Cheaper wines find more fans
In the recession, drinkers traded down to less-expensive brands. Now they're hooked.
Wine drinkers traded down to cheaper brands over the past few years, and now they're not returning to the pricey bottles, The Wall Street Journal reports. Instead, they're sticking with lower-priced ones.
The economic downturn was the hardest on wineries that sell bottles for $20 and up, the Journal reports. Last year, wines priced at $9 to $12 a bottle saw sales spike 12%, while the overall industry saw only a 3% increase.
People "have woken up to the fact that there are a lot of choices out there," one California winemaker told the Journal. He said he doesn't expect buyers will return to their earlier spending habits. "It's not ever going to be what it was."
Even Wal-Mart (WMT) is jumping on the lower-priced-wine trend, installing wine vending machines at some locations. Check them out in this video (post continues below):
This new reality is obvious at companies like Constellation Brands (STZ), which owns the Robert Mondavi label. In the last quarter, Constellation shifted from holiday promotions to focus on higher-priced brands, the Journal reported. Sales to retailers rose by only 2%, compared with 4% in the previous quarter.
There's a similar story at restaurants. People are ordering more wine by the glass instead of full bottles, and prices on wine lists are coming down, the Journal reports.
Once in a while, my friends and I get together for a wine tasting where we hide the labels of four wines -- three under $10 and one at $50 or more. We pick the one we like the best, without seeing the bottles. The lower-priced bottles come out ahead just about every time.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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