The Price Of Wine Is Dropping Due To Low Demand And High Supply

Wine enthusiasts and grape growers are experiencing pros and cons
Wine enthusiasts and grape growers are experiencing pros and cons
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Wine lovers rejoice! Certain factors helped drive the price of wine down significantly. Additionally, experts expect that downward slope to continue. On the other hand, though, this puts wine grape growers at a disadvantage. Ultimately, these decreased prices come from oversupply and scarce demand, according to CNN.

At the end of the day, there are simply too many grapes for wine and too little a desire for wine. This extends to what is known as the secondary market. That involves using grapes for brandy, grape concentrate, and so on. As with any big changes, we shall see the pros and cons emerge as the situation further unfolds.

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The demand for wine just isn’t there like it used to be

Millennials are not yet a reliable consumer base, which causes the price of wine to decrease along with the demand
Millennials are not yet a reliable consumer base, which causes the price of wine to decrease along with the demand / Festival Wine and Spirits

“The industry should rightly be concerned,” warned Rob McMillan, founder of Silicon Valley Bank’s Wine Division and author of the annual State of the Wine Industry report. Demand has shifted with time. McMillan elaborated, “We aren’t engaging with the millennial consumer, and boomers who have driven wine sales for the last 30 years won’t live forever.”

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McMillan sees millennials as the biggest growth opportunity for the wine industry. If wine sellers could win them over, a lot of the demand would return. Specifically, if millennials become “more consistent wine buyers,” this might, in turn, lead the price of wine to even out again. For now, wine enthusiasts can enjoy the “best wine retail values in 20 years.”

Wine prices shall stay low as long as this oversupply continues

There are plenty of grapes to produce an abundance of wine...but there's already too much with little demand
There are plenty of grapes to produce an abundance of wine. But there’s already too much with little demand / Sea Rock Inn

Because fewer consumers are purchasing wine, less of the drink is selling off the shelves. But production continued until this new trend came to full realization. As a result, there’s simply too many grapes and too much wine to keep prices from going back up. In 2016, vineyards around Northern California hosted thousands of acres in new vines. Agricultural experts also refined the harvesting process, so the yield was increasingly more plentiful.

While that itself is a positive thing, it is also just feeding an already oversaturated market that doesn’t have the consumer base it used to. That drives costs down for consumers and diminishes profit from growers. Allied Grape Growers president Jeff Bitter also points out that even if grapes can go into the secondary market, growers don’t make as much there. The process of harvesting, processing, and selling wine further complicates things. Bitter explains, “Since it takes up to five years to bring wine to market from the initial planning stages of planting a vineyard, it makes hitting future demand very complicated. In this case, we overshot demand.” That, according to Bitter, is because “The slowdown in growth has caught the industry by surprise.”

Because wine production and distribution takes time, the overabundance can't be fully scaled back yet
Because wine production and distribution takes time, the overabundance can’t be fully scaled back yet / The Big Wine Guy

RELATED: Kurt Russell’s Wine Brand GoGi Secures Huge Deal With Southern Glazer’s

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