WinEconomy III

Over the past months we had found that wine prices had begun a stabilization that would not only be welcomed by wineries and grape growers but to some degree was needed to ensure the financial health of the industry. In just the last couple of weeks though we have started to see broad based and very deep discounting at the wholesale price level that leads us to think we have some time to go when great wine can be had at compelling prices.

The interesting and at times troubling aspect of this discounting is that it is happening with a backdrop of two (2010 and 2011) vintages that are yielding very small and quite low quality harvests. This tells us that wineries and distributors are far more worried about current cash flow than they are emboldened by the coming shortages of quality wine as the 2010 and 2011 vintages will be released.

Some anecdotal data from the last couple of weeks clearly illustrates the trend. Wine retailers and restaurants here in North Idaho and Eastern Washington are being shown discounts of 50 percent or more on some California and Washington wines. Many of the wines that are being discounted are well known brands of very high quality that we believe would have no trouble selling their products. Also the bottlings being discounted are from quality vintages of 2007-2009 that would typically hold up better under pricing pressure. Many of these wines we have personally tried and there is no lack of quality - they are all delicious.

While the discounts solve problems for wineries and more likely distributors in the short term it does indicate some desperation in the supply chain. If wineries and wholesalers had the financial wherewithal to sit on some of these great wines from very good to great years for another year or so they would be able to sell them at much better prices as consumers would be facing the prospect of paying up for wines that are likely to be not very good due to the challenging growing conditions in 2010 and 2011.

Another sign that winemakers are facing some tougher times too is their recent tendency to embrace moving large quantities of wine off their books by placing it with large discount stores and warehouse clubs. While short term it no doubt feels great to have the income generated by these sales, longer term it is likely to crater their demand in otherwise friendly markets. Smaller specialty wine shops and restaurants are unlikely to continue buying brands that are stacked in big box stores by the pallet. It dilutes the brand value and diminishes the perception of quality.

So the question then is what are consumers to do and how can you ensure that you are both participating in the price reductions and at the same time protecting your wine collection as we face some tough vintages. The quick answer is to buy wines you currently like in sufficient quantity to carry you through the coming years. As retailers are seeing price cuts of half or more in some cases you should be seeing the same kind of price reductions on your retail shelves. If it is a wine you know and like you can feel comfortable buying at will; if it is a wine recommended by your favored wine professional whom you trust and who's palate agrees with yours, buying some now is a good idea too.

A little caution is warranted though. If you see cases upon cases of a wine stacked at a larger retail outlet with prices that are too good to be true, they just might be. Try a single bottle or maybe two before you load up the trunk of your car with case purchases. It is also a great time to attend tastings, winemaker dinners and the like as they provide opportunity to try before you buy. The wineries that make the investment of time and capital to hold tastings in communities far from home are not only confident in the quality of their wine but are making the commitment to serving consumers for the long term. Events like the upcoming Winter Wine Rodeo on Nov. 19 where you will be able to taste hundreds of wines and buy them on the spot are a way to guarantee you are getting what you pay for.

For consumers it remains a great time to buy wine given this next wave of price cuts and the coming difficulties of some not so good years, but consumers want to be sure they are getting wines they will enjoy.

If there is a topic you would like to read about or questions on wine you can email George@thedinnerpartyshop.com or make suggestions by contacting the Healthy Community section at the Coeur d'Alene Press.

George Balling is co-owner with his wife Mary Lancaster of the dinner party - a wine and table top decor shop in Coeur d'Alene by Costco. George is also the managing judge of The North Idaho Wine Rodeo and writes frequently for the online version of Coeur d'Alene Magazine at www.cdamagazine.com. His articles can also be found on the blog at www.thedinnerpartyshop.com.