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A Correction In the Market? - 9/20/2019 6:50:23 AM   
annerk

 

Posts: 6122
Joined: 10/16/2008
From: Central Florida
Status: offline 		We've seen California (particularly Napa Valley) wines raise in price to astronomical levels over the past 15 years. Allocation lists closed for years have begun to open, and higher end wineries who in the past have not welcomed guests are often now hanging out "We're Open, Come On In" shingles where their driveways meet the Trail and Highway. While there could be many reasons for this, I firmly believe that what I've been saying for the past 6-7 years is beginning to happen--Napa has priced themselves out of the market, and there is an over supply of wine and fruit.

This article is worth the read.

I'll be the first to admit that there are a number of factors that cumulatively have produced this situation, but it was bound to happen. Every commodity market has it's cycles, and I believe we are about to see a fairly major shift in Napa, and California in general.

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RE: A Correction In the Market? - 9/20/2019 7:28:05 AM   
Sourdough

 

Posts: 1883
Joined: 12/23/2013
From: Austin, Texas
Status: offline 		Hi Anne! Fully agree! Many factors and there will be exceptions, but I have long felt that the volume of improving wine quality would eventually lead to pressures that would tend to soften demand for elite priced wines. I don't spend much time or money on Napa but I see some winemakers prices soaring (up 15 to 20 percent per year) at the same time that they seem to be inviting new allocation commitments. That seems unhealthy and likely a sign of future problems.

But I believe these pressures apply to essentially all premium price wines. Better wines are flooding the market and lower quality producers are getting squeezed. Here in Texas I see prices both increasing and decreasing, And belts seem to be tightening.

The higher price wines need to have a perception of both quality and scarcity to achieve high prices . And consumers willing to pay a premium. I think it is generally getting harder to get the public to pay a premium.

< Message edited by Sourdough -- 9/20/2019 2:06:27 PM >

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RE: A Correction In the Market? - 9/20/2019 7:51:43 AM   
CranBurgundy

 

Posts: 8272
Joined: 1/5/2016
From: Philly / South Joizey
Status: offline 		The wineries that thought they had achieved Cult status, but didn't quite have the cache they thought, are the ones going to be forced to reduce their prices to move their product. There will still be the elite & coveted bottles though.

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RE: A Correction In the Market? - 9/20/2019 8:05:29 AM   
jmcmchi

 

Posts: 3222
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Status: offline 		recalculating

< Message edited by jmcmchi -- 9/20/2019 8:06:06 AM >

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Post #: 4
RE: A Correction In the Market? - 9/20/2019 9:11:52 AM   
hankj

 

Posts: 4672
Joined: 6/26/2008
From: Seattle, WA
Status: offline 		Anecdotally, I've seen a change in wine consumers at all levels. Aficionados have seemed to have shifted to some extent toward lighter, more food-friendly wines and a broader variety of varieties. And entry-level enthusiast seem to have trended the same way. It seems to me too like the magazines are driving this trend, both reflecting and stoking a broader-minded consumer base.

In my wine marketing classes it was noted that the wine market is rapidly trending less white, and that groups growing in representation trend toward wines as a complement to food. That food is often hostile to heavy reds.

I actually see a similar trend in beer. Forever the craft beer palate was run by this stereotype: ruddy big-gutted he-man nerd swiling the punchiest of Triple IPA's with tubular meats and declaring that the height of the art form. So go get in line for Pliny the Whatever! Now though there is a broader general knowledge base in beer at all levels of craft consumption, and the newer nanos in these parts are doing (for better and mostly worse) sours, saisons, lights, kolsch, wheats, etc. Tastes have rotated as the more hip in and out of the industry have asserted their tastes (again for better or worse - these styles don't mask flaws, and the newer breweries often butcher them).

Consider how many people on this message board have rotated away from big old luxe-style reds in the time we've been a community. I've seen this trend strongly in the Seattle group. Personally I do a certain calculus around prestige-type big reds now, not just from Napa but everywhere. Back in the day I'd see Georges de Latour for instance at $80 and without a thought buy. Now though I think about the killer Chinon I could purchase at a ratio of 3-1, and probably enjoy the same. I think a lot of people are doing this same thing more often, on a variety of levels.

Lastly consider how much the number of producers has grown - maybe pushing twice as many as compared to 20 years ago? There's bound to be more competition as newer alternatives bleed off some of the collective fine wine budget. There's just so much damn wine!

All in all probably a positive set of trends, and if (when?) the next recession comes there ought to be cornucopian crazy bargains for those lucky enough to remain flush.



< Message edited by hankj -- 9/21/2019 7:56:03 AM >

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RE: A Correction In the Market? - 9/20/2019 9:46:39 AM   
BobMilton

 

Posts: 2877
Joined: 1/29/2010
From: Newbury Park, CA
Status: offline 		Hope you're right. Haven't bought much Napa cab in some time now because the price is too dang high. And some Paso producers are inching up towards the same. Would not mind lower prices (but not holding my breath - still don't ever expect to be able to afford Screaming Eagle!)

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RE: A Correction In the Market? - 9/20/2019 10:17:55 AM   
annerk

 

Posts: 6122
Joined: 10/16/2008
From: Central Florida
Status: offline
quote:

ORIGINAL: BobMilton

Hope you're right. Haven't bought much Napa cab in some time now because the price is too dang high. And some Paso producers are inching up towards the same. Would not mind lower prices (but not holding my breath - still don't ever expect to be able to afford Screaming Eagle!)


SO true Bob. We dropped Linne Calodo after their pricing went up around 150% in a decade. I get inflation and all, but it was an absurd price hike. Over the same time frame, Denner went up about 110%

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RE: A Correction In the Market? - 9/20/2019 10:25:34 AM   
recotte

 

Posts: 6874
Joined: 1/19/2011
Status: offline 		Napa has kind of become a Disneyland of wine, insofar as it’s expensive and provides a very polished experience. Obviously this is a gross generalization, but it’s a perception that’s been growing for years, and every new winery that opens with a $150 first release helps solidify the image. In my mind, at least. For my money, I’d rather visit Sonoma or Paso in CA. I agree with the comment that the true cult producers will be just fine, but I think the wannabes are going to struggle.

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RE: A Correction In the Market? - 9/20/2019 11:14:07 AM   
Eddie

 

Posts: 6242
Joined: 12/17/2012
From: central Kentucky
Status: offline 		I've pretty much quit buying California wines, the exceptions being occasional Napa Cabs sold at a discount by flash retailers. There are still many wine bargains in Italy and Spain, and I'm focusing my shopping in those countries now.

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RE: A Correction In the Market? - 9/20/2019 11:52:47 AM   
DoubleD1969

 

Posts: 3601
Joined: 8/19/2008
From: New Jersey
Status: offline 		I hope you all aren’t holding your breath for the prices of your favorite wine to be cheaper. I have a feeling most posters here don’t purchase Kirkland and Cameron Hughes.

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RE: A Correction In the Market? - 9/20/2019 1:40:35 PM   
BobMilton

 

Posts: 2877
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From: Newbury Park, CA
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quote:

ORIGINAL: DoubleD1969

I hope you all aren’t holding your breath for the prices of your favorite wine to be cheaper. I have a feeling most posters here don’t purchase Kirkland and Cameron Hughes.

While not my favorites, I do buy both Kirkland and Cameron Hughes as well as some other inexpensive wines. As a retired old f@rt who consumes 200 bottles or so a year (with my wife), I can't afford to spend a lot on wine, though I do average $25 to $30 a bottle.

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RE: A Correction In the Market? - 9/20/2019 2:29:19 PM   
S1

 

Posts: 14826
Joined: 11/12/2011
From: Wandering between Coastal SC and South FL
Status: offline
quote:

ORIGINAL: CranBurgundy

The wineries that thought they had achieved Cult status, but didn't quite have the cache they thought, are the ones going to be forced to reduce their prices to move their product. There will still be the elite & coveted bottles though.

totally this

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RE: A Correction In the Market? - 9/20/2019 3:52:41 PM   
Sourdough

 

Posts: 1883
Joined: 12/23/2013
From: Austin, Texas
Status: offline 		I agree! Will be very difficult to predict who precisely will continue to soar and who falters, but I expect major shifts and reconfiguration of tge elite market - say bottles over $100 and higher.

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RE: A Correction In the Market? - 9/20/2019 3:58:24 PM   
DoubleD1969

 

Posts: 3601
Joined: 8/19/2008
From: New Jersey
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quote:

ORIGINAL: BobMilton
quote:

ORIGINAL: DoubleD1969

I hope you all aren’t holding your breath for the prices of your favorite wine to be cheaper. I have a feeling most posters here don’t purchase Kirkland and Cameron Hughes.

While not my favorites, I do buy both Kirkland and Cameron Hughes as well as some other inexpensive wines. As a retired old f@rt who consumes 200 bottles or so a year (with my wife), I can't afford to spend a lot on wine, though I do average $25 to $30 a bottle.

It will be interesting to see if you notice those bottles will be cheaper and/or taste better in the future if there is really a correction in the market.

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Post #: 14
RE: A Correction In the Market? - 9/20/2019 4:27:22 PM   
CranBurgundy

 

Posts: 8272
Joined: 1/5/2016
From: Philly / South Joizey
Status: offline 		Fingers crossed that I'll once again be able to get Shafer's second bottling (now called One Point Five, used to be Stag's Leap District and then simply Napa after that) for around $30.

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Purple Drankin' Cretin.

Vote NO on Proposition S1ct1516 "BAN the CRAN!" this Election Day.

“Let it be recorded: henceforth, December 15 shall be known as 'The Day of Dennis'.” - Prof. Ken "KPB" Birman, 12/17/23

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Post #: 15
RE: A Correction In the Market? - 9/20/2019 10:22:13 PM   
jmcmchi

 

Posts: 3222
Joined: 8/6/2013
Status: offline 		Anybody considered what the juice cost per bottle is at $8000 a ton for Napa CS?

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RE: A Correction In the Market? - 9/21/2019 4:43:47 AM   
Eddie

 

Posts: 6242
Joined: 12/17/2012
From: central Kentucky
Status: offline 		I was reading an article yesterday that says the price of grapes has dropped precipitously this year, as there is a glut of grapes. Some Napa grapes are being offered at less than $1800/ton, and there are still few takers.

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RE: A Correction In the Market? - 9/21/2019 5:17:08 AM   
KPB

 

Posts: 4661
Joined: 11/25/2012
From: Ithaca, New York
Status: offline 		I’m skeptical. The wines we talk about here on this board are generally better than average, and sometimes much better than average. 2017 will be a year without much wine available, and 2018 was an exceptionally good year, so stocks will be a little depleted as we start seeing rollout of the 2018 offers and demand should be strong. Napa as a whole won’t have difficulty.

Now you can focus more narrowly and ask if Colgin might be facing hard times, or Bevan, or Futo, or Kapcsandy, or Hundred Acres. Or such and such a family. Well, sure, they might. Parker has retired and we all know that his taste was getting kind of bizarre and had been propping up some parts of the market. Wines forced into a shape made just for him might do less well on their own. As for obscure family wines at $150, well, those have always depended on marketing. MacDonald seems to be well established and will sell. I’m very happy to buy Cornell Family, Kelly Fleming and Greer. Continuium doesn’t run much risk. I think they are in fine shape.

For me the wines at the highest risk are on the list above: wines in peculiar styles that suddenly might stop earning 100pt scores. Then we have examples like Accendo, which is priced very high, or Verite, or Ovid. All make excellent wines. But I’m not keen to spend $375 on them.

Napa won’t weep for them if a few of those fail....

As for grapes in excess of demand? No problem, grape prices fluctuate and if they are asking too much, the growers will simply have to ask a bit less. Some wineries will do extremely well on the resulting glut of higher quality, cheaper grapes. Quality overall would rise. Not a sad thing. Misc will do very well, I imagine... and I will be buying those kinds of wines, at $90

< Message edited by KPB -- 9/21/2019 5:20:50 AM >

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RE: A Correction In the Market? - 9/21/2019 5:35:04 AM   
dontime

 

Posts: 9515
Joined: 8/11/2009
From: Orlando, FL
Status: offline 		A very interesting thread. Thanks for starting Anne.

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non regna il silenzio"

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Post #: 19
RE: A Correction In the Market? - 9/21/2019 7:22:31 AM   
S1

 

Posts: 14826
Joined: 11/12/2011
From: Wandering between Coastal SC and South FL
Status: offline
quote:

ORIGINAL: Eddie

I was reading an article yesterday that says the price of grapes has dropped precipitously this year, as there is a glut of grapes. Some Napa grapes are being offered at less than $1800/ton, and there are still few takers.

'Some' grapes in Burgundy are affordable as well.
The Napa cult producers are site specific; they are not sitting on juice.

Land prices in Napa are insane.
High end grape prices are insane.
Then you have to build an insane, attention-grabbing estate/tasting room.
Then you have to hire a big name winemaker.
Then you have to get lots of points (and RMP3 is retired). Does Antonio really drive prices? Does Jeb?
Then you have to have enough funds to sit on while the juice waits for release.
Then you have to do it again next year and hope mother earth cooperates.
Then you have to hope that highend buyers don't discover the next big thing.

Ken, I hope you are correct about Continuum being safe; the family history of shooting the moon is concerning, and the price crept over $200 last year. I passed for the first ever. I have dropped BeauVigne, Roy, Harris, Schrader, Hundred Acre, Sloan, Maybach, Levy & Mc, Outpost, Hourglass, Ovid... I love(d) Ovid, but I expect that we will see lots of other small, cult wineries selling out to conglomerates in the next few years.

I am not slamming Napa. I adore Napa Can nearly as much as I adore Burgundy and N. Rhone, but I have culled most of my mailing lists.
I hear the same from many posters on wine forums.


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RE: A Correction In the Market? - 9/21/2019 7:29:21 AM   
CranBurgundy

 

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From: Philly / South Joizey
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quote:

ORIGINAL: S1

I have culled most of my mailing lists.
I hear the same from many posters on wine forums.



Same here - pared down to only 5 or 6. It just makes room for all the others who were on the waiting list.

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Vote NO on Proposition S1ct1516 "BAN the CRAN!" this Election Day.

“Let it be recorded: henceforth, December 15 shall be known as 'The Day of Dennis'.” - Prof. Ken "KPB" Birman, 12/17/23

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RE: A Correction In the Market? - 9/21/2019 8:33:48 AM   
annerk

 

Posts: 6122
Joined: 10/16/2008
From: Central Florida
Status: offline 		The other problem that Napa is running into is labor. The sky high housing costs have created a labor shortage--why would anyone drive to Napa to make $15 an hour when they can do that elsewhere with less traffic and not have a 90 minute commute from their affordable (for California) housing?

Napa County currently has the 4th lowest unemployment rate in the State. Employers either have to up compensation packages or downsize their businesses. It will be a tough decision for many.

There was an article about it recently in the Napa Valley Register.

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RE: A Correction In the Market? - 9/21/2019 8:44:26 AM   
CranBurgundy

 

Posts: 8272
Joined: 1/5/2016
From: Philly / South Joizey
Status: offline 		These wineries should sell "vacation packages" touting the "total Napa harvest experience". I'm sure there are PLENTY of suckers who are willing to pay to be a wineries workforce in September and October.

_____________________________

Purple Drankin' Cretin.

Vote NO on Proposition S1ct1516 "BAN the CRAN!" this Election Day.

“Let it be recorded: henceforth, December 15 shall be known as 'The Day of Dennis'.” - Prof. Ken "KPB" Birman, 12/17/23

(in reply to annerk)
Post #: 23
RE: A Correction In the Market? - 9/21/2019 9:11:47 AM   
S1

 

Posts: 14826
Joined: 11/12/2011
From: Wandering between Coastal SC and South FL
Status: offline
quote:

ORIGINAL: annerk

The other problem that Napa is running into is labor. The sky high housing costs have created a labor shortage--why would anyone drive to Napa to make $15 an hour when they can do that elsewhere with less traffic and not have a 90 minute commute from their affordable (for California) housing?

Napa County currently has the 4th lowest unemployment rate in the State. Employers either have to up compensation packages or downsize their businesses. It will be a tough decision for many.

There was an article about it recently in the Napa Valley Register.

YES
quote:

ORIGINAL: CranBurgundy


Waiting lists- pared down to only 5 or 6. It just makes room for all the others who were on the waiting list.

How many Napa wineries currently have lengthy waiting lists (besides MackyD's and Screagle)?
Is there still a waiting list for Schrader?
Colgin maybe?

Do 'too big for their britches' wineries need to go kitschy marketing like Tusk (must be no more than 2 degrees of separation from owner or winemaker)?

Does The Todd have to personally deliver your bottles?

Are you granted helicopter access?

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Post #: 24
RE: A Correction In the Market? - 9/21/2019 9:19:58 AM   
CranBurgundy

 

Posts: 8272
Joined: 1/5/2016
From: Philly / South Joizey
Status: offline
quote:

ORIGINAL: S1

Are you granted helicopter access?


Only if I lift off from the pad on my yacht.

_____________________________

Purple Drankin' Cretin.

Vote NO on Proposition S1ct1516 "BAN the CRAN!" this Election Day.

“Let it be recorded: henceforth, December 15 shall be known as 'The Day of Dennis'.” - Prof. Ken "KPB" Birman, 12/17/23

(in reply to S1)
Post #: 25
RE: A Correction In the Market? - 9/21/2019 9:44:11 AM   
KPB

 

Posts: 4661
Joined: 11/25/2012
From: Ithaca, New York
Status: offline 		Blankiet seems to have a long wait list. On the other hand VHR is fairly easy to buy. I’m not sure wait lists are the right metric.

In fact Bruce Phillips once outlined his costs and there is a Roy Piper video where he does the same thing. If you make a small production wine in Napa, it will cost $175/bottle, and you’ll need to charge more if you hope to make a profit...

< Message edited by KPB -- 9/21/2019 9:45:18 AM >

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Post #: 26
RE: A Correction In the Market? - 9/21/2019 10:21:43 AM   
S1

 

Posts: 14826
Joined: 11/12/2011
From: Wandering between Coastal SC and South FL
Status: offline
quote:

ORIGINAL: KPB

Blankiet seems to have a long wait list. On the other hand VHR is fairly easy to buy. I’m not sure wait lists are the right metric.

In fact Bruce Phillips once outlined his costs and there is a Roy Piper video where he does the same thing. If you make a small production wine in Napa, it will cost $175/bottle, and you’ll need to charge more if you hope to make a profit...

I posted that video here a while ago.
I don't understand the lack of wait list at VHR--incredible wines which just don't seem to create 'buzz' in the marketplace.

_____________________________

Tous les chemins mènent à la Bourgogne!
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Post #: 27
RE: A Correction In the Market? - 9/21/2019 11:28:26 AM   
DoubleD1969

 

Posts: 3601
Joined: 8/19/2008
From: New Jersey
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quote:

ORIGINAL: KPB

Blankiet seems to have a long wait list.

Isn't Graeme M the winemaker of Blankiet for a few vintages now?

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Post #: 28
RE: A Correction In the Market? - 9/21/2019 12:05:58 PM   
KPB

 

Posts: 4661
Joined: 11/25/2012
From: Ithaca, New York
Status: offline 		Yup. I should have joined their members list the day he signed with them...

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Post #: 29
RE: A Correction In the Market? - 9/21/2019 5:02:04 PM   
mtpisgah

 

Posts: 3570
Joined: 6/7/2012
From: South Carolina
Status: offline
quote:

ORIGINAL: CranBurgundy

These wineries should sell "vacation packages" touting the "total Napa harvest experience". I'm sure there are PLENTY of suckers who are willing to pay to be a wineries workforce in September and October.



Crap, I feel like a sucker now.

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