Is the economy improving? Some people read tea leaves, others palms or cards, and still others the stock market. Me? I check wine prices. Regardless of what the upper one percent is buying or not buying, most wine businesses make money only when the middle class is thirsty for more wine. And it is. According to the annual wine industry report from Silicon Valley Bank, winery sales grew 12.2 percent in 2011 primarily for wine that retailed for $20 or more per bottle.
The banking crash of 2008 was a double whammy for wineries. Consumers stopped buying premium wine at $20 or more a bottle. So inventories of unsold wine remained high at wineries, restaurants, and wine shops, all of which stopped buying additional wine as they attempted to sell what they already owned. The marketplace was rife with deals. At the same time, wineries saw big grape harvests. They bottled what they could reasonably hope to sell and sold the rest in bulk to negociants. Those businesses sold it down to the next level, which puts its own labels on bottles and charges the lower prices that consumers were looking for. Two Buck Chuck was never so good. All of that is about to change, according to Silicon Valley Bank.
In the last 18 months, wineries have been talking about grape shortages. Demand is increasing at the same time that the last three harvests have been smaller. For the first time in a long time, new vineyards are in planning stages, but it will be years before they come to fruition. The result? You guessed it. Price increases. Who benefits? Wineries, certainly. But also foreign producers, who can expect to fill in the gap between domestic wine production and consumption. Because of difficulties in the European community, the Euro is weakening against the dollar, so expect a lot more foreign wine on store shelves at good prices.
In a word, we won’t be suffering from lack of wine at any price that we choose to pay.
Think of our Facebook page as the black market for Celebrations Wine Club. This week I’ll begin to post wines that are left over from previous shipments and offer discounted prices that will be at least half as much as normal retail. Reorder prices are already greatly discounted. But Facebook prices will be even less. See you on Facebook. And check with your kids if you need directions.