Where the Economy is Dragging Wine

AC Nielson reports that wines priced $11 and higher are up 19% the first three months of this year over the same time last year. Wines priced $7 to $11 are up 6%. And wines priced under $7 are up just under 2%.

Pinot Noir sales are up….55%

Syrah, Shiraz and Pinot Gris have all grown in the double digit range.

What’s up? Associated Press writer Libby Quaid doesn’t quite lead her readers down that road beyond noting that the "Sideways Affect" has had a substantial impact. And indeed that is what accounts for the mighty increase in Pinot sales. Remember, however, that there was relatively little Pinot Noir sales to begin with.

Still, the question is, why are higher priced wines selling so well? Clearly it is linked to the economy.

Wine sales are an excellent barometer of the movement of the economy. Wine is a really a luxury good in this country, something indulged in more as people make more money and when expense accounts bloat. I predicted this movement back in December. And I predict that barring any bubble bursts, the economy’s growth and higher incomes drag the wine industry with it.

Will prices increase? Not substantially. At least not among those wines currently priced $15 to $25 a bottle. And there are a good many brands on the market competing in the sub $7 group to assure a consistent supply of good wine a that price too. However, the bargains that were in the market two years ago are not going to return. Two years ago you could find wines once priced at $35 discounted down to $20, or even less.

Overall, there is still good value in the market as well as very good wine.

Posted In: Wine Business


2 Responses

  1. Ryan Scott - June 5, 2005

    Speaking of prices, about a year ago a local liquor store was having a half price sale, and not just plonck either. I was able to pick up 3 bottles of $14 Chianti Classico for $7 each, 2 different $45 Barolos for $22.50 each, 1 $45 Chateauneuf du Pape for $22.50 and good Malbec for half price. Shortly thereafter (a couple months) the store went out of business. I bet the sale was just to get some cashflow to stay open long enough to clear most of the inventory. If I had known about the closing, I would have got more wine there.

  2. Fredric Koeppel - June 6, 2005

    Perhaps this explains why Treana is raising the price of its red wine from $35 to $50, an increase of about 42 percent. when i asked a regional sales rep for Treana why the price was going up so much, he said, “That’s what they thought the wine was always worth.” So wineries can justify price increases by saying that the previous price undervalued the product, while trying to persuade consumers that the (in this case) extra $15 is OK because the wine is just as good as ever.

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