How Much Will You Spend on a Bottle of Wine? Americans Now Say $21.
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How Much Will You Spend on a Bottle of Wine? Americans Now Say $21.

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Thu, Jan 19, 2023 9:00amGrey Clock 2 min

Americans may be feeling financially constrained these days. And they may also be drinking less, as exemplified by the booming Dry January movement.

But that’s not stopping them from spending $21 on a bottle of wine.

That’s the price that has emerged as the consumer “sweet spot,” according to a new survey of more than 1,000 wine-industry professionals. And the figure is higher than a year ago, when the same survey, done by the wine-promotion company Colangelo & Partners and research firm Wine Opinions, found that $20 was the hot price tag.

To be clear, wines priced $10 and under—the so-called “jug” or “popular premium” categories—still account for the bulk of U.S. wine purchases. But a growing number of consumers are trading up—and that’s where the $21 “sweet spot” figure comes into play.

“It’s where the industry sees the most excitement and enthusiasm,” said Juliana Colangelo of Colangelo & Partners.

Wine professionals point to a variety of factors that explain why consumers are willing to spend $21 for a bottle.

For starters, many Americans have become more sophisticated about wine and can talk knowingly of a range of varietals and styles in a way that was unheard of a generation ago. And with that level of sophistication comes that desire to trade up, wine pros say.

“They want to expand their horizons,” said Leo Le, beverage director of Momoya Soho, a New York City restaurant.

Adam Levy, who organises wine competitions in cities across the world and heads up the Alcohol Professor website, said that he believes people are entertaining more at home, given the Covid-era hesitancy about eating at restaurants. And when they entertain, they’re willing to spend a little more, he explained, especially given that prices for bottles are still much lower at retailers versus restaurants.

Levy also said that wine prices have generally been increasing, due to supply-chain issues and other factors, so consumers who want to drink better will have to pay more by extension. “There’s so much pressure on wine producers,” he said.

Finally, Colangelo makes the point that natural wines have become very popular, especially with younger consumers. These wines are typically more expensive, so it stands to reason that the pricing “sweet spot” will go higher over time.

“You don’t really get a naturally produced wine for less than $20,” she said.



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Why Prices of the World’s Most Expensive Handbags Keep Rising

Designers are charging more for their most recognisable bags to maintain the appearance of exclusivity as the industry balloons

By CAROL RYAN
Tue, Mar 5, 2024 3 min

The price of a basic Hermès Birkin handbag has jumped $1,000. This first-world problem for fashionistas is a sign that luxury brands are playing harder to get with their most sought-after products.

Hermès recently raised the cost of a basic Birkin 25-centimeter handbag in its U.S. stores by 10% to $11,400 before sales tax, according to data from luxury handbag forum PurseBop. Rarer Birkins made with exotic skins such as crocodile have jumped more than 20%. The Paris brand says it only increases prices to offset higher manufacturing costs, but this year’s increase is its largest in at least a decade.

The brand may feel under pressure to defend its reputation as the maker of the world’s most expensive handbags. The “Birkin premium”—the price difference between the Hermès bag and its closest competitor , the Chanel Classic Flap in medium—shrank from 70% in 2019 to 2% last year, according to PurseBop founder Monika Arora. Privately owned Chanel has jacked up the price of its most popular handbag by 75% since before the pandemic.

Eye-watering price increases on luxury brands’ benchmark products are a wider trend. Prada ’s Galleria bag will set shoppers back a cool $4,600—85% more than in 2019, according to the Wayback Machine internet archive. Christian Dior ’s Lady Dior bag and the Louis Vuitton Neverfull are both 45% more expensive, PurseBop data show.

With the U.S. consumer-price index up a fifth since 2019, luxury brands do need to offset higher wage and materials costs. But the inflation-beating increases are also a way to manage the challenge presented by their own success: how to maintain an aura of exclusivity at the same time as strong sales.

Luxury brands have grown enormously in recent years, helped by the Covid-19 lockdowns, when consumers had fewer outlets for spending. LVMH ’s fashion and leather goods division alone has almost doubled in size since 2019, with €42.2 billion in sales last year, equivalent to $45.8 billion at current exchange rates. Gucci, Chanel and Hermès all make more than $10 billion in sales a year. One way to avoid overexposure is to sell fewer items at much higher prices.

Many aspirational shoppers can no longer afford the handbags, but luxury brands can’t risk alienating them altogether. This may explain why labels such as Hermès and Prada have launched makeup lines and Gucci’s owner Kering is pushing deeper into eyewear. These cheaper categories can be a kind of consolation prize. They can also be sold in the tens of millions without saturating the market.

“Cosmetics are invisible—unless you catch someone applying lipstick and see the logo, you can’t tell the brand,” says Luca Solca, luxury analyst at Bernstein.

Most of the luxury industry’s growth in 2024 will come from price increases. Sales are expected to rise by 7% this year, according to Bernstein estimates, even as brands only sell 1% to 2% more stuff.

Limiting volume growth this way only works if a brand is so popular that shoppers won’t balk at climbing prices and defect to another label. Some companies may have pushed prices beyond what consumers think they are worth. Sales of Prada’s handbags rose a meagre 1% in its last quarter and the group’s cheaper sister label Miu Miu is growing faster.

Ramping up prices can invite unflattering comparisons. At more than $2,000, Burberry ’s small Lola bag is around 40% more expensive today than it was a few years ago. Luxury shoppers may decide that tried and tested styles such as Louis Vuitton’s Neverfull bag, which is now a little cheaper than the Burberry bag, are a better buy—especially as Louis Vuitton bags hold their value better in the resale market.

Aggressive price increases can also drive shoppers to secondhand websites. If a barely used Prada Galleria bag in excellent condition can be picked up for $1,500 on luxury resale website The Real Real, it is less appealing to pay three times that amount for the bag brand new.

The strategy won’t help everyone, but for the best luxury brands, stretching the price spectrum can keep the risks of growth in check.

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