A recent study, commissioned by Italian wine producer Marchesi de’ Frescobaldi, revealed interesting differences between Italian and U.S. wine consumers. It seems that Italian wine drinkers are more focused on quality and thus, continue to buy wine at the same quality levels as previously during this economic downturn. However, they are buying fewer bottles.

Conversely, according to a Nielsen Group study, Americans are drinking in the same quantities, but have adjusted the price point of their purchases. Accordingly, if one used to buy wine in the $15-$20 range, that same consumer is likely now buying wines in the $10-$15 price bracket.

These studies and the comparisons drawn across them serve as an interesting barometer for wine sales during this economic crisis. As the U.S. is poised to become the largest wine market, retailers that offer a wide range of wines at lower price points should fare well.

However, a report from Rabobank indicates that consumers who are trading down in their preferences will possibly maintain their purchasing at the lower level for a long time. Therefore, the long term prognosis for higher end wines (above $15.00) does not bode well.

Concurrent with this news is the rumor that Costco will be changing its policy to limit its new wine purchases to 90+ point wines which retail for $15 or under. If the rumor is valid, Costco should be well positioned to sell wine both in the current and future economic environments.

Fellow Examiner, Dennis Schaefer (Kansas City Wine Examiner), who lives in a state where it is legal to purchase wine in a supermarket, is very alarmed about this potential new policy, fearing homogenization . Similar concern was voiced in New York when the issue of selling wine in NY State grocery stores was up for a vote. However, I am not convinced that this doomsday prediction will come to fruition in the way people envision. For example, Dennis suggests that certain wines will be excluded by this approach such as Vinho Verde. Yet, there are certainly Vinho Verde wines on the market that have indeed achieved good scores and fit within the price band; maybe not as many as Chardonnay, but they do exist. 

Costco has denied the rumor, but, regardless of whether Costco does alter its buying practices, consumer buying habits, with respect to wine ratings and shelf talkers, are likely to continue. Given that the average wine consumer is trading down and many have limited wine knowledge (and frequently, even less confidence in their ability to select wine), the opportunity to buy wines that experts have rated makes them feel more comfortable in buying wine, especially at lower price points (higher prices are often unconsciously thought to be of higher quality). 

While I am not personally a fan of relying on wine scores, I certainly do not condemn people who do, and, especially after my experience in working for a wine importer, recognize the power of high scores to sell wine. Consequently, it would be foolish for retailers not to promote these reviews, especially in larger stores where hand selling is not an option. We may find that wines that do not make the cut (those scoring 80-89) will find a home in smaller wine stores with well-trained sales associates that have the opportunity to tell these wines’ stories.

In any case, the wine industry definitely has its work cut out for them if they want to sell wines above $15.00 for the foreseeable future. Further, if we want consumers to think outside the wine score box, we will need to do a better job in educating them about wine and what quality wine really means beyond simple ratings. Moreover, we need to help them trust their palates and wine preferences. With such progress, we might see less elasticity in U.S. consumers’ wine purchases during the next economic downturn.