Thread

1. dluan · 1790650752 · focus · HN ↗

   Because of years of trade war, American wine industry is taking a beating around the world and a lot of Australia, NZ, and South Africa is picking up that slack. Even niche producers like Chinese and Japanese wine industry are very quickly maturing into real home-grown industries. The biggest market for California has always been Asia, and it's been near impossible to stumble into Opus One the way you used to be able to in Tokyo, Hong Kong, Beijing, etc.

   Old world has always been able to be flexible, eating these kinds of punches by pivoting into NA or brandy during gluts, and demand has less fluctuations. This contraction, like a lot of everything else happening in the US, maybe was already coming because of some trends overlapping, but policy threw gasoline onto a combustible and fragile situation.

   1. hattmall · 1790651047 · focus · HN ↗

      Ok, so does this mean prices in the US will go down? I keep seeing stuff about countries shifting away from US goods but prices seem to continue to rise.

      1. brewdad · 1790651344 · focus · HN ↗

         Companies will try to make up lost sales by serving American "whales", especially in a luxury good like wine. I would expect prices to rise here in the short term and then the market will decide whether that means those of us outside the 1% stretch our budgets to keep buying or turn to the cheaper options.

         Kind of like the Super Bowl and other major sporting events. Normies can make that their "major trip" for the year but mostly they want to sell their multi-thousand dollar tickets to folks who will be at the next big thing the following month.

      2. dluan · 1790651460 · focus · HN ↗

         Reportedly, last year ~10% of California vineyards were uprooted, some grapes like Pinot Noir production is down 30%. Growers are going to keep trimming until they get back into the black, or prices fall down far enough for consumers to come back, whichever happens first. And it's not going to be just CA, it will be NY, TX, WA, OR wineries too, all areas that had big capex expansion over the past 10 years.

         You can see it happening in real-time, right this moment. Go to your local Costco wine section, look for the clearance markdowns where the price ends in $0.97. That means it's marked for clearance and won't be coming back, and there's some screaming deals right now.

      3. aprilthird2021 · 1790651543 · focus · HN ↗

         No
      4. linuxftw · 1790651827 · focus · HN ↗

         Many wines are already well under $10/bottle. Plenty of cheap wines already, I don't think there's room for prices to go down much farther.

         1. SoftTalker · 1790652746 · focus · HN ↗

            Even at $10/bottle, food is too expensive now for a lot of consumers to splurge on wine. I drink water with my meals almost exclusively now.
      5. johnnyApplePRNG · 1790651863 · focus · HN ↗

         Don't count on it.

         Prices and costs generally increase as the quantity sold decreases.

         If they're buying fewer bottles for example, bottles will cost them more per bottle.

         And if they're "losing money on international sales", often times they'll try to recoup that elsewhere. Like jacking up their own prices in justification.

         1. vlovich123 · 1790655113 · focus · HN ↗

            There was a time not too long ago that Napa wineries still had free tastings and cheap bottles. As demand went up, so did prices. As demand goes down prices also go up? This seems disconnected from the supply/demand curves we learned about in econ 101.

            1. NewJazz · 1790655613 · focus · HN ↗

               Econ 101 usually teaches a simplified model... Still my lower divs covered the relationships between scaling supply and costs. It really just depends on the market, sometimes you are amortizing a high capital cost over each unit sold, while other times you are paying high input costs that are directly related to your scale. Scarcity/abundance of inputs is another major factor.
            2. jjk166 · 1790658362 · focus · HN ↗

               Higher demand incentivizes more production, increasing supply which drives prices down. Demand increases only drive up prices if supply is constrained.

               Very likely wine demand was not going up, and price increases were instead due to increasing costs and inflation.

               1. bruce511 · 1790660236 · focus · HN ↗

                  Wine has the advantage that it keeps really well, and in some cases improves (becomes more valuable with age.)

                  So when demand softens it may be advantageous to hold back the excess rather than lower prices. Yes, there are cash flow issues when this approach gets out of hand, but financial interests can cover a lot of that as well.

                  1. toyg · 1790684555 · focus · HN ↗

                     > it keeps really well

                     Eh, not really true for the cheap end of the market. A lot of wine sold in supermarkets, for example, is meant to be consumed a couple of years after bottling, tops. And storage can be a significant problem.

               2. vlovich123 · 1790789074 · focus · HN ↗

                  Considering you could walk in before and now you have to plan ahead with reservations (and this is broadly true in NorCal beyond just wines), it sounds like you’re a non local making conclusions without knowing how it’s changed here.
            3. johnnyApplePRNG · 1790725246 · focus · HN ↗

               There's a reason those were all taught to you in a classroom setting. They're generalities.

               The real world works much differently.

      6. hiddencost · 1790652061 · focus · HN ↗

         Who is giving you the idea that trade makes things more expensive?

         <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Comparative_advantage" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Comparative_advantage

      7. askjdfksdbfhk · 1790659755 · focus · HN ↗

         &gt;Ok, so does this mean prices in the US will go down? I keep seeing stuff about countries shifting away from US goods but prices seem to continue to rise.

         The actual answer is yes, at least when it comes to wine (although I will note that the trade war stuff is only part of the picture--it has certainly hurt a number of wineries that previously relied on exports, but the wine industry is experiencing a much broader downturn than just this).

         Not all wine, of course, but some wine is indeed seeing prices drop. There have been some great deals to be had in the past few years in certain corners, both big and small. Costco has had increasingly good deals on wine lately and other large retailers are having more and more as well.

         There&#x27;s a lot of price stickiness with wine, with wineries not wanting to lower sticker prices (since price is closely tied to branding and market positioning), so there&#x27;s also been this fascinating trend of wine increasingly being bulked out to online retailers that operate on a rotating flash sale model (companies like Last Bottle or Wine Access), or to third parties who relabel it and sell it under an NDA on the original brand. These segments of the market are only going to continue to grow in the coming years as the glut of wine continues.

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