Wineries around the world are struggling to cope with consumers who are ignoring wine in favor of alternative beverages.
Sales of wine around the world have declined precipitously, and it may be years before the industry recovers. Wine companies now face some daunting problems that can only get worse.
For one thing, how will they deal with the wines they will make this year? And there is still a lot of wine in warehouses from past years.
As recently as a year ago, there were strong warning signs of an entire wine industry in decline. Most wineries that made wine last year are now stagnant.
To be sure, a number of expensive wines were immune from the fiscal slide in the last 20 years, but wine has always been an optional purchase for most Americans, and even wealthy buyers are rethinking purchases.
Some wholesale costs are rising, too. One key service wholesalers offer is delivery. This means owning trucks and paying for gasoline. Those fees have not declined.
In some cases, retail stores have stopped buying anywhere near the amount of wine that they previously acquired. “I have the floor space,” one Southern California retailer said, “but do I need 50 chardonnays? ... I’m cutting way back...”
Even popular wines are having trouble finding a home. Discounts, closeouts and other strategies are being employed by wineries and wholesalers. Still, a lot of good wine is sitting around unsold. And as vintages back up in the pipeline, the wine isn’t getting any better; it’s actually declining in quality. So, it must be sold.
The operative phrase with some retailers is, “Make it go away.” And that doesn’t just mean to dispose of it at a profit. Many people are willing to get rid of it at cost—or below! Built in to that phrase is the vital idea that the wine be disposed of in a way that doesn’t taint the “suggested retail price” of succeeding vintages of the same wine.
In France, Italy, Portugal and even Spain, recent prices reflect the quality based on what the vintage yielded and the volume of wine produced.
In the United States, prices have traditionally gone up based on how much the producer believed the marketplace would bear and never came down.
Producers believe that consumers are unaware of the European model, so any price decrease would be seen as a reflection of poor quality. And that is the kiss of death.
It is much better, producers believe, to discount wines not because of too great a volume produced, or because the wine wasn’t as good, but because the wine wasn’t moving as fast as expected.
This may be based both on quality and quantity, but as a cynic, I see what I believe is the real reason: If consumers don’t buy a wine because its sell-by date is approaching, wineries get antsy and discount.
But don’t expect to see the same wine at the winery for a discounted price. If you go into a winery tasting room, the retail price will apply. There are no discounts at wineries.
You might ask why a winery with a lot to sell won’t discount at all. It’s to “protect” the small wine shop that doesn’t discount the wine. It doesn’t want to undercut the mom ‘n’ pop grocery stores who have the wine at its suggested retail price.
Meanwhile, sales remain sluggish. The shakeout is occurring before our eyes.
