Another credit crisis victim: wine prices

By Leslie Gevirtz

NEW YORK (Reuters Life!) - The subprime mortgage crisis may be pushing housing prices down but it could soon have the opposite effect on Chardonnay, Chianti or Shiraz.

Concerns about the economy, lower interest rates, rising oil prices and a weak dollar are expected to push the price of wine higher by the end of the year.

Jim Galtieri, head of Pasternak Wine Importers, described the combination of economic events as a perfect storm and said we are all wearing foul weather gear.

"The dollar is weak and the prognosis is that it is not only going to stay weak, but get weaker when interest rates fall as they are doing now," he said in an interview.

"As an importer, we don't gamble on our currency. We hedge six months at a time. Last year, when I was buying for January to the end of June, I was locking in the Euro at $1.20. It's now $1.45," he said.

"The difference is 18.8 percent. That's a 19 percent difference without any costs raising prices from my suppliers."

Kurt Eckert, director of fine wine for importer Frederick Wildman & Sons supported Galtieri's comments when asked what his company plans.

"It's simple. We're raising our prices. We held the line as long as we could. For the last 18 months, as the dollar has declined, we've watched our margins shrink. To stay in business we have to restore our margins," he said.