Is The Price of Wine Really on the Rise?

Is the price of wine on the rise? Do you need to stock up now on your favorite bottles before the cases exceed rate expectations? According to a recent forecast report by Silicon Valley Bank (SVB), consumers should drink up fast before wine prices head high. But before you panic and start calling Destination Cellars in chaos over whether or not your favorite bottles are on the rise, it's important to get all the facts before buying wine in bulk.

Reuters reported that this year, U.S. consumers are going to be faced with paying more for a bottle of domestic wine, or settling for lower quality. The analysis came after SVB, a commercial banker to the wine industry, said in its "Annual State of the Wine Industry Report" that it expects vintners to raise prices as the supply of grapes declines and evolves "into a state of shortage that will last for some time domestically." The result: they anticipate prices for California wines will be the first to rise, followed by wine from Oregon and Washington State.

But according to our our own estate sommelier Sean Q. Meyer, it's all about perspective.

"A number of luxury wineries assume that the luxury consumer is not price sensitive. While the actual price of the item may not have a large bearing on the purchase, the luxury buyer still wants to see that there is value there and often feels taken advantage of with a substantial price increase," said Meyer.

As for the grape shortage? Meyer said don't go seeking imports for your own vineyards just yet. The perceived grape shortage is just that: perceived.

"Two years ago, in Napa, there were acres and acres of grapes just sitting on the vine.  Some growers actually gave them away to anyone that would come and harvest them," he said.  "We have had a couple of lean years in production but there is still plenty of bulk juice on the market for sale.  We will be buying fruit this year and turning it in to wine and there is no indication that our grower contact forsee any price increase in the fruit."

So, what's really happening to domestic wine? It's all in the grape.

The report by SVB says "This year, with the slightly small harvest, we have moved past being balanced into a position that’s trending to shortage overall. High-end Cabernet and Zinfandel are clearly short and the only varietals we view as being close to balanced are the usual suspects in Merlot and Syrah. That said, with demand for Cab and Bordeaux-styled blends growing and Cab short, we can expect Merlot to be used to fill in for scarce Cabernet and should see some of the Syrah lost in blends as well."

As for the price of wine, Meyer says there's no need to panic. "Will prices increase? Yes, but they will more be corrections from any dips over the last three years.  In Bordeaux, even with a 60% drop, pricing is still higher than it was 3-4 years ago.  It is all a matter of perspective."