As low-end wine prices fall, premium varieties likely won’t budge

EVANSVILLE, Ind., Feb. 21 (UPI) — If you’re a connoisseur of fine wine, don’t expect to get the same price breaks that are starting to appear among cheaper varieties.

A surplus of grapes in California is driving down the prices for lower-end wines, industry experts say. But the price for premium bottles, which is influenced by many other factors besides grape production, is unlikely to be impacted.

“Where you will probably see the biggest impact from the glut or oversupply is in the lower-end wines, the grocery store wines,” said Rocky Menge, the owner of Palmetto Wine Sellers in Columbia, S.C. “For the more expensive wines from California, Oregon and Washington, I suspect we won’t see an impact on price.”

The price of wine grapes plummeted between 20 and 40 percent last year, said Rob McMillan, the founder of Silicon Valley Bank’s Wine Division, who authors an annual State of the Wine Industry report.

The demand was so low that vineyards across the state went unharvested, prompting farmers to scale back production.

“We’re already seeing quite a few vineyards being removed over the winter,” said Jeff Bitter, the president of Allied Grape Growers, who grows grapes near Fresno, Calif. “Even in my own vineyard, I removed a third of it this year.”

In his 2020 report, McMillan predicts the falling grape prices will drag wine prices down in the coming year. It’s already starting to happen, he said.

In California, Charles Shaw wine — known colloquially as “Two Buck Chuck” — now is being sold for $2 a bottle again. Its price rose to $3 nearly a decade ago, McMillan said.

“It all starts with grape price,” McMillan said. “When the price drops for grapes, that works its way into every bottle.”

It doesn’t happen evenly, though.

Higher-end wines can take years to make, so it will be years before these grape prices show up in premium bottles. That time gap softens the impact, said Ryan Moses, director of marketing analytics and management at K&L Wine Merchants, in San Francisco, Calif.

What’s more, Moses said, fine wines are priced based on factors like branding, quality and international competition more than on the cost of grapes.

“We’re not seeing a direct impact right now,” Moses said. “We’ll have to wait and see if it impacts us.”

But other long term issues might eventually pull down the price for even the highest quality wines, Moses said, because wine consumption around the country is beginning to decrease.

That’s largely because millennials aren’t as interested in drinking wine as previous generations.

Wine had been a favorite among the Baby Boomer Generation — and also Generation X — since the early 1990s, when it was linked to numerous health benefits.

Wine’s rise to stardom started with something called the “French Paradox.” Scientists had found that although they ate diets high in fats, French people were generally healthier than Americans. Wine was identified as the possible reason.

And as one result, Boomers’ appetite for wine grew steadily for nearly 30 years.

“We’ve had a good run,” Bitter said. “But, that population is drinking less now because they’re aging, and they’re starting to die. The next generation behind them is Generation X, and they’re great customers, but that generation is much smaller.”

And millennials haven’t inherited the same penchant for wine as their parents and grandparents.

Part of the issue is marketing, McMillan said. Wine producers have made few changes in how they package and market wine since its popularity exploded three decades ago.

Millennial consumers have different tastes, he said. That generation is interested in environmentally sustainable products, with a growing demand for more plant-based items. And many young adults are looking for lower-calorie beverages.

“The odd thing is, if we just start explaining what wine is, and how it’s made, they’re going to realize it is exactly what they’ve been looking for,” McMillian said.

“It is healthy, it is plant-based, it is made in a totally natural way, it’s usually gluten-free. This is a very traditional industry and it is slow to change. But, once we start doing that, I’m confident that young consumers will discover wine and we will turn this around.”

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