Price of US wine to rise

The price of US wine is set to rise this year due to a looming domestic grape shortage, according to commercial banker to the wine industry Silicon Valley Bank.

Californian wine will be the first to rise, followed by wine from Oregon and Washington State, SVB predicts in its latest annual wine report report.

The bank expects vintners to raise prices as the supply of grapes declines into a state of domestic shortage that will last for some time.

“We hope you stocked up on a few cases because reality is knocking at your cellar door.

“Inventories are starting to run to the short end of the scale and bottle prices will start to increase in 2012, while vineyard plantings will increase to deal with the grape shortage,” the report said.

Sales are expected to grow 7-11% in 2012; a slight drop from 2011, the report said.

SVB foresees declining wine quality for the price paid, pushing consumers to decide if they are willing to drink lesser quality domestic wines, or pay higher prices, or find foreign substitutes.

Imports are set to take a larger share of total domestic sales, according to Rob McMillan, founder of Silicon Valley Bank’s wine division.

“The biggest obstacles to growth and profitability for wine businesses over the next few years will be finding supply at the right price and quality,” he said.

The looming grape shortage SVB refers to is more of an issue in California than Washington and Oregon.

Oregon reported a record harvest in 2011, with 41,500 tons of grapes picked, 23,726 of which were Pinot Noir, which accounts for 57% of plantings in the state.

The company has also forecast that prices for European wines, especially those from Spain and Portugal will go down.