High gas prices are one thing, but sometimes rising prices can really hit a person where it hurts. The price of wine, due to grape shortages, is set to rise substantially this year.
Wine is unlike many products, as the price of the commodity is uniquely tied to its production rather than being dictated by Wall Street, as oil and other things are. Wine prices are fairly simple; if grapes are in abundance, then the price is low. If the grape harvest suffers, the price is higher.
Unfortunately, last year, according to Time magazine, grape harvests did not yield as high a volume as many hoped. The recession had a hand in it, as poor economic conditions led to a fair number of vineyards being shuttered and a loss of production. As a result, prices for white whine grapes rose by 8 percent and red wine grape prices rose by 12 percent.
Unfortunately, the trend is likely to continue.
Wine prices to rise again
An annual report by Silicon Valley Bank, a bank that caters heavily to wine producers in Napa Valley, found that wine prices are set to rise this year. The report, titled “State of the Wine Industry Report,” projects a rise in price per bottle of 7 to 11 percent, especially among fine wines.
SVB believes this will affect mid-range and high-end domestic wines more than others. According to CNBC, sales grew most in the past few years for wines under $20 per bottle, but more people are starting to buy wine in the $20-plus category. However, due to higher-priced wines failing to sell as well during the recession, wine producers would sell it at a loss through discount merchants, which led to the $9-to-$12 per bottle segment exploding in supply, according to Time.
Unfortunately, as more vineyards go out of business, there are fewer grapes to go around. There have also been, according to CBS Los Angeles, some California vineyards that have suffered due to frosts, wiping out as much as 30 percent of crops in some vineyards.
As a result of diminished supply and more demand, wine producers are not going to be able to continue to sell at a loss and survive. Ergo, the cost must go up.
California uber alles
The news is worst for oenophiles in the Golden State and the Pacific Northwest. Prices are projected to rise for California wines first, followed by Oregon and Washington.
However, people in those regions can take some heart, as imported wines are projected to remain stable in price, so one may be able to find a wine from Spain, Portugal, France or Argentina at the same or perhaps at slightly less than the typical domestic. It may also be an opportunity for people in those regions to try more of the many microbreweries located on the West Coast.