Tuesday, August 13, 2019

Affordable Wine: It Shouldn't Be This Hard


This past weekend I set out to pick up a mixed case of inexpensive wine. My target price range was $10-13, and my objective was to have some bottles around to enjoy with weeknight meals.  Nothing extravagant, just a handful each of summer-friendly reds and whites. But I failed. Miserably. Five bottles with an average price of $14 made it home with me - after going to three (!) reputable, independent wine shops.

It shouldn't be this hard. So, why is it? And will it get better?


Wine Is Expensive
Has wine become so expensive now that drinkable $10-12 wines are the unicorns of the industry? One funny, if cynical, reference to this phenom is the phrase, "$16 is the new $10."  Certainly wine pricing continues to outpace all reasonable indices, but there is ample evidence that the world (the Old World in particular) continues to churn out delightful, affordable wines. In other words, tasty, value-priced wines still exist, but there are fewer of them. Finding them requires more effort.

Grocery Stores
It's hard to beat the convenience of picking up a bottle while you're shopping for dinner. And with margins on alcohol way, way higher than regular groceries, it's no surprise that large grocers are devoting ever-increasing square footage to their beer and wine selections. But while this expansion results in more bottles on the shelf, it doesn't exactly result in a greater diversity of choices. The bean counters at grocery chains have mandates to reduce the number of suppliers each store buys from and centralized decision-making on what stores will offer is also common. These factors net out to thousands of bottles that fall into maybe a total of eight or nine flavor profiles. Heck, I bet that more than 50% of all domestic reds - regardless of variety - at most grocery stores would be indistinguishable in blind tasting.

Independents
Independent retailers, on the other hand, differentiate themselves by selling more unique offerings.  But if you're not moving a ton of volume, you'd better be moving a ton of margin. That's just what's required to survive in the retail game anymore. And independent retailers are subject to a variety of practical vagaries that inhibit moving any serious level of volume, such as location, parking, space, loading docks, cost of inventory, labor, etc. So, it's no surprise that the bargain bins have been shrinking.

Sure enough, that "$16 is the new $10" joke was on full display at one shop where $16 was the ground floor on their selection of rosés. Rosés! Ha! I suppose the theory is that, if the selection of $16 and under wines is slim, customers will just upgrade. Double ha!

Anyway, this explains why I could only come up with five bottles from three different stores, and I still wasn't able to stick to my price range. I'm not blaming independents for this, but it does offer a sign post to where things are heading.

Online
Independent retailers just can't make ends meet by selling affordable wines, no matter how delicious they are. And grocery chains wouldn't know a delightful wine if it bit them in the ass. Online retailers, on the other hand (at least collectively), offer a seemingly endless range of wines at a variety of price points with the convenience of online shopping. In the wake of the Supreme Court's Tennessee ruling, retailers are also getting more bold in shipping into other states, making access even easier for consumers.

Beer, Cocktails, Cannabis & Other Factors
Particularly as the focal point of wine consumer demographics shifts from boomers towards millennials, the idea that wine is a precious and irreplaceable product is as laughable as the theory that drinkers will just pay more to access decent quality wine. Think about how ridiculous that sounds, yet premiumization in the wine market presumes just that.

Back in the real world, though, consumers are increasingly looking at beer, spirits, and, yes, cannabis (market sectors which are all enjoying good/explosive growth) as alternatives to wine (sales of which are basically flat.)

So, where does that leave us? With market factors that favor online retailers and increasing competition from alternative products. Yet wine prices continue to climb and deliver lower and lower value. These conditions do not suggest that the wine industry is poised to attract more consumers or begin to grow sales again.

I'm probably wrong more often than I'm right, so who knows? Then again, just in the last 12 months drinks giant Constellation sold off 30 of its wine brands to Gallo and invested $4 billion in a Canadian cannabis behemoth. What does that tell you?

Bringing It All Home
The bottom line is that it's becoming harder to be enjoy authentic wines at affordable prices - and even more difficult to do so while supporting local independently-owned businesses. Bringing the good stuff home is likely going to require sourcing more affordable wines from online sources, something that would have seemed oxymoronic just a few years ago. As for your local independent wine shop? Keep on supporting them if you can. They are quickly becoming an endangered species.

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