Good news for consumers, bad news for producers?

by Eve Resnick on February 13, 2012

in General

A recent study by Nielsen shows that the 2011 trend of decreasing prices for wine bottles will keep going in 2012. If this is good news for consumers, it is bad news for producers who would like nothing more than reversing the trend.  But it will not be the case in 2012:

Price Point for Wines- 2012

Source - Nielsen, 2012

According to Wine Market Council President John Gillespie, “One of the reasons the over-$20 segment was strong, was that there was a great deal of price discounting in that category. When people see a wine that they’ve bought before for $45 or $35, and it’s now $22.99, they buy it.”

But what drives wine sales is mostly the economy and mid price categories. If the industry is looking to increase its prices, consumers do not have the power (or the will) to pay a lot more for their bottle of wine.  This statement is confirmed by Gillespie: “2012 will probably mirror 2011 in terms of consumption frequency and purchase price-points. Within that there may be some shifting, because if there are shortages in California, there are certainly no shortages in Europe, South America or Australia. But I don’t see any real changes on the horizon in terms of overall consumer behavior with wine in the U.S. in the coming 12 months.”

This situation is not the best for domestic wine producers but not good either for imported wines coming from France, South America or Australia. It means that the QPR must be very good in order to stand out and get the consumer’s interest. American wine professionals foresee only a few ways to get the bottles out of the shelves: direct-to-consumers sales through a wine club, a site or in the tasting room as well as on a “flash sale” site.  2012 will be again a good year of opportunities for the wine consumers.

 

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