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supermarket winesWine economist Mike Veseth reports that sales of higher-priced wine are increasing.

Last week I wrote about the unexpected state of the U.S. wine market today, where sales of wines above about $9 are strong and growing while the below $9 segments are stagnant or in decline. Thinking back to the dismal state of the wine market a few years ago, with trading down and heavy discounting, the current situation comes as a big surprise.

What accounts for the transformation of the U.S. wine market?

Mike entertains a variety of theories and is skeptical that any of them fully explain the numbers. Millennials may be spending more per bottle but they were never large drivers of the market to begin with. Wine at the lower end may be deteriorating in  quality discouraging consumers from buying it but there  is no conclusive evidence of that. The theory he seems to prefer is that wine producers are devoting more attention to branding thus attracting loyal customers who are willing to pay more for their favorite brands.

Not being an economist I will leave the economics to Mike. I have no idea what’s going on. I will say that if you’re buying wine of the bottom shelf in the supermarket, there is lots of very ordinary wine there—not bad just ordinary. With the availability of craft beer (and phony craft beer) in the supermarket competing at the price level of cheap wine, it wouldn’t surprise me if some consumers are making other choices. But that wouldn’t explain why sales of wines above $10 are increasing.

So let me throw out another hypothesis. As America’s food revolution and our interest in taste deepens, more people are able to tell the difference between quality levels and are deciding its worth a few extra dollars to get something they will really enjoy.  That’s an optimistic hypothesis but today I’m having one of my optimistic days. Enjoy it while it lasts.

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