how low is low when it comes to pricing wine?

Thursday, October 03, 2013

On The Wine Curmudgeon blog this morning is an interesting post about how “awfully low” wine prices are these days. Jeff Siegel (AKA The Curmudgeon) quotes a mailer from Total Wine with a mix of discounted brands, ranging in price from just under $5 to $57 for a benchmark Napa Cab. He mentions a Pinot Gris from King Estate knocked down to $11.97.

That’s a wine I’m quite familiar with, as I’ve reviewed the last several vintages for Wine Enthusiast. And I agree, that’s a mighty low price, for a very fine wine that is listed at $17 suggested retail.

But there’s more to the story than just a discounted price. Heck, every few days in my local paper is a pull out flyer from Macy’s, listing “the lowest prices of the season” on a variety of goods from jewelry to shoes to bedding to furniture. Does anyone really think that the prices quoted as original retail are in any way legit? When this stuff comes at you not annually, not quarterly, not even monthly, but almost daily, who in their right mind expects to pay full retail?

There are many factors that may account for discounting wines. Among them: changes in the law that allow volume discounting at the wholesale level; the rise of big box booze retailers; the economy; the expansion of the number of wines and wineries globally; the so-called glut of supply... and so on.

But there is really and truly only one final explanation for wine prices being stuck in the basement. Consumers don’t want to pay any more!

When you are on a tight food budget (who isn’t?) and you can go to the grocery and easily feed a family of four a healthy, balanced dinner for around $10, then spending another $10 on a bottle of not-all-that-great wine seems downright foolish. Those of us who work in the wine industry can easily lose sight of that, being surrounded by wine at all times, with price being of little concern when the free samples are rolling in. But for the average person, a $10 bottle can be a luxury, and all too often a disappointing one at that.

Mrs. G and I recently hosted a visiting relative, an older gentleman on a fixed income, for whom a $4 bottle of wine was about as high as the bar could rise. His astonishment at the panoramic displays of opened bottles on our kitchen counter on a daily basis was only matched by my own realization at how far out of the norm my own tastes have become.

Not that I want to start drinking $4 wines – and if I did, as I advised our guest, I’d go for 3L boxes. But were I dependent entirely upon purchases for my daily bottle, there’d be some changes made, for sure.

When vintners explain their pricing as a result of their costs, it’s really looking through the wrong end of the pricing telescope. The consumer doesn’t care about your cost. The consumer cares about her/his budget. Their cost is what concerns them, not yours.

It seems inevitable that in places where the cost of production is quite high and going higher (California anyone?) that there will be casualties. Entire wineries will be loss leaders, not just the wines. Expect to see more and more failures and consolidations into mega-wineries, and the dumbing down of popular varieties made for high volume sales. Some boutiques will prosper, and more than a few will survive, but it will take a lot of creative thinking to design such businesses so that the ROI justifies the total cost of production. It certainly helps to be living in a place where the land you farm has been in the family for a few hundred years, and the government offers some financial assistance for your efforts. I don’t see that happening here in America any time soon.

Pick of the Week – Bergevin 2012 Linen Sauvignon Blanc; $10.
Here’s a $10 (suggested retail) white wine that will not disappoint! Before the last vestiges of warm weather vanish entirely, this is a great go-to bottle for your late afternoon pre-function. Along with the Sauv Blanc, there is 14% Roussanne in the blend, bringing more flesh to the fruit and some hints of orange and pineapple fruit. It’s as fresh and crisp as the name implies.

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