Market Trends in Wine… Is it Good or Bad for You?

Wine has never been easy. Its not a simple thing to make, or everyone would be doing it. It only takes a drive to “Wine Country” for us to understand that Wall Street has made its way to the vineyard. Egos, arrogance, and the “Our wine is too good for you…” is prevalent. In all fairness, you can still find personality and friendly farmers, but its getting slim out there day by day. We’ve all gotten accustomed to the steep rise in wine prices from 1999 to 2009. One member of our Forum told me in a private discussion he tried Caymus Special Selection in its inaugural vintage at the hefty price of $15 per bottle and its now averaging $150 for a cherry vintage. In the 90′s, you could buy a First Growth just over $100 retail.

Listening to suppliers (wineries, distributors, and retailers) discuss the sharp increase in wine and its current push back to a more level playing field is nothing more than candy in a bucket. Its not going to last. Only last week we hear from the grapevine that New Zealand’s ministry is cautioning producers to slow production, thereby leveling the supply/demand which would no doubt keep prices at inflated levels. France is two steps ahead of New Zealand. A sharp movement by negociante producers to alleviate supply, and to keep prices inflated opened the doors further to opportunity in a very creative way. Unwanted supplies by mammoth importers and distributors are now being shipped to China, offered to overnight millionaires and ex-patriots at pre-recession levels.

While we’re all aware of rising costs and our human tendencies to grasp opportunities and I feel that producers and negociantes are missing the point. Complex price manipulation and the difficulties of obtaining wines in a more direct system is the fundamental flaw with wine. You are asking yourself what the heck does this have to do with me? Well let me tell you….

First, if producers have the ability to produce more and lower prices as such that consumers would gravitate to a revised price floor, long run results would produce lower costs to the consumer and more new fans to the producer. Its called buying your customer with your product (A system which I am a fan of). Lowering supply simply keeps prices high, and keeps you beyond arms length to experience new and potentially exciting wines.

Secondly, enjoy the discounts you see out there now. They won’t last long. What you are seeing is push back from the producers to the distributors who are sitting on older vintages. Everyone has bills to pay and that means moving wines out at prices that are unusually low. As soon as the Dow hits 10,000, you’ll see resistance to put wines $25 and up on sale. Basically, buy wine in acceptable amounts to you and your family, especially if you are a collector.

Lastly, but certainly not least, with Bordeaux and “futures” wines trading openly as if it were a non-perishable stock in an oil company. Turning this into a commodity is not what people need or want. With suppliers turning the supply way down to address demand levels is not the answer. Lower your price and provide value, not ego. This is the simplest way to attract wine shoppers. At day’s end wine is meant to be an affordable, complimentary addition to your lifestyle. If suppliers continue to race for “First Growth” status, we’ll all lose what we love most about wine, taste and class.

by Personal Wine on our Wine Board Forum

Posted in: Blog

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