(CNBC)
Say goodbye to snagging fine wine at a value price.
As demand increases and inventories experience an extended shortage, consumers will have to choose between paying more, trading down or buying foreign imports, according to a wine industry report.
Silicon Valley Bank, which provides the wine industry with commercial banking services, predicts the fine wine business will see sales growth of 7 to 11 percent this year amid a looming grape shortage.
“I think the consumer for the past five years has been used to getting really fine quality wines at a good price,” said Rob McMillan, founder of the bank’s wine division. “But as the balance evens out, you can’t expect the producer to sell at a loss, which is really what they were doing.”
Although wines sales grew most for lower-priced wines during the recession , sales in the $20-plus category rose the most last year as consumers began to trade up to pricier wines, according to IBISWorld. Changing tastes and wine’s perceived health benefits are helping to fuel the surge in demand for wine.
While McMillan predicts that bottle prices will start to increase in 2012, he does not think they will jump to pre-recession price tags.
“The consumer now has to decide whether they like a better quality wine or they like a cheaper price,” he said. “That’s going to feel like whiplash to the consumer.”
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