Wine Prices Expected to Drop Due to California Grape Surplus
With the way 2020 is going, some good news is much appreciated in any form. So, let’s raise our glasses and toast to the fact that the price of wine is expected to drop to its lowest levels in five years, thanks to a surplus of grapes in California.
Wine drinkers can rejoice in the fact that coupled with a decreased demand in wine, new low prices could last even up to three years. Rob McMillan, founder of Silicon Valley Bank’s Wine Division and author of the annual State of the Wine Industry report, predicts US wine consumers will enjoy the “best wine retail values in 20 years.”
Northern California vineyards began an aggressive planting schedule in 2016, with thousands of new aces of new grapevines planted. As the vineyards began implementing more efficient harvesting methods, it has led to some of the biggest harvests in years, causing a surplus of grapes.
The surplus of grapes may sound great, but if there is not sufficient demand to keep up with the supply production, then many of these grapes will go to waste. Jeff Bitter, president of Allied Grape Growers, told CNN “The main cause of oversupply today is the culmination of a few years of slowing wine shipment growth, with an ample 2018 wine grape crop as an exclamation point.”
“Since it takes up to five years to bring wine to market from the initial planning stages of planting a vineyard, it makes hitting future demand very complicated. In this case, we overshot demand.”
With more Americans turning to liquor and ready-to-drink cocktails, wine consumption has dropped for the first time in 25 years. Rob McMillan, founder of Silicon Valley Bank’s Wine Division and author of the annual State of the Wine Industry report attributes this drop millennial consumers who have yet to embrace wine, along with a shrinking boomer population that has driven the wine market for the last 30 years.
“Today, the wine supply chain is stuffed,” McMillan wrote in his report. “This oversupply, coupled with eroding consumer demand, can only lead to discounting of finished wine, bulk wine and grapes. US wine consumers will discover unprecedented retail value in 2020 and should buy up.” In the meantime, all you vino lovers can bask in the sweet glory of low wine prices. Cheers!