Thursday, April 28, 2011

Wine Prices Rebound!

Just in time for a follow-up to my last post about wine prices, here's a story that ran in the Santa Rosa Press Democrat about rebounding wine prices:

http://www.pressdemocrat.com/article/20110427/business/110429507


I'm extremely happy about this, and here's my rant and rave about why:

Wineries were pressured from all sides during the recession. Not only were wine drinkers demanding better prices for higher-end wines, but distributors and brokers were also demanding discounts deeper than have been given in as long as we can remember. Considering the fact that wineries have to sell their wares to distributors at 50% off as standard pricing (brokers range, depending upon the state and broker), that's taking a HUGE hit. Even many local restaurants (which wineries often just sell to direct from the winery), were asking for discounts, then marking up the wines more than they ever had (so the consumer paid the same as pre-recession prices).

What does this mean? For the past few years, it wasn't uncommon for distributors, restaurants and brokers to make more money on the wine than the winery was. Their reasoning? They have overhead. The winery's reasoning for being mad about it? They have overhead too! And the cost to make the bottle in the first place!

When wine is discounted as deeply as it has been the past few years, someone pays for it. During the past two years, it's been the winery for the most part. So, you can understand why I'm happy that pricing is starting to return to normal. A lot of wineries have been just trying to hold on for dear life, so it will be a great help to the industry to get back to normal, or whatever the new normal will be.

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