Ask a Wino – April ’09

Pinch a penny, press a grape: Your money and wine

By Christine Go

Everyone knows the economy is tanking; it’s the hot topic these days. But how is that affecting wine sales? Are you still drinking wine? Of course you are! We’re all still winos; the real question is, are you still buying wine, and if so, what are you buying these days? All the other major wine publications (Wine Spectator, Wine Enthusiast et al.) have focused on “wine values” in recent issues, so the economy obviously is affecting wine sales, but how, and to what extent? Seems to me, all the talk of gloom and doom would make people want to drink more!

In my last column, I answered a question about QPR (quality-price ratio), and in a down economy, that ratio has become even more important. I’m still buying wine, and I’m sure you are, too; but I bet instead of spending $20 on a bottle, you’re looking at wines that are less expensive but have a high QPR. Or, maybe you’re treating yourself to a nice bottle of wine to drink at home, instead of spending big bucks in a restaurant. After all, these days people just aren’t eating out as much, so you’re probably doing more of your wine-drinking at home.

I’ve always heard that wine is recession-resistant, and an analysis by IRI and Wine Industry Insight indicates that this common wisdom is correct. In fact, the data show that wine sales outperform the Dow-Jones. As a matter of fact, wine sales for January 2009 increased 6.4% as compared to January 2008. What’s even more exciting is that Washington State wines showed the greatest domestic growth, with dollar volume climbing 13.5% (compared to California’s 7.4% increase). Also, Argentina had the largest increase (44.4%) overall, so my prediction in last month’s column about Malbec being the hot new grape is obviously correct—Argentina produces Malbecs with the highest QPR. But there are a few Washington wineries that produce Malbec (Camaraderie Cellars makes a tasty one) and Seattle Magazine’s ’09 Wine Awards named Malbec “Best Emerging Varietal.” Am I psychic or what?

But I digress….there’s more good news for Washington wineries. According to Lauren Gardiner, wine steward at Thriftway Ballinger in North Seattle, her customers are specifically asking for Washington wines. With so many delicious options, it’s easy to drink local.

How have local wineries adapted to the realities of this new marketplace? Some are making less of their premium wines and more of their table wines, or decreasing overall production. Some, like Brett Isenhower of Isenhower Cellars, saw the writing on the wall, and decide to produce some wines that would retail under $20. Others are re-evaluating their pricing structure. For example, Mike Neuffer at Nicholas Cole Cellars completely restructured the pricing of his ultra-premium wines. Now the QPR for his wines is through the roof.

I’ve spoken with several of my buyers, and people are still buying wine, although it seems like they’re buying a case of something cheaper, instead of five or six bottles of more expensive wines. The magic number seems to be $20; wines under $15, or even under $10, are moving the quickest, while more expensive wines (e.g. those over $20) seem to take longer to sell.

That’s not always the case; people are still buying some expensive wine. NPR recently did a piece on how businesses that offer luxury goods and services are doing well with consumers who have cut back on big expenses, but are treating themselves to little luxuries (e.g. massages or wine). After all, buying a $50 bottle of wine is a great way to treat yourself, and it’s much cheaper than a week’s vacation in Paris.

In January, the New York Times published a series of articles on wine as an economic indicator—retailers said that people are trading down to less-expensive wine, but buying more of it, so the average dollar sales remain the same. Wine industry consultants believe that people are buying more wine in retail shops since they’re not buying as much wine in restaurants. However, some analysts say that glass pours in restaurants have gone up; people who won’t splurge on an entire bottle will splurge on one nice glass of wine.

Bottom line: what does this mean for Washington wine? Overall, the wine industry is doing okay; winemakers are adapting to the realities of the current market while maintaining excellent quality. Personally, I’m more worried about local eateries, so support your favorite restaurant, and don’t forget to order some wine with your meal!