It doesn’t look like the economy is ready to right the wine ship. With a few thousand or more tons of fruit left on the vines along the wonderful North Coast, I think we’ve finally realized the higher end of the wine market is not recession proof. When a winery won’t accept fruit at any price, it’s certainly an indication of full tanks and warehouses. Add to that the tremendous deals being offered to distributors, wine shops and restaurants, and it shows just how deep we are.
One large winery recently told its growers that a contract for 20 tons would be honored, but if they brought in so much as one extra ton, it wouldn’t be accepted—even if the grower offered it to them for free. That certainly says to me that the tanks are all full and sales are way off. You’re probably thinking, “Of course the winery will take all the fruit under contract.” But in reality, many winery contracts aren’t worth the paper they’re written on. It’s not uncommon, in times as stressful as these, that wineries will simply say, “Screw you, sue me!”
The wine business has always been slanted toward the winery, but in times of grape shortages—in the not-too-distant past—growers thought they were in the driver’s seat and held up the wineries for a far higher price. They got it many times, but now they’re learning wineries have long memories…and, may I add, rightfully so! Maybe some day (but probably not in my lifetime), wineries and growers will learn a mutual admiration society is needed, since we all have our feet in the same pond.
You can see indicators of how things really are by looking at grapes for sale on craigslist, Wine Country Classifieds and Turrentine Brokerage. The latter will also tell you about the amount of bulk wine for sale. That’s wine left over from past harvests and currently filling a needed tank. One good friend of mine needed a small amount (about 900 gallons) of North Coast, preferably Sonoma or Napa, Cabernet Sauvignon from 2007. He called a well-known wine broker requesting samples and, instead of getting just a few samples, he received five cases. Is that an indication of the wine available? Oh, by the way, he wanted to pay about $13 per gallon and it wasn’t a problem. (That equates to about $1,500 per ton or less after deducting winemaking costs.)
Unfortunately, it’s not entirely our own industry’s fault that these difficult times seem to come and go. Some blame for the oversupply on the marketplace is due to foreign competition. Australia, Chile, France, Spain, South Africa and others gain a foothold in the marketplace by offering a low price and a varying degree of quality. I’ve talked about Australia many times, since I have close ties down under, and it’s the classic example.
Early in the decade, Australia was sending Penfolds and other higher-end wines along with Rosemount, Lindemans and other middle-of-the-road wines. It competed very well as a value-added package. Then Yellow Tail made its appearance on the low end; others soon followed and, suddenly, even before the Aussies saw it coming, it was mired in the bottom-tiered wines. To quote Australian winemaker and critic Jeremy Oliver, “Australia can’t even bottle air and make money selling it at that price. It’s not sustainable for Australia to be trying to produce the world’s cheapest wine; we’re totally unsuited to it.”
Australia also became known for just one variety, that being Shiraz. Aussie Shiraz is still great, and we’ve been unable to match it, quality-wise, in America. It’s been a long learning curve—and I don’t see the top of the hill yet.
Next spring, when the average price is announced for each varietal, everyone will think, “Hey, that’s not bad. What’s the matter with $2,000 per ton (or any other number)?” Well, the problem is the number doesn’t mean crap, because unsold tonnage—at $0 per ton—isn’t figured into the “average.” If you didn’t sell yours, that $2,000 doesn’t make you feel any better. About the only positive side of this is the vineyard management companies that generally get paid regardless of grape price or even if the fruit they nurtured went unsold.
So I guess the big question is, how do we survive the short-term bump so we’ll still be here when high-end wines begin to sell again? That sounds like I’m convinced high-end wines will return, but I’m not going to hold my breath, because a couple of things could happen. First, many economists have said our more thrifty ways of living could be long-lasting, and thus high-end wines will be true luxury items and only bought by the elite. Second, maybe people are discovering less expensive wine is actually quite good after all—and the hell with $30+ wines. (Anybody ever heard me say that price is more a function of availability than quality? If not, you have now.)
In ending, I’d like to mention something I heard recently about wine judgings that I think is true: The quality of wine entered in most judgings is artificially low. Thinking back on my years of experience, I think that’s true, since looking at results, you never really see the supposed high-end wines. Weren’t they entered, or did they get their butts kicked? It’s a well-documented fact that new kids on the block will enter judgings, win a few golds and then stop entering—for fear of getting beat, I suppose. It’s like, “Hey thanks, Mr. Wine Competition. Now that you’ve helped me, you can get lost.” I could make a real good list just from the Sonoma County Harvest Fair on that topic. Someone also suggested some wineries that win gold medals have sent special samples to be judged—not their everyday commercial product. I say anything is possible, and human nature is a funny creature.
Well, by now the judging season is over, so go out and buy all of the medal winners and let me hear your favorites. Also remember: We’ve increased the homework assignment to help us out of this sales slump, so get going!
