The other evening I was having a glass of wine with a friend and the topic of prices came up. My buddy buys most of his wines from local wineries and wine merchants, but he also buys online. Sometimes local merchants are competitive, sometimes not, he said. What gives?
Let's look at what drives the bottom line in this varied and complex industry.
Rarely do we find, especially in low-production, high-quality wines, exactly the same prices in every market and with every wine merchant. Large wine companies that produce hundreds of thousands of cases usually have national marketers who tend to stabilize prices, especially within chain retailers, where competition is fierce.
Some chain outlets will run "deals" on wines and sell product as loss leaders to the general public, but one has to be cautious about vintage date and appellation of these "deals."
I noticed a well-known California cabernet sauvignon recently stacked as a deal. The label looked very much like the more expensive, high-pedigree offering, but the region was not the one generally associated with the Napa Valley and was not at all the same quality. And, yes, the price was greatly reduced and it looked like a real bargain.
Also, and I have seen this time and again, some markets will offer graduated discounts: the more one buys, the more one "saves." What the consumer is not aware of is that the base price often is inflated to begin with.
Different growing seasons can mean different prices in wine. Take Willamette Valley offerings from 2007 and 2008, for example. Clearly, 2008 was spectacular and considered a much finer vintage than 2007. The prices for 2008 wines climbed moderately at first, but more markedly as time went on. Wineries often will take advantage of a widely-known better vintage, knowing that the next year could be subpar and bring the prices back down again.
Once a winery has established a tradition of excellence and received consistently positive press, prices will remain high. The only time in my 42-year history of selling wine when this phenomena didn't hold true was during the last economic recession. Many high-end wines that once were strictly allocated were reduced in cost and available for general purchase.
Bumper crops of fine or poor vintages can lead to lower costs to the consumer. Wineries do not want to hold onto huge inventories, regardless of how great the vintage is.
Inexpensive and sound wines arriving from Chile, Argentina, Spain and Portugal also can depress wine prices. In today's market, a tempranillo or malbec selling for more than $15 had better be very, very good. This is a tough price range for American producers to compete in.
Lorn Razzano is former owner of the Wine Cellar in Ashland and still works there part-time. Reach him at email@example.com.