Inflation and Wine, We’re in This Together. VinoFlation Blows!.

This whole inflation thing blows. Let’s be honest.

Casual, I-don’t-want-to-cook Friday night dinners out have turned into a $50/person investment.  Since when did a basic pasta and a sauce merit a $22 price tag.  And the 250% markup on wine sometimes feels like it’s not a bottle-to-bottle markup…..it’s bottle-to-glass.     Holy heck, that’s painful.

That made me do a little research on high inflation’s impact on wine sales.  It turns out that there is no one-size-fits-all answer to this question, as the impact of high inflation on premium wine consumption can vary depending on a bunch of things, such as the amount of time the economy sits in an inflationary period, just how high inflation gets, consumer preferences, and overall market changes.

akes this weird economic cycle different than other high inflation periods is that many consumers were and are cash and credit flush.  The various pandemic boosts put money in our pockets, and those infusions are still working their way through the system.  Also, especially during the COVID re-opening days, many diners and shoppers were willing to pay a little bit more for everything in sympathy for restaurateurs and store owners, who were perceived to be struggling and having a tough time finding employees.  Economists speculate that for the last year, rather than pulling back on premium wine purchases, we’re just using our new cash to keep buying what we like, even at big markups.

There’s another line of thinking that suggests that ultra-premium, collectible wine becomes a hot commodity for investment purposes, while budget wines see growth as the masses trade downwards.   The bottles that feel the pain are in the $20-$75 range.   If you add all of that up, you can imagine how the impact on wine sales overall might not show up in the aggregate numbers, even when the plusses and minuses are uneven.

That being said, most economists also believe that high inflation, which drags out, starts to pull down wine consumption, premium or otherwise. It’s hard to argue with that because as prices rise across the board for everything you buy,  your cash and credit accounts get tapped out sooner or later.  My guess is that’s coming a lot sooner than later.

If that sounds like you, and you’re feeling the budget pinch, there are a few strategies they we’re going to go deep on different strategies you can use to adapt their habits.  Come back to Wine X Magazine over the next few weeks, and let’s figure this all out together.