The slow economy has taken its toll on several industries, and now, one more can be added to the list: wine. Some wines that were going for about $60 a bottle are now being sold for about $20—so have another glass!
Pali Wine Co., a small California Pinot Noir producer started in 2005 by Tim Perr and Scott Knight, use to fetch $40, $50, and $60 a bottle. They sold out their first vintage of 1,300 cases that year and because of the booming economy the duo believed there would always be a demand for high priced Pinot Noir.
Now, those same bottles are going $19. “We had to do something. We had to bring our costs down, and everyone in the business was seeing the same thing,” Perr said earlier this week while visiting New York. While Pali does not own its own vineyards, it outsources its grapes from groves in Napa, Oregon, and Sonoma. Those Pinot Noir grapes that once sold for $5,000 a ton are now selling for half that.
According to Robert Smiley, director of wine industry studies at the University of California, Davis School of Management, “The spot market (for wine grapes) is basically dead.” His survey of winemakers proved wineries will be cutting back their production, “And it’s not just in the U.S.,” he said, “I just returned from Munich and there is a worldwide glut. There are generally no more waiting lists for the cult wines. And some of the cult wines will even make deals with you.”
In fact, the wineries are making deals with their distributors. As winemakers don’t set the prices consumers pay, they are lowering prices for their distributors and offering promotions, which in turn has caused the retailers to lower consumers prices.
Vice president of beverage alcohol at The Nielson Company, Danny Brager, said, “When we last looked at wine at points north of $20, we saw declines at each of them.” It seems that consumers who shifted were also quite pleased with the wine they purchased for less than $20.
In fact, Marcelo Papa, a chief winemaker for Chile’s Concha y Toro said the company has seen most of its brands rise 30 percent this year. Papa commented that, “compared to 20 or 30 years ago, wines under $20 or $15 are of much better quality today.”
I guess that explains the baffling fame of boxed wines, which Kathy Griffin noted need an extra tip when you reach the bottom of the bag. However, when a $60 bottle of Pinot Noir is selling for a bargain of only $19—how could you resist not having another glass?
Via: NY Daily News