Tag Archives: wine prices

Ask the WC 28: Wine Curmudgeon ethics, sweet red wine, and wine spending

bribery
“So write something nice about our crappy cheap wine — or else!”

This edition of Ask the WC: A reader questions my ethics. Plus, what’s a quality sweet red wine and the blog’s annual wine budget

Because the customers always have questions, and the Wine Curmudgeon has answers in this irregular feature. You can Ask the Wine Curmudgeon a wine-related question by clicking here.

Hi, Jeff:
I read with great interest your article on cheap wines. I was wondering if you have any conflict of interest to disclose. What can you disclose regarding your cheap wine articles, like if you have received compensation of any sort from any winery\wine consortium. I am asking because reading your piece I had the impression that may be the case., and I’m sure you do not want that.
Skeptical

Dear Skeptical:
That you ask me that question speaks to how screwed up wine is. Because, I assume from your question, that anyone who writes nice things about cheap wine must be paid to do so. Because, after all, cheap wine is crap. So, for the record: I am an independent journalist and not a huckster for any wine company. I am not paid by anyone to write about their wines. A link on the blog explains my policy — no tit for tat, not ever, and I have never violated that promise.

•

Hi, WC:
I am new to wine, and needless to say confused. So I know you don’t necessarily like sweet red wines. Are there some you do like?
Like sweet

Dear Sweet:
First, never, ever apologize about what you drink — drink what you like, and enjoy what you drink. My objection to sweet red is not that it’s sweet, but that producers sweeten dry wine, but still it call it dry. That means those of us who want dry wine often get stuck buying something that is sweet. Two of my favorite sweet reds are from Italy — the L’Onesta Lamrusco di Sorbara and the Cleto Chiarli Lambrusco Vecchia Modena. If you buy the latter, you may need a pliers to get the top off.
•

Oh, Wine Curmudgeon:
You’re always writing that you buy a lot of the wine you review. How much do you spend on wine each year?
Penny pincher

Dear Penny:
I probably buy about two-thirds of the wine I review, up from about half when the blog started. I just don’t get the same quality samples anymore. How much does that work out to? $5,255 in 2020 and $5,419 in 2019. In other words, about $100 a week — and given that I drink wine most every night, I practice what I preach about cheap wine.

Photo: “Bribery” by joncandy is licensed under CC BY-SA 2.0

More Ask the WC:
• Ask the WC 27: Pandemic wine sales, red Burgundy, wine competitions
• Ask the WC 26: Wine gifts, supermarket wine, blog ads
• Ask the WC 25: Three-tier reform, wine prices, wine scores

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

wine prices
Will pandemic-related shortages empty wine store shelves?

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.

Update: Wine prices 2021 – the Trump wine tariff is finally dead

chianti producers
“A toast — no more Trump wine tariff!”

Will the end of the Trump tariff lead to lower wine prices?

This is the first of two parts updating my wine prices in 2021 post. Today, Part I: What does the end of the Trump wine tariff mean for prices? Part II: The pandemic, wine prices, and the law of supply and demand.

It took the Biden Administration just five months to undo four years of suicidal Trump economic policy, announcing this week that it would end tariffs on European wine, cheese, and spirits. The settlement means an end to decades of wrangling over illegal aircraft subsidies, the impetus for the tariffs.

All of this is terrific news. It would be even more terrific if it meant wine prices, forced higher by the 25 percent tariff on German, Spanish, and French wines, would retreat. My sense, after several days of reporting? We’ll see some prices come down, but we won’t see as many drop as we’d like.

There are a variety of reasons for this:

• Producers, and especially those making wine costing less than $15, tried not to raise prices (or did so minimally) because of the tariff. If they raised prices by the full amount, they were afraid they would lose market share. Hence, there’s not much to give back with the end of the tariff. So wines like the La Vieille Ferme rose, which stayed at $8 or so during the tariff, will still be $8.

• Much of the savings will come from more expensive wines, and especially the highest priced; Champagne, for example, was badly hurt by the tariff. They should drop by most of the 25 percent, and I’ve already seen some evidence of this. One national New York retailer is advertising “up to 25 percent cheaper” on six wines, all costing $20 or more because of the tariff.

• The pandemic’s supply chain tribulations will also slow price reductions. If the wines can’t get here, or cost that much more to ship, we won’t see savings until all is straightened out.

• Bad judgment and premiumization will play their role in keeping prices higher. When this mess started in October 2019, a very smart Italian wine importer told me the tariff was an opportunity for producers – and especially Italian producers, not subject to the tariff – to take market share away from the French and Spanish by holding the line on prices. Sadly, that hasn’t happened the way he thought. I got an email the other day for a $15 Italian chardonnay, which is hardly the way to gain market share during all of this.

Winebits 702: Premiumization, Smithsonian, wine bottles

wine toast
“Let’s celebrate! Wine is going to come in lighter bottles!”

This week’s wine news: One retailer says premiumization is out of control, plus good news for wine at the Smithsonian and wine bottles get lighter

• Enough, already: Writes one of the leading independent wine retailers in the country: “The damage caused by skyrocketing pricing for exclusive allocations may be irrevocable.” Brett Zimmerman, the owner of the Boulder Wine Merchant, says prices for top Burgundy are out of control, citing a 600 percent increase for one wine over the past couple of vintages. The result? A bottle costing $4,300 wholesale – even before he takes his markup. At this rate, Zimmerman writes, “the damage to our industry caused by skyrocketing pricing for exclusive wines may be irrevocable. … [W]ith pricing like the offer I received recently, there’s no doubt that these wines will be available only for a small demographic otherwise known as the Billionaires Only Club.” His post discusses the “disingenuous” pricing and sales tactics used for these wines, and points out that prices like this can only alienate younger consumers – the people wine needs to thrive.

• Thank you, Warren: Wine is getting a boost at the Smithsonian’s National Museum of American History, thanks to the generosity of Barbara and Warren Winiarski. They’ve donated $4 million to establish a curator for U.S. wine and food history, who will guide the museum’s efforts to research, collect, and exhibit the country’s wine and food traditions. Warren, of course, was one of the participants in 1976’s Judgment of Paris, which established that California wine could hold its own with the best from France. His Stag’s Leap cabernet sauvignon was one of the winners. And, if I may name drop, Warren has been a long-time friend of the blog.

• Lighter bottles: The Wine Enthusiast reports on a growing trend among wine critics and wineries to advocate for lighter bottles, what Britain’s Jancis Robinson has called a chance to make wine more green, since “making and transporting glass bottles is by far the greatest contribution to wine’s carbon footprint.” Who knew the WC was so far ahead of the rest of the wine business? Regardless, it’s about time that more writers and producers noted that lighter bottles make environmental and fiscal sense.

Photo: fauxels via Pexel

 

Winebits 698: Layoffs, wine prices, wine consumption

grocery store wineThis week’s wine news: Consolidation-driven layoffs hit California, plus wine prices are tied to toilet paper prices and the French are drinking more wine

• Layoffs hit California wineries: Clos du Bois and Sebastiani, two long-time California wineries, closed last week as consolidation tightened its grip on the wine business. Wine-searcher reported that the brands will continue, but will be made elsewhere. As many as 80 people could lose their jobs. E&J Gallo closed the Clos du Bois winery, a Sonoma fixture since 1974, after acquiring the label in its multi-billion dollar deal with Constellation Brands. Sebastiani, founded in 1904, survived Prohibition and two world wars, but not its purchase by Foley Family Wines in 2008. Both producers said it didn’t make economic sense to keep the wineries open.

• Who knew? Newsweek, as near as I can tell, is reporting that since toilet paper prices will increase in the “post-Covid-19 era,” so will wine prices. There doesn’t seem to be any evidence supporting this assertion, save for a reference to the consumer price index for people who live in cities and some quotes taken – not necessarily in context – from this year’s Silicon Valley Bank report. The story, in fact, is a terrific example of post-modern reporting – stringing together a bunch of news releases, paraphrasing quotes, and pretending that it takes the place of original reporting.

• Good for the French: French home wine consumption increased more than three percent in 2020, probably because of the pandemic. The report, from the the country’s FranceAgriMer agency, found that households bought about four cases of wine. But that’s still less than the five-year average and about 20 percent less than what they bought in 2010. Interestingly, the best selling price category was €2.99 or less (about US$3.65) – a price point that barely exists in this country.

Winebits 695: Wine consumption, legal weed, wine prices

wine consumption
Let’s celebrate — we’re getting drunk while drinking less!

This week’s wine news: World wine consumption declined for the third year in a row, plus legal weed is a hit in Illinois and Internet wine prices

• Just go pass out already: World wine consumption sank to its lowest level in almost 20 years, falling 2.8 percent, according to a study from OIV, the International Organisation of Vine and Wine. In the U.S., total wine consumption was unchanged. Yes, yes, I know – we’re all passing out drunk from boozing it up during the pandemic, according about a million medical studies conducted over the past year. So, somehow, we did that while drinking less wine. Pretty impressive, yes? The report, released annually, was about as depressing as it gets for the wine business – not only was consumption down, but wine production was up, and the average price of wines exported worldwide dropped. Tariffs were much of the reason for all three – the U.S. levy on European wines in particular.

• Who needs booze? Illinois took in more tax dollars from marijuana than alcohol for the first time ever, according to the state’s revenue department. From January to March of this year, Illinois generated $86.5 million in adult-use marijuana tax revenue, compared to $72.2 million from liquor sales. This is not exactly an apples to apples comparison – higher taxes for legal weed, for example – but that doesn’t mean it’s not significant and ironic. Alcohol’s three-tier system exists because Al Capone – yes, that Al Capone – controlled production, distribution, and retailing in Chicago during Prohibition.

• Lower prices: E-commerce was a savior for the wine business during the pandemic, except when it wasn’t. A study from Sovos ShipCompliant, a consultancy for legal alcohol shipping, says direct-to-consumer volume from wineries was up more than 25 percent – but prices for that wine dropped significantly. There was a 9.5 percent drop in average bottle price while shipments of wine costing less than $30 increased more than 40 percent. In other words, as more of us bought from wineries over the past 12 months, we bought less expensive wines – a dynamic that stands conventional wine industry wisdom and premiumization on its head.

Photo: Cottonbro, via Pexels

Update: Wine prices 2021

Wine Prices
Where’s the $18 Italian chardonnay?

Making sense of an $18 Italian chardonnay blend, the California grape glut, and higher wine prices despite flat demand

Would you pay $18 for an Italian chardonnay blend? Chardonnay, of course, is hardly an Italian white grape and it certainly doesn’t speak to terroir the way Italian wine is supposed to. But there it was, on the dinner table, in its heavy bottle with a big punt – just like any other luxury wine.

Which, as much as anything, speaks to the pricing conundrum that wine drinkers are facing this year.

I’ve spent the past couple of weeks trying to make sense of why, despite the law of supply and demand, wine prices are higher than they should be.

I’ve spent the past couple of weeks trying to make sense of why, despite the law of supply and demand, wine prices are higher than they should be. It baffled me at the beginning of the year, and it still does.

And I’m not the only one who is confused:

• Jeff Bitter, who oversees the Allied Grape Growers trade group, says California has way too many vines, and needs to pull out almost 50,000 acres. Otherwise, he says, the continued oversupply will cut prices in a flat market.

• Wine critic Dan Berger doesn’t pull any punches: “One of the wine industry’s Achilles heels, and a topic no one ever talks about, is that domestic wines’ retail prices always seem to go up and almost never come down.” His analysis: Price has been associated with quality for so long that producers are terrified that lower prices will mean their wine is crummy.

• Steve McIntosh, writing in the Imbiber’s Journal: “By far the most frequently discounted variety on my radar this year is not nebbiolo or grenache or sangiovese. It’s cabernet. And you know who bottles cabernet labeled as such? Not France. Not Italy. And certainly not Spain or Germany. California does. More specifically, Napa Valley cabernet.” In this, Napa caberent – and, to a lesser extent, other California cab – is being heavily discounted on so-called flash sites, which buy from producers who can’t sell what they make through normal channels.

So what’s going on?

Why are we seeing $18 Italian chardonnay – and so much other pricey wine – when the evidence shows there is no apparent economic reason for it?

My guess – and it’s only a guess, without a study to support it – is that wine is finally crossing the divide from agricultural product to consumer packaged good. The former’s price revolves around the cost of the grape; higher grape prices mean more expensive wine, and lower prices mean less expensive wine. That’s been the case for centuries.

Consumer packaged goods, on the other hand, are priced according to brand. That’s why Tide detergent costs almost three times as much as Arm & Hammer, even though the ingredients are mostly the same. You’re paying for the Tide name, which the manufacturer has worked diligently to promote as denoting quality that’s worth three times more.

Is that where we are with wine? The $18 Italian chardonnay was well-made, but was it worth almost 30 percent more than my Domaine Tariquet? Has packaging and price become the symbol of quality, just like laundry detergent, rather than what’s in the bottle? Are we expected to pay more for a wine not because it’s better or more interesting, but just because we’re supposed to?

I hope not, but premiumization’s continuing presence in the face of economic logic seems to say otherwise.

Photo: “Wine Prices” by mason bryant is licensed under CC BY-SA 2.0