No two buck chuck? why don't prices come down?

[madscientist451]

According to media and industry reports, wine consumption is in decline. TV news reports show videos of wine grapes left unharvested and entire vineyards being ripped out to be replaced by other crops. So why don't we see a similar correction in prices? Simple economics 101: excess supply, decreasing demand, prices come down. But wine (and beer) prices always seem to go up, never down. Sure, costs are high, 2 buck chuck wine was 15 years or so ago, but you would think someone would jump in and try to capture market share by offering low prices. The craft beer industry is in a similar situation, lots of production, lots of competition, but sales are somewhat flat or in decline depending what data you look at. Yeah a few breweries like Anchor have closed and also a few smaller producers have shut down as well, but I would have expected to see some kind of price war erupt by now. Yeah, my local brew pub can't lower prices, their fixed costs are increasing but what about the large producers? Is there just price collusion between the big players in the market? Or do they not want to hurt the value of their "brand" by having consumers associate their product with low price? I suppose the good news is that with high prices, cheapskate home brewers like me keep on brewing.

 

[hilljack13]

Just my opinion, but I call it greed. Prices went up during pandemic and never came down. People paid the price then and now companies refuse to "lose" profit. I have seem some prices stay flat, but going down? Nope.

 

[pvtpublic]

The costs associated with production and operation don't go down just because sales decline.

 

[madscientist451]

Update: Aldi doesn't sell wine in my state, (they used to sell the 2 buck chuck wine) but where they do sell it they have a selection of $3.99 wines. So I guess there is a cheapo alternative and $4 isn't bad. The cheapest craft beer six pack is also at Aldi, $7-$8, compared to about $10-$12 at stores that put their prices on line. If they can do it why not others?

 

[mac_1103]

According to media and industry reports, wine consumption is in decline. TV news reports show videos of wine grapes left unharvested and entire vineyards being ripped out to be replaced by other crops. So why don't we see a similar correction in prices? Simple economics 101: excess supply, decreasing demand, prices come down.

They leave the grapes to die and rip out the vineyards in order to reduce supply so that it matches the decreased demand. Expecting someone to intentionally overproduce so that the price of their product doesn't come down seems rather unrealistic.

 

[mac_1103]

If they can do it why not others?

It's not that others can't, it's that they don't need or want to. Kroger owns Harris Teeter, but just about everything costs a little bit more at my local Harris Teeter than it does at my local Kroger. Prices are determined by what the traffic will bear. If consumers are willing to pay more for the same product in a "better" store, why would the people running that store choose to lower their prices and profit margins?