months of the year. So, say what you will about whether premiumization has any staying power (and the first report says it does), an 8.2 percent decrease in five months is serious.

Now, none of this certain. For one thing, despite the drop in the price of oil — and which should hint at slowing inflation — no one has any idea what prices are going to do. Second, premiumization has become so baked in to pricing that it’s probably going to take a hard jolt, not unlike what happened during the 2008 recession, before producers cut prices. Third, if economists can’t get this stuff right (and they haven’t), what chance does a cranky ex-newspaperman have?

Still, I wouldn’t be surprised if, by this time next year, we’re seeing the first signs of falling wine prices.

Winebits 757: The “it’s all about wine prices” edition

Man pouring sparkling wine
Champagne pours in Britain? Not so fast.

This week’s wine news: Are wine drinkers balking at higher prices? Maybe so.

• Dumping pricey booze? Consumers may be buying less expensive alcohol this summer, reports VinePair, based on an analysis of beer and spirits sales data. The story doesn’t mention wine, but the sales numbers here tie in witth a variety of recent wine sales trends. Sales of cheaper beers and spirits, including Busch Light and spirits costing less than $10 are growing; sales of higher-priced craft beers and spirits aren’t. The story says that “continued inflationary pressures, extreme heat, rising interest rates and recession fears” are among the reasons for the changes. I assume the weather is included because simple beers are easier to drink when it’s 100 degrees. Who wants a hoppy, high alcohol craft beer then? One caveat: The sales figures compare 2022 to 2021, when there was some pandemic-ending boost in beer and spirits.

• Smaller wine servings? The New York Post, whose wine coverage is surprisingly interesting, says some Manhattan restaurants are cutting back on wine serving sizes to save money. “All over the city, from taverns to fine restaurants, diners are doing double takes as they receive reduced pours of wine at increased prices.” One wine writer says he paid $18 for a 4-ounce glass of Austrian gruner veltiner – a markup that works out to six or seven times the wholesale cost of the wine. The story says restaurants see this as one more way to cut costs at the expense of wine drinkers. Says one Manhattan wine importer: “I go to some places and think, ‘Are they serious?’ I’m blown away by how small the pours are.’’

• No more Champagne? British wine drinkers are turning away from Champagne, thanks to increasingly higher prices. This is shocking news, given that Britain is perhaps Champagne’s most important market outside of France. But, reports a British trade magazine, “nearly every Champagne available in the UK’s supermarkets suffered a sales slump this year.” Even the most popular labels are slumping, and the story blames high prices – caused by recent short Champagne harvests, as well as price hikes by many producers. The situation in Britain is not quite the same as here – British inflation is even worse than in the U.S., while Brexit has made European products more expensive even without inflation. Still, it’s worth noting the trend in Britain, and to watch what happens here.

Photo: Alexander Kovacs on Unsplash