The Economics of Wine

How the Current Recession Is Affecting Wine Habits

© Alan Boehmer

Mar 27, 2009
The current economic downturn has deeply affected consumer spending. How has this affected the production and purchasing of wine?

Wine has historically been considered a luxury item in American and Canadian culture. Only a few decades ago it was widely unavailable in all but the most upscale or ethnic restaurants, and even then largely confined to major cities. The number of families who enjoyed wine with their dinner at home was minuscule, except for immigrants from other cultures.

Regular wine consumption is becoming a part of our culture.

How times have changed! Wine has found its place in the American mainstream and now occupies a place in supermarkets as prominent as produce. It's considered a healthier alternative to coffee and soda when enjoyed in moderation and has become a part of daily life.

No longer thought of as a luxury, but rather a staple of the American diet, wine sales have been little affected by the current downturn in global economy. But we've observed some changes in the way consumers view the purchasing of wine in harder times.

How our flagging economy is affecting wine purchasing.

First, wine sales are not slacking off, as many predicted. It's just too important a commodity to do without for many people. What has changed is the kind of wine we buy. Wine sales in the $3-7 price point has soared due to improvements in quality in these very inexpensive products. While most of these bargain basement wines are imports from Chile, Italy, and Australia, a few American wineries are offering some competition.

Wines priced over $30 seem to be holding their own in these economically trying times, largely because those who enjoy expensive wines on a regular basis are usually able to afford whatever they cost. Except in restaurants. There has been a notable shift to more moderately priced wines in restaurants, since a $30 wine can easily cost $75 in a restaurant.

It's the mid-priced wines that are being hit hardest. And for good reason. The spectrum of quality levels is greatest in the mid-priced sector. Many wines priced around $15 are only marginally better than the cheapies. And if you aren't paying close attention, a less expensive wine might do just as well. Say, a $6 Salice Salentino from Italy with your pizza instead of a $15 Barbera; or a $4 Sauvignon Blanc from Chile instead of a $10 Sauvignon from California.

Lesser known varieties are on the back burner.

One of the interesting future indicators of what wine consumers will be offered is seen at trade shows that present a broad spectrum of current release wines, such as the huge Family Winemakers of California tastings in San Diego, Pasadena, and San Francisco. In contrast to past events, this year is showing a return to the tried-and-true varieties that have an established customer base. At the latest FWC tasting we found only a single Nebbiolo, a single Pinotage, two Carignans-but 138 Syrahs. Even the very promising Albariño, thought to be the next white fad wine, was offered by only one winery. There were over150 examples of Chardonnay.


The copyright of the article The Economics of Wine in New World Wine is owned by Alan Boehmer. Permission to republish The Economics of Wine in print or online must be granted by the author in writing.




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