Retailers and wine prices

Wine-Searcher.com has great news for wine drinkers: “Increased transparency of wine prices worldwide means retailers are no longer able to charge excessive prices.”

So how does that jibe with what I saw yesterday – a national retailer charging $17 for a South African red blend that included pinotage? Wine prices don’t get much more excessive than that.

The Wine Curmudgeon will sort this all out after the jump:

There is no doubt wine prices, in terms of value and quality, are the best they’ve been in generations. Pick a reason: Better trained winemakers using better grapes; the growth of the multi-national producers and their economies of scale and more efficient supply chains; the after-effects of the recession and excess supply; and increased competition among retailers. Competition is so intense in Dallas, in fact, that I can buy some wine at near cost.

But are we at the point that Wine-Searcher describes? Hardly, as my experience at that Dallas retailer demonstrated. South African wine has been a glut on the market since at least the start of the recession, and to expect consumers to pay top dollar for wine they know nothing about from a country they aren’t familiar with (and made with pinotage, to boot) is expecting a lot.

But that doesn’t mean retailers don’t have expectations. They have been wishing and hoping for a return to the good old days – that is, before 2007 – when consumers threw cash at wine regardless of cost or quality. Anyone who has tried to negotiate the Great Wall of Wine at their local supermarket knows about those expectations. Often, there seem to be three or four prices for each wine, depending on how much you buy, whether you have a club card, and if it’s on sale. Confusion rules, and that’s never good for the consumer. I’ve seen Bogle chardonnay, which is almost never more than $10, listed for as much as $15.

Still, the realists, whether producer or retailer, know those days are gone and are acting accordingly. Walmart, for one, “is so committed to becoming America’s biggest beer retailer that it has been selling Budweiser, Coors, and other brews almost at cost in at least some stores” reports Bloomberg Business Week. Beer isn’t wine, but the principle is the same. Wine retailing is evolving into a battle for market share for the wine that most of us drink, and the most competitive retailers will suffer lower margins to boost market share by selling at the lowest possible price.

Which has a lot more to do with what’s going on than the miracle of the Internet, which is what Wine-Searcher says is the reason for fair pricing – giving itself credit in the process. Not coincidentally, Wine-Searcher’s business is listing wine prices over the Internet, and it charges retailers and consumers for premium services to do just that.

This is not to say that Wine-Searcher hasn’t made a difference; I use it regularly and recommend it to anyone looking for hard to find wine. But to suggest that its listings are the main reason for fair pricing in a country where the percentage of Internet wine sales is in the single digits is suggesting a lot. And it’s difficult to imagine that most consumers consult Wine-Searcher before they buy their Barefoot or YellowTail.