Why did wine coolers go away?

Answered by Robert Flynn

The decline of wine coolers can be attributed to various factors, but one of the primary reasons is the increase in taxes imposed on wine in the early 1990s. This sudden spike in excise tax had a significant impact on the wine industry, making wine blending a less profitable business. As a result, many wine producers shifted their focus towards creating alternative beverages, which eventually led to the rise of malternative beverages.

In order to better understand the situation, let’s delve into the details surrounding the tax increase on wine. On New Year’s Day in 1991, Congress decided to more than quintuple the excise tax on wine, raising it from a mere $0.17 per gallon to a staggering $1.07 per gallon. This sudden and substantial increase in taxes had a profound effect on the wine industry, forcing many wine producers to reevaluate their business strategies.

Prior to the tax hike, wine coolers were a popular choice among consumers. These refreshing, low-alcohol beverages, often made by blending wine with fruit flavors, gained significant popularity in the 1980s. However, with the increase in taxes, the profit margin on wine blending diminished significantly, making it less financially viable for producers to continue making wine coolers.

The higher taxes on wine essentially made it more expensive to produce wine coolers, forcing wine producers to explore alternative options. This led to the creation of malternative beverages, which are essentially alcoholic beverages made by blending spirits with various flavors. These new products offered a more cost-effective and profitable alternative to wine coolers, as they were not subject to the same high taxes as wine.

The rise of malternative beverages marked a shift in consumer preferences and tastes. These new products, such as flavored malt beverages and alcopops, gained popularity among younger consumers who were looking for trendy and flavorful alcoholic options. The lower taxes on these beverages made them more affordable and appealing to both producers and consumers alike.

Additionally, the decline of wine coolers can also be attributed to changing consumer preferences and the emergence of new trends in the alcoholic beverage industry. As the 1990s progressed, there was a growing interest in craft beers, spirits, and other innovative alcoholic beverages. This diversification of options further contributed to the decline in demand for wine coolers.

The decline of wine coolers can be primarily attributed to the significant increase in taxes on wine in the early 1990s. This tax hike made wine blending less profitable for producers, leading to the rise of malternative beverages as a more cost-effective and appealing alternative. Changing consumer preferences and the emergence of new trends in the alcoholic beverage industry also played a role in the decline of wine coolers.