Cheap Wine Chic

Oenophiles aren't drinking less wine, at least not yet, and in fact many of them are drinking more. But they're spending far less for it.

"People have money but they're afraid about the future," Paul Hayashi told Bloomberg News. Hayashi, a Napa Valley wine salesman whose products sell for between $30 and $135 a bottle, could have been talking about the economy as a whole, where the loss of courage has, so far, been far greater than the loss of wealth. But he was talking in particular about true wine aficionados—the kinds of people who have hundreds or even thousands of bottles in their private cellars, but who, until recently, were always on the lookout for more.

These days, they're drawing down from their stock, and when they do buy, they're going downscale.

Boutique wineries, which depend more on higher prices for their profits, are hurt the most. Their costs—for everything from corks to fertilizer—are up. Traffic in their tasting rooms, which many of them rely on for the bulk of their sales, is way down. And since many of their wines are sold in increasingly empty restaurants, the situation is that much worse. About half of high priced wines are sold in restaurants, and when people do decide to eat out, they are increasingly buying wines by the glass rather than the bottle.

That's good for the restaurants themselves—sales by the glass carry much bigger margins—and one New York restaurateur says wine revenue is up by about 15 percent in the past two months. But it's not so good for the wineries.

The online retailer Wine.com reports that its average selling price has fallen by nearly a fifth over the past year to $24.50. Volume-wise, though, sales are up by 11 percent, suggesting that wine lovers are drowning their sorrows with the cheaper stuff.

It will be interesting to see whether average selling prices increase again once the recession passes. Price and quality have a tenuous relationship when it comes to wine, and it could be that many people will discover that they'd been overpaying all along, and that great wines can be had for as little as $15 to $20 a bottle. Bloomberg notes that sales of wine rated at 91 on a 100-point scale were up by 44 percent by volume in September, while the average price fell by 27 percent.