New forecast says American wine prices are going up in 2012 - NBC Right Now/KNDO/KNDU Tri-Cities, Yakima, WA |

RICHLAND, Wash. -- U.S. consumers are going to be faced with a choice this year: pay more for a bottle of domestic wine, settle for lower quality, or buy cheaper imports, the Silicon Valley Bank forecast on Tuesday.

Great weather, and wine are two of the biggest reasons people visit Eastern Washington, but wine-makers are not toasting  our last few winters and cooler summers.

"We're not getting the yields of quality grapes, and the farmers are having to charge higher prices for the grapes they are getting," says Marcella Henson, the operations manager at J. Bookwalter Winery in Richland.

SVB, a commercial banker to the wine industry, said in its latest "Annual State of the Wine Industry Report" that it expects vintners to raise prices as the supply of grapes declines and evolves "into a state of shortage that will last for some time domestically."

"We hope you stocked up on a few cases because reality is knocking at your cellar door ... inventories are now starting to run to the short end of the scale, and bottle prices will start to increase in 2012," the report said.

"I don't see this having much of an impact on Washington. We are not yet in a position of shortage of grapes for the demand that we have," says the Spokesperson for the Washington State Wine Commission Ryan Pennington.

But a shortage of grapes in California could mean Washington and Oregon grapes would be used for their mass production. locally, businesses have had to raise their prices as well.

"The impact is not outrageous, you're probably looking at anywhere from two dollars to five dollars a bottle," says Henson of what she's seen in the past years.

Pennington says demand controls prices the most but other factors play a role.  "Cost of production, not only grapes, but glass and barrels, and transportation are continually inching up."

"The wine makers are having smaller production so less bottles made and with less bottles made that does also translate into having to charge a little more," says Henson.

Prices for California wines will be the first to rise, followed by wine from Oregon and Washington State, according to the report.

SVB has also cooled on European wines. It forecasts that prices for European wines, especially those from Spain and Portugal, should decline.

While SVB predicts 2012 sales growth for the industry at 7 percent to 11 percent, a slight drop from 2011, it also foresees declining "wine quality for the price paid, pushing consumers to decide if they are willing to drink lesser quality domestic wines, or pay higher prices, or find foreign substitutes."

Pennington says our state's sales have remained healthy even throughout the recession. Despite price increases for some  he says they've still seen an increase in sales anywhere from seven to ten percent this year.