Stand by for the wine bargains that are now well on the way. Inflated high prices are tumbling in an industry in crisis.
Australia has a wine glut and the surplus is not just bulk wine from the Murray Basin. As well there are too many producers trying to sell too many bottles at $50 or more.
Chester Osborn, the winemaker at d’Arenberg, touched on the problem in an interview with The Australian this weekend. Australian wineries are sitting on at least a year’s worth of extra wine and that is putting downward pressure on prices and reducing the value of inventories.
“Normally the ratio of stock (held by wineries) to sales is about 1.6 and right now it is about 2.6,” said Osborn. “Everyone is carrying an extra year’s worth of stock right now and that makes competition really tough.”
The obvious first reaction to falling demand is to cut prices. That has its difficulties for winemakers. Reductions are difficult to reverse once made.
Customers are not amused to find a wine available at less than they paid. When faith is lost in this way the chance is the next vintage will be given a miss.
A good sign of this marketing dilemna is seen in the proliferation of what I call disguised price reductions. Wine is sold to retailers who hide the label in a black bag or some such device to try and protect protect the producer’s high-price reputation.
Glug customers benefit from other makers selling bottled wine unlabelled on condition they are not named.
The next step is sure to be new secondary brands sold by those makers at cheaper prices.
One way or another it is a good time to stand by for cheaper prices.
