Wine industry reports that sales of more expensive wines are booming

Modern Brewery Age, May 30, 2005

AP--U.S. wine drinkers are developing more extravagant tastes. Wines priced $11 and higher are selling much more strongly than others, according to the marketing information company ACNielsen.

Sales of those wines have risen by 19 percent from last year, said Danny Brager, vice president of ACNielsen's alcohol beverage team. Research shows that a 6 percent increase in sales of wine costing $7 to $11 and a gain of 1.4 percent for wines costing less than $7.

He said there is excitement in the industry about new wines, new packaging and new contemporary-looking labels.

"Along with the economy improving over the last couple of years, it's helping to move the price up that consumers are willing to pay," Brager said.

When it comes to wine sales, it is impossible to dismiss the impact of the movie "Sideways," about two buddies on a road trip through California wine country. The movie appears to have boosted pinot noir sales in particular.

Pinot noir sales jumped 55 percent in the first three months of the year, according to ACNielsen. It tends to be a more expensive varietal, which may be helping to drive the growth in expensive wines, Brager said.

The movie was like an ad campaign for the wine industry, said Jon Fredrikson, an industry consultant based in California's Bay area. Wine makers spend relatively little on advertising compared with the beer and liquor industries, he said.

Consumers have been moving upscale in general, Fredrikson said, "but of late, it seems to be accelerating."

Merlot's growth has slowed, but it remains the second most popular variety behind chardonnay, according to ACNielsen. Other varieties--pinot noir, syrah and shiraz and pinot gris--grew by double digits over the past year.

Enthusiasm for better wines goes beyond learning more or advertising, said Paul Dolan, owner of Mendocino Wine Co. in Ukiah, California. Some wineries are discounting their $25 bottles of wine, Dolan said. "People look and say, 'This was $27 and now it's $17; that looks pretty good,"' Dolan said.

Wineries also see potential to boost sales in a Supreme Court ruling this month that paves the way for more direct wine shipments to consumers.