U.S. Market Flooded by Cheap Bulk Wine

The Press Democrat, my local newspaper, had an interesting article on the wine industry this morning.  The first paragraph read, "California wine shipments dropped in 2009 for the first time in 16 years as major U. S. wine companies looked overseas for the cheap wines that cash-strapped consumers increasingly crave."

Wines selling below $7 a bottle are experiencing a surge in demand while higher-end wines are seeing decreased sales, and demand has dropped sharply for the most expensive wines.  Jon Fredrikson, a wine industry analyst, commented, "It was ugly.  Many people I have talked to said it was the worst year in their history.  For small and medium-sized wineries, the year was brutal, as consumers shunned higher-priced wines."

Even though shipments from California decreased in 2009, U.S. wine consumption increased overall.  Market share has shifted from higher-priced wines to boxed wine and lower-priced wine.  Wine shipments have also increased substantially to Asia, especially to China and Southeast Asia.

Bulk wine shipments from overseas -- that turn into lower-priced wine and boxed wine -- have soared.  The largest U.S. wineries have been able to capitalize on the "trading-down" phenomenon by tapping into the globalized supply of cheap wine.  The amount of imported bulk wine increased 87% from 2008 to 2009.  Most of this wine was then bottled in the U.S. and sold as either boxed wine or 750 ml. bottles priced from $3.99 to $6.99.

Many traditional wineries thought that bulk wines couldn't compete, but the improving quality of these bulk wines is changing consumers' ideas about how much they need to spend to get a decent bottle of wine.  This trend of U.S. wineries outsourcing wine had been growing steadily in the past 10 years, but it exploded in 2009.

Occasionally, I'll try a bottle or two of the wine that normally sells for under $7 a bottle.  Some of it is surprisingly good IMO, especially for use as weekday table wine.  For example, I found the 2009 Mendoza Station Sauvignon Blanc ($6.99 at Total Wine, as discussed previously) to be very good.  And IMO the 2007 La Vieille Ferme "Cotes du Ventoux" Rouge (Cotes du Rhone) is a very good to excellent wine that happens to sell for under $7 (see prior post).

I've found most of the brands under $7, however, tend to be flat, one-dimensional, and lacking in structure or character.  But you only need to find one decent red wine and one decent white wine to use as regular table wines.