Demand for high-end wines leaves room for under-$10 category to increase prices

Demand for high-end wines leaves room for under-$10 category to increase prices

Source: “Wine Pricing…No Longer Sour Grapes?” from RBC Capital Markets

 

Quick takeaways (lots more in full analyst report):

 

• When a consumer chooses to purchase wine that retails for more than $40, they are no longer buying that product as a consumer staple but rather as a lifestyle choice—and the same consumer who is able to afford and willing to pay more than $40 for a product has shown willingness to pay as much as $100 and above given that dynamic.

• Wine category dollar sales have grown 6.2% over the past year according to Nielsen (~300 bps faster than the average CPG category).

• This big trade-up on the high-end has provided room for sub-$10 brands to begin increasing price. And ultimately, pricing will directly result in margin progression.