Wine Prices Stay Relatively Low Because Of Sluggish Economy

* Volume seen rising 3.5 pct to 4 pct this year

* Company launching new-flavored Svedka vodka

* Shares down 2.6 pct, market down 1.2 pct (Adds quotes, background, bullet points)

By Martinne Geller

NEW YORK, May 4 (Reuters) - The U.S. economy remains too delicate for Constellation Brands Inc to lead any attempt to raise wine prices, even as a smaller harvest is expected to make grapes more expensive, a senior executive said on Friday.

As a result, the world's largest maker of branded wine, with names like Robert Mondavi and Ravenswood, does not expect to raise prices this year -- unless other producers do so first.

"We're not going to lead the charge," said Constellation Brands Chief Financial Officer Bob Ryder in an interview.

Ryder said Constellation was paying close attention to what competitors were doing about prices, but said that as of yet, it was hard to see any big price increases this year. That could squeeze margins for the whole industry.

The latest evidence of how fragile the U.S. economic recovery is came Friday when the April employment report showed that the pace of hiring slowed.

Still, Ryder said consumers could see fewer discounts or promotions on wines as producers seek to offset expected increases in grape prices due to the smaller harvest.

While Constellation owns some vineyards, particularly in California's Napa and Sonoma regions, the vast majority of the wine it makes comes from purchased grapes.

Wine volume for the industry should grow about 3.5 percent to 4 percent this year, and Constellation expects to keep up that pace, Ryder said. He added though that more expensive wines are selling more swiftly than cheaper bottles.

Silicon Valley Bank, a banker to the wine industry, said last month that it expected vintners to raise prices as the supply of grapes declines.

Constellation last month forecast earnings for the fiscal year that were below Wall Street estimates as it spends more to market new products.

As opposed to growing primarily through acquisitions, as Constellation had done in the past, Ryder said the upstate New York-based company was now focusing inward on driving its own profitable growth organically.

In addition to new wines like Simply Naked and Primal Roots, Constellation is launching more flavors of its Svedka vodka, Ryder said.

Constellation shares were down 58 cents, or 2.6 percent, at $21.13 in morning trade on the New York Stock Exchange, slightly underperforming the wider market, which was down 1.2 percent. (Editing by Gerald E. McCormick and Leslie Gevirtz)

Comments

[HoosierBoy1986]

03:56 PM on 06/27/2012

There are also some great websites like MyWineDeal.com, Lot18.com and WTSO.com. These sites are helping people find cheaper wine delivered to their doorsteps.

[JackAS12]

10:30 PM on 06/16/2012

Love those in expensive California wines. Wine a wonderful juice.

[PristineInPink]

09:43 PM on 06/09/2012

This reminds me of a funny t-shirt about wine tastings and hash tags
http://bit.ly/KWCoGe

[madcityy]

12:30 PM on 05/06/2012

I DONT DRINK NO MORE,,SOOOOOOOOO?? I DUNT CARE.................THEY DIDNT CARE ABOUT ME WHEN I DID............

THE WEAK WILL BE GONE................UNLESS MR O AND MR JO BAIL THEM OUT............

[Lindytindy]

11:41 AM on 05/06/2012

That is one thing California has going for it, really good wine at reasonable prices. Otherwise we're broke and busy watching our state turn into a mixture of the National Socialist Republic of Silicon Valley and the Hunger Games. A dystopian mix of vulture capitalists and the permanently unemployed. The rest of us who can afford to do it are drinking lots of wine. We would smoke dope too but Obama is too busy destroying dope plants and arresting sick people using medical marijuana.

[AlohafromMrHand]

06:30 PM on 05/05/2012

U.S. job growth slowed again in April and more Americans dropped out of the work force, a fresh sign that the economy could be settling into a sluggish spring."

The US isn't settling into a sluggish spring. That implies it wasn't sluggish in winter, fall, summer, or the previous spring. It has never stopped being sluggish. A more accurate statement is that the US has long ago settled into a sluggish future.

[janmB]

07:35 AM on 05/06/2012

Seeing the big picture: 1. For three decades the American economy has been growing, but almost all the gains from that growth have been going to the very top. 2. All the income and wealth at the top has translated into political power. 3. This political power has been used to reduced taxes on the top and get corporate welfare for big businesses. 4. Because so much income and wealth have gone to the top the vast middle class no longer has the purchasing power to keep the economy going. 5. Because most people’s wages have gone nowhere, and tax rates on top earners have dropped, tax revenues to fund government have plummeted.” Robert Reich
( I'll put it more succinctly. IF the Republicans gain control of the government again, this nation will not survive as we know it. We will become a true third world nation. )

[AlohafromMrHand]

09:03 AM on 05/06/2012

Quoting Robert Reich ? --- Thanks I needed a good laugh

[Lindytindy]

11:44 AM on 05/06/2012

Right up until the last partisan delusion, that the Democrats will do anything differently. If Obama gets re-elected the result will be the same, permanent economic collapse, which is perhaps the only way any real change can happen. Since Obama has done nothing but push Bush policies, until recently to get elected he pretends to want to reverse some of those, I don't see how electing him again will produce any different result than what we've already seen. Rule by Wall Street.

[TxHeifer]

02:11 PM on 05/05/2012

I'll stick to 'Two Buck Chuck' (now $3) from Charles Shaw sold at Trader Joe's.

[dropthedh]

03:35 PM on 05/08/2012

I second that! I stopped buying wine at my local liquor stores because of Trader Joe's.