Wine prices heading up? Looks like it
A very interesting article by economist Michael Veseth on his always compelling blog, Wine Economics. In it, he traces the economic forces currently impacting the global prices of wine. Concluding that “Wine prices in the U.S. appear to be heading up,” he asks the logical question, “what’s a bargain-seeking shopper to do?”
Among the external forces sending prices higher, Veseth writes, is the dollar’s weak position against the Euro (which is pushing the price of imports up) and high energy costs (which is boosting the price of everything that has to be transported). Another factor, which Veseth didn’t mention but is enormously relevant, concerns this report, from the Western Farm Press, that “2008 [California] wine grape prices [are the] highest in seven years.” Seems that Allied Grape Growers, the state’s largest grower coop, is reporting “better prices than any of the past seven years,” due to decreased acreage in the Central Valley. For example (I got these figures from the 2007 California Grape Acreage Report), standing acreage of red wine grapes in District 11 (San Joaquin and Sacramento counties) District 12 (San Joaquin, Stanislaus and Merced counties), District 13 (Madera, Fresno and Tulare counties) and District 14 (Kings, Kern) all dropped from 2006 to 2007. And that doesn’t take into account the loss of crop due to this past Spring’s historic freezes, which mainly impacted premium coastal grapegrowing areas. Meanwhile, wine from the 2005 and 2006 bumper crops is largely gone from the bulk markets, and consumption of California wine continues to grow, even as California wineries are experiencing increasing export success due to the weak dollar. As Record.net, an online publication, reported, “this price uptick could be the start of a long-term upswing” in both grape and wine prices.
Veseth looks to Southern Hemisphere (especially South African) wines for value, as well as his native Washington State. (He teaches at the University of Puget Sound.) Washington wines, he suggests, are as good as any, but “they suffer somewhat from an undervalued reputation” and so prices are lower. I myself have noted fewer “Best Buys” lately in my reviews of California wines at Wine Enthusiast. They still come in, but not with the frequency they used to. My impression is that prices are creeping upward in the under $12 category, while quality is either staying level or, in some cases, dipping. On the other hand, quality at the ultrapremium level is higher than ever — but hey, that doesn’t help the average consumer who’s looking for a bargain.
P.S. Check out this blog for a side-splitting “interview” of Sarah Palin, the Republican nominee for Vice President, on her favorite wine. It’s hilarious.
Please visit my posting on Gary Heck’s new luxury wine at Wine Enthusiast’s Unreserved.