ENTHUSIAST'S CORNER December 2000
What's Behind Wine Spending?
Statistics show that Americans are spending more on California Wine. But is this because of higher prices?
All of us who are enthusiastic about wine know that California is the shining star in the United States wine constellation. Now we have statistical confirmation that the robust economy of the late 1990s has been helping Golden State winegrowers and winemakers to live high on the hog.
Just recently Motto Kryla & Fisher, a Napa-based wine-industry consulting firm, released the findings of a study it cnducted on wine spending trends in the U.S., and the most telling discoveries are that per capita spending on California wine increased by 83 percent from 1994 through 1999, but per capita consumption of California wine increased only 22 percent during the same time period. According to the study, the key factor driving the increase in spending has been a major shift among consumers toward higher-quality wines. But I have another theory.
While it goes without saying that Baby Boomers have substantial disposable income, which they are spending on better wines, the survey's results also suggest that California wine has gotten more expensive. How else could the increase in per capita spending exceed the increase in per capita consumption by such a large margin?
Five years ago the prevailing theory throughout the beverage alcohol business was that people were drinking less but drinking better. The latest statistics suggest that people were drinking less but drinking better. The latest statistics suggest that people are actually drinking more and drinking better. But if you look inside the numbers of the MKF study, you have to ask yourself whether it's consumption trends or higher prices that's bolstering spending.
We taste and review thousands of wines each year at Wine Enthusiast in order to provide you with purchasing guidance. Something our tasting panel members have concluded is that often a wine's price is not only based on it's quality but also on the belief by the winery that maintaining a reasonable price—or even a low price—might minimize the consumer's (and the wine press's) perception of the wine's quality. The more things cost, the greater the implied quality, or so the theory goes.
From our vantage point, it seems as though winery owners are raising prices to keep up with the Jones's. If a Napa Valley winery is selling its Cabernet Sauvignon for $30 and its neighbor's wine is going for $40, the maker of the less-expensive wine feels compelled to raise his price under the guise of self protection.
This sort of price creep has created mayhem in Bordeaux in the past, and if California wineries don't apply the brakes to runaway pricing soon, it could negatively impact the growth of California wine. Americans want to drink more wine, but increasing the average price per bottle is not the way to increase consumption, especially in light of the way the Chileans, Australians and other aggressive international producers are keeping prices low. Consumers are smart, and if California ultimately gets too pricey, they will look elsewhere for wines with better quality-to-price ratios. Things may be rosy today, but California producers need to avoid creating the perception that their state no longer provides quality wines at fair prices.
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In this issue, our annual spotlight on Champagne and sparkling wine, we look at the origins and evolution of the Champagne glass and solicit expert opinions on which vessels offer the best drinking experience (page 42 in The Wine Enthusiast Magazine). Next is a feature on bubbly by the glass, where we have uncovered which Champagnes and sparklers the top restaurants in the United States are serving and how they go about selecting their house pours (page 48). And we conclude our Champagne bonanza with a feature on Champagne cocktails, those tantalizing tasty concoctions that have been around since the 19th century and are making a comeback in bars and restaurants everywhere (page 72).
Also this month, we profile California wine country's top wine-friendly resort spas—seven outposts where you can restore your mind and body as well as eat and drink like a king or queen, albeit one who's watching his or her waistline.
Cheers and enjoy the holidays!