So are wine prices going up, down, or what?
For the last week or so, ever since Silicon Valley Bank came out predicting a dire shortage of grapes, there’s been a burst of stories that wine prices are spiraling upward, and will be for years to come. It’s become the standard narrative.
The news first surfaced in Silicon Valley, as you’d expect. Then it hit the Internet, spreading like an epidemic to the national stage, with this alarming if hyperbolic (so what else is new?) headline from TIME: Panic! Wine Prices Due to Rise
It even reached around the world; here’s a Reuters report published in the Times of Malta.
I haven’t seen this much press given to a wine story in a long, long time, maybe not since The French Paradox episode on 60 Minutes, 22 years ago. I found myself wondering how it grew so big, so fast. After all, there are studies on wine prices released about once a week. How did this one go so viral?
Then, yesterday, I came across this account, originally published in The Drinks Business, and picked up by Wine Industry Insight’s News Fetch, that called the whole “Panic! Prices Spiraling!” thing into question, basically for two reasons: first, there’s wine pouring into the U.S. from all over the world, not just California, so that, as John Gillespie, from Wine Opinions, was quoted, “There is enough wine.”
This was confirmed, in the Drinks Business article, by my old pal, Wilfred Wong, from Beverages, and More!, who told the reporter he hasn’t yet seen prices rising. If they were, trust me, Wilfred would be the first to know.
The second reason prices may not be going up is because the consumer remains cash-strapped. Even if a grape shortage (the result of short vintages) is real, that only affects supply. The other half of the eternal equation, demand, means that growers won’t feel able to increase their prices, because buyers (brokers, wineries, consumers) will tell them firmly that a hike in cost simply won’t fly at this delicate time in the recovery (if, in fact, there is a recovery).
To get the proper perspective on this, we have to understand that we’re talking about inexpensive, common, mass produced wines in this discussion of prices. I mean, the kind you buy at the supermarket or the big box store. Ultrapremium wines will not be affected by any grape shortage, one way or the other.
I’ve been around this business long enough to have seen several predictions that the sky is falling, only to have them turn out to be false. If you remember the phylloxera episode in California, everybody was saying it would destroy the wine biz. It didn’t. Similarly, in the early 1990s there was a wave of consolidation. People worried that pretty soon there would be no more small family wineries left. That was about 3,000 wineries ago, in California alone!
So I’m pretty sanguine that prices aren’t going through the roof. The higher they go, the less people drink, putting greater pressure on prices and forcing them downward. That self-correcting mechanism is built into the marketplace. It’s why wine prices will look pretty much a year from now like they do today.