According to this article in favor of cheap wine from Slate:
Americans' … annual consumption is around one bottle per month (PDF) per capita—but perhaps they would if the industry hadn’t taught them that truly affordable wine isn’t worth drinking. The evidence is right across the Atlantic: In Europe, consumption is 3-to-6 times higher than in the United States. But only the most affluent would spend 11 euros to drink a bottle of wine at home on a Wednesday night. Europeans seem perfectly comfortable cracking open a 1-euro tetra-pak of wine for guests. Germans, for example, pay just $1.79 on average for a bottle of wine.
Not long ago, American wine-buying habits were very similar to the Germans’. In 1995, 59 percent of the wine purchased in the United States sold for less than $3 per bottle. By 2006, controlling for inflation, that share had dropped to 29 percent. Wines over $14 per bottle more than quadrupled their share of the market during the same period. Looking at raw consumption rather than market share, sales of over-$14 wine increased sevenfold. Sales of wines that cost less than $3 per bottle actually declined 28 percent, during a period when overall wine consumption was rapidly increasing.
The pretty stunning figure of $1.79 per bottle comes from the linked report here, which is a pretty interesting analysis of German wine-buying habits, although it'S from 2007. Here's the relevant passage:
Despite the increasing sales of premium quality wines, Germany still is a market with a low average price of €1.77 (US$2.38) per litre in the off-trade in 2006. This is due mainly to the fact that the discount chains, which sell more than half of the total volume, move over 77% of their portfolio at below €1.99 (US$2.68) per bottle. When looking at all trade channels other than direct sales, the category under €2 a bottle has a 74.7% market share.
Yep, it must be the discounters, all right. In their scuffed and dingy aisles, you can find cardboard cartons of wine from all over the world for 1-2€ per bottle. And if you try enough bottles, you can often find something relatively drinkable. I remember Netto had a line of €1.50 Argentine cabernet that that was not half bad. Right now, my source of cheap tipple is my man Werner März, of the Natürlich Natürlich organic food store at Brunnenstr. 32 in Düsseldorf. In addition to plenty of other organic treats, he sells Vida Feliz organic wine from Spain. The absurdly low price of €3 per liter can't be beat, and the stuff is thoroughly drinkable. Since it's organic, you never know exactly what you'll get, which I find a feature, not a bug. But it's usually a simple, ripe, fruity red. Plus, you often actually see lees at the bottom of the bottle!