Just to get you off to the right start, how about hearing what’s happening in Australia that would be great here? The headlines read: Wine Cheaper than Coke and Water! Doesn’t that sound great? And it’s actually true. Woolworths (one of only two major chain supermarkets and liquor chains there) is selling unlabeled wines (only variety and appellation are in small print on the neck band) for $1.99. It has a Two-buck Chuck also!
The real part of the story is the ungodly price of water and Coke. At that same supermarket, water was selling for $2.25 for a 750 mL bottle and Coke was $3.84 for the same size. In a restaurant, a house wine will be $3.50, water $4 and Coke $4.50. Don’t blame it on a lower valued dollar either, since we’re now very close to parity and it’s not nearly as much fun shopping as it used to be. Alcohol can only be bought in liquor stores, so that limits competition also.
Why this is happening is no different than conditions here at home. A very simple fact of basic economics: supply and demand. There are too many grapes and not enough drinkers. With numbers for the 2009 harvest becoming available, our biggest fear may come true with a larger harvest than we needed. Price-per-ton numbers aren’t yet available (as of this writing), but they won’t be real anyway. They’ll be artificially high because of the way they’re calculated. Tons crushed are divided into total dollars paid to get the average price—but the catch is that unpicked fruit is not included. It’s like having 100 apples, selling 10 for $10, and getting an average price of $1 when, in reality, it’d only be $0.10 because you had to eat 90 of them.
So, when you hear Cabernet Sauvignon sold for $3,000 per ton, that’s great if you’re the lucky one to sell it. Average price, therefore, doesn’t give any true indication of the industry’s condition. Growers who had their fruit custom crushed add another layer of confusion to the true price. Having your fruit crushed and then praying you can sell it on the bulk market is risky, but probably better than letting it rot on the vine. It’s kind of like gambling. You’re hoping the market will strengthen over the next few months so you won’t have to sell your wine to Bronco for Two-buck Chuck. That could get you $1 per gallon or less, which doesn’t pay any bills. (Figure about 160 gallons per ton, times the price per gallon, less about $250 for winemaking to get your equivalent price per ton.)
Another alternative is to have it finished and bottled with your own label. Then the fun will really start. If you think it’s hard to grow grapes or make wine, don’t even begin to think about trying to sell it, especially in this economic climate (let alone in better times). After the first 20 “Thanks, but no thanks—and don’t let the door hit you in the butt on the way out,” you’re completely shot down and have a very badly damaged ego. Don’t these damn buyers have any heart? You probably could always join the ranks of the $3.99 specials that appear every other day at Trader Joe’s.
I guess what I’m finally saying is the entire industry is in tough straits right now and, as you can see in my opening paragraph, it’s not just right here—it’s worldwide. Looking at just the United States, probably the only healthy segment of the industry are the other 49 states besides California, where they sell and drink all they make right at home. Probably a good thing, since they couldn’t sell them anyplace else. I’m not trying to be derogatory, but wines from Kansas, Iowa, Oklahoma and so forth don’t exactly satisfy the Californian or European palate (and that’s putting it mildly).
By the time you read this, some of the questions posed might be answered, but I don’t see any silver lining. The few wineries that have loyal followings and sell most of their products through tasting rooms and wine clubs will be OK. Others will get a tough lesson in marketing.
The word in the field from local retailers is that deals are getting better and better as wineries try to unload inventory by offering deep discounts, free cases and so on. Are they passing those bargains on their customers? I guess you need to find out for yourself. I still also suggest that you keep trying those new “I’ve never heard of them” labels, since you might find a few relabeled gems in the mix. Relabeling is one way to unload wine at a lower price without damaging your primary image. It’s easier to lower prices than to raise them when things get better.
Those two words, “get better,” could probably be up for discussion also. Will consumers resume buying high-priced wines when things get better? Or have they figured out there are some really good affordable wines? It’s been shown a few times in wine tastings that if price is unknown, less expensive wines are voted better. Tasting the same wines with the prices known, the higher priced ones are voted better. I guess that’s considered psychology in marketing. But the good, less-expensive wines bode well for Lodi and the Central Coast producers. Napa and Sonoma may be on a slower track to recovery and might even have to retrain themselves to sell to the younger generations.
I always think about the story where a local tasting room was very crowded with a group of us older, serious tasters, who think it has to be quiet to fully enjoy the total experience, and a younger group who were loud and really enjoying themselves. Which group do you cater to? Think about it the next time you’re on a field trip doing your homework. Which reminds me, why do you have to be quiet for a golfer when the ball is just sitting there, while a baseball player has to hit a ball coming 90 mph at his head with 50,000 people screaming? Are golfers just wimpy? Or are they the serious tasters? Just thought I’d ask.
