Wine is due for a price hike, especially those cheap supermarket bottles. That’s the word from the International Organization of Vine and Wine, an intergovernmental trade group, which attributes the coming surge to 60 year wine production low in 2017.
The group’s April 2018 report cited a 2017 production of 25 billion liters of wine, a decrease from 26.7 billion in 2016 and 27.6 billion in 2015.
The Director General of the OIV, Jean-Marie Aurand attributed the drop to historic hail storms and frost in the EU which saw a 14.6% drop in production compared to 2016. In Italy, the world’s largest wine producer, production dropped 21% over last year.
Complicating matters were production drops in the New World. Wildfires plagued California wine country in October 2017. South American wine regions were hit by droughts.
Accordingly, the laws of supply and demand are pushing prices up. going up. Wholesale prices of wine have already surged in Europe. Italy experienced a 74% price increase over the previous year, Spain’s sticker prices went up 45%, and France saw an average increase of 10% according to European Commission stats reported by CNNMoney.
However, the brunt of the issue will be weathered by lower end wines. These brands operate with the lowest margins on their product. (Obviously, if you’re selling a $10 bottle, there’s not too much profit involved.) Consequently, a price correction appears imminent for the category.