I'd like to take this opportunity to weigh in on the question of price increases in wine. In a recent opinion published in Harpers, Brian Howard says the following:
Yet has the consumer stopped buying these essentials and everyday pleasures? No, consumers are spending to maintain their food lifestyles, and maybe cutting down on DIY, furniture and white goods. The issue of what the UK consumer does about wine price increases turns on whether wine is considered one of the essential grocery items.
Our evidence suggests the industry should press ahead with moderate and hard-fought price increases and consumers will follow –or still buy from elsewhere in the supplier’s range. Suppliers should also face up to the counter-claim that listings will be lost or consumers will stop buying. The only reason that consumers would actually stop buying is if their favoured wine were no longer on the shelf at any price.
I couldn't agree more with the above sentiment, but I'll take it further.
I believe that many wine marketers have a sense that consumers' concept of price and value are inextricably linked. That the collective willingness to pay is communicated between consumers in a particular market at light speed and with great accuracy. Any attempt to alter a product's price point will be met with not only customer resistance, but with a loss of goodwill and perhaps the end of the world as we know it.
We frequently see the phenomenon of wines of similar quality and market readiness content to sit a very different price points for no reason other than the assumption on the part of the brand manager that this is what the market demands and moreover, this is all that the market will accept. 
I reject this philosophy as a reactionary stance based in largely in fear. The signals which indicate the value proposition of a wine are sent to consumers as clearly through the shelf tag as through the label. We often forget that price is one of the most important choices we make as a part of marketing strategy, where often it is treated as the natural consequence of the other choices we make. We revert to cost-plus pricing because it's easy.
Take a look at the experience of Kendal Jackson in California; they were able to take a unilateral price increase from (foggy remembrance) $12 to $14 without sacrificing volume. I know it's only one data point, but I think we can extrapolate the following:
For every step toward a conscious price positioning, we take a step toward price inelasticity.
When we within the brand behave as though there is absolute price elasticity, how can we expect our customers to behave any differently?
Googling "wine price elasticity" turned up this post. We looked to see whether mavens of wine were forecasting the snap in demand for a newsletter. Our sense was not. In a recession the forecasts for wine economic topics are positive. Do you still hold to you 2008 comments?
Posted by: Leo McCloskey | October 27, 2009 at 11:50 PM