Clearly the return of inflation is a wider topic than just wine, but it seems to me that there are likely to be pretty significant pricing pressures in the next year or so at least. I’m afraid I remain cynical about the official line that inflation is ‘transitory’ in general. It’s clear that inflation is likely to be one of the routes taken to diminish the real value of debt for start…however specifically in the case of wine we have:
- lower yields across many leading wine regions in Europe and other parts of the world in 2021.
- cost inflation from a number of sources, including fuel, labour and raw materials (everything from fertiliser, chemicals to glass and closures for bottles), transport costs
- in the UK at least, Sunak’s stealth tax on most wine duty scheduled for 2023, and the additional import costs direct and indirect resulting from Brexit.
One minor mitigant at present at least has been the £ exchange rate (against Euro in particular) but this can’t be relied upon to be sustained.
How do you see wine prices in 2022/23? Do you think that the traditional price points in supermarkets will crumble? What about fine wine/EP?
I think that margins have already been squeezed for UK retailers, so limited scope to absorb further. I wouldn’t be surprised to see 10% plus increases; the alternative at the lower end is to cut quality even further I suspect but not sure how much more that can happen. Will £8 become the new £6 and £10 the new £8?
At the higher end, what is the price elasticity of demand for fine wine (I’m not talking DRC or Petrus here, where price seems not to matter, but the rungs below that). Will we see a switch in buying towards better ‘value’ regions?
What do you think will happen to prices over the next 2 years or so? Will it affect your buying and drinking habits? I think that even if prices don’t move much in real terms (i.e. wages grow just as fast), there are probably competing pressures on budgets from the likes of fuel and food costs, not to say the ‘money illusion’ and price point effects.
I had thought of doing a poll on people’s views on price changes and impact on their wine buying/drinking, but decided it was too reductive and too many nuances…however would be interested to hear views.