A toast to affordable wine prices, everyone!
Due to a surplus of California grapes, the price of wine is expected to drop to its lowest in five years. The price drop also comes as the demand for wine decreases. More and more Americans are instead turning to liquor and ready-to-drink cocktails.
Rob McMillan, founder of Silicon Valley Bank’s Wine Division and author of the annual “State of the Wine Industry” report, said in a statement that he predicts that this will be the “best wine retail values in 20 years.”
Vineyards in Northern California have progressed over the years with their harvesting methods. Vines have been planted over thousands of acres over the past few years, which in turn has produced a more bountiful harvest of grapes.
While this might sound amazing to the wine enthusiast, it could be a loss for the industry and vineyards. If there are more grapes and not enough demand to support the increased production, a lot of the grapes go to waste.
While the surplus grapes could be used in the secondary market for other products such as brandy or grape concentrate, Jeff Bitter, president of Allied Grape Growers, said that these typically do not provide continual and feasible returns.
McMillan added that the wine industry is not engaging enough with the millennial consumer. Boomers have driven the wine sales “for the last 30 years,” but millennials are the industry’s largest growth opportunity. McMillan hopes that improved value on wine will encourage millennials to become consistent consumers.