There is no Simple Solution!

Two days ago, I received my copy of the November 15th issue of Wine Spectator – Rich and Powerful Cabernets. Before dinner, I started to skim through the pages. I stopped on Sr. Editor James Laube’s page. Entitled “Napa Cabernets on the Brink”, I hit the pause button and started reading. I know that there are many mixed feelings towards the magazine but personally I find that James makes a lot of sense about what he writes.

He starts this editorial by saying that a Napa winemaker told him that the market for luxury or high end Cabs had dried up like a desert riverbed. James wanted that statement qualified, so the winemaker responded with “Anything above $20 is in trouble”. James' next line expresses the sentiment that the statement is an exaggeration, “but perhaps not by much”. He continues by discussing many of the issues facing all wineries and finishes with a positive statement about Napa Cabernet wines but concludes with a note that “it may be some time before the next boom cycle begins”.

Three pages later James writes an article about the 2006 California Cabernets and rates 42 Top Wines and 20 Top Values wines. At first, I was going to entitle my piece “Dichotomy” when comparing the price of the rated wines with his statement in his editorial piece. I thought about it more and came to realize that the article was probably researched and written a while ago. It was probably planned for at the beginning of this year. I then started thinking about the wineries and their mostly fixed costs of doing busy.

Of the Top rated Wines there were more wines priced over $200 (9) than priced under a $100 (8) and there were 25 wines priced between $100 and $200. Of the Top Value wines 9 wines fell below that $20 mark. I subdivided it a bit further, knowing that for the right brand, wines between $20 and $35 might have decent sales numbers, I found 6 wines. In certain circles the price range above $35 is being referred to as a dead zone, and 4 of these wines were in that “zone”.

I know that winery owners can’t just wave a magical wand and change the costs of doing business. I know that many people are looking at the stock exchange indexes with excitement as well as other positive economic news. As I have written before (“Joining the Boy Scouts”), there are facts that I have presented that I am convinced indicate another two years (at least) of difficult times. If you think that a certain percentage of wine drinkers are entrenched in a price range now I can promise you that (if I am correct) they will be embedded for a long time in “their comfort zone” as far as price goes.

I hope that I am wrong but I don’t think so.

There is no simple solution. There is going to be a lot of downward pressure on every cost associated with the making, bottling, and marketing of wine. The ripple effects will go on for a long period of time. God bless. Someway, somehow, wineries need to find a long term solution.