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United States Drinks Itself Out of Wine Glut

Posted by perle0 on 2007-01-30 19:02:51 (3550 views)

By consuming a record-setting 300 million cases of wine in 2006, U.S. wine-drinkers have helped to remedy a six-year glut of excessive wine supplies. This return to a more normal equilibrium of supply and demand should be good for wine-makers, but could mean slightly higher prices for wine-drinkers.

Overplanting of vineyards in the 1990's, and the general excessive optimism of California's dot-com boom, lead to over-production of wine grapes. But thanks to those thirsty Americans...and the tearing out of less-successful vines...things are evening out. When wine is no longer over-produced, prices should rise...but only a little.

Wine has become a more global market, so American wine will still have to compete with cheap imports from Australia, Chile, Argentina, and South Africa, not to mention other new wine-growing areas that will undoubtedly emerge. And on the high end, they'll still need to compete with more quality offerings from France, Italy, Germany, Spain, etc. With all that competition, American wine-makers will only be able to raise prices a bit...or their customers will switch to cheaper foreign wines.

One interesting tidbit: Americans aren't just drinking more wine; they're drinking better wine. Sales of bottles costing more than $15 rose 27% in 2006. And the only category of wine to decrease in amount sold last year was the ultra-cheap variety, costing under $3. Hoboes and college students will need to pick it up, or--*GASP*--next thing you know, Boone's Farm and Night Train will have to go upscale to survive. ("Waiter! There's a bit of cork in my 2010 MD20/20 meritage.")

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