Imagine receiving a layoff notice from an industry with 30+ years of growth. That would be Caifornia’s wine industry. Growth is gone, consumption is declining.
A Paso Robles acquaintance of ours found herself unemployed. As a chemist she worked consistently in wine’s growth heyday. With the slowdown in wine consumption, employment is drying up. We hear plenty of anecdotal stories of winery staff layoffs & cut hours.
| “This will be a great time for consumers. Most wineries have a lot of inventory so there will be a lot of discounting going on.” Jana Harvey Co-owner Scott Harvey Wines |
This trend is rippling across the globe. It’s not just California. And while this is bad for wine makers, it’s great for us as bottle prices decline amid a glut of wine. There’s a lot of wine sloshing around in retail channels and wineries. One terrifying example, California winemaker’s pain continues with Direct to Consumer (wine club shipments & tasting room sales) falling 17% year over year from August, 2023.
This oversupply of vino needs to be monetized.
The Bordeaux region of France recently requested $120 million Euros to remove 74,130 acres of grapevine. While they’re asking for European Union money to rip out unprofitable grape in all of France, their query originates in the Bordeaux region, home of the noble grape Cabernet Sauvignon. They hope to pay growers €4,000 per hectare (2.471 acres) to rip out vines.
| ‘Imagine eliminating almost all of Napa and Monterey grape production from our state. That’s the amount of grape they’re removing in the Bordeaux area alone.’ |
Citing the decline in wine consumption in France of all places, they claim there’s a 70% decrease in consumption since 1970. Their research also shows retail sales of wine slowed 15% in the past three years.
Grape acreage here and Europe is going to waste, costing farmers money and causing losses. A closely watched report from First Citizen Bank quotes sources suggesting 50,000 acres need eradicating from California’s grape fields. Some call for removal of more.
The 74,130 acres France wants to remove from Bordeaux is almost double the amount of Napa Valley grape’s current growth. By comparison, Lodi, one of the larger agricultural areas for California wine grape, sports 90,000 acres of vine. Monterey is home to 53,000 acres.
Imagine eliminating almost all of Napa and Monterey grape production from our state. That’s the amount of grape they’re removing in the Bordeaux area alone. That doesn’t include the Rhone, Champagne, Alsace, Burgundy, Loire Valley, etc.
We sought out several winery owners for their opinion: how difficult the future might be? One was optimistic, one in the middle, the others are pessimistic. The truth should be somewhere in the middle.
Damian Grindley of Brecon Estate tells us, “Sure, visitation is down due to macro economics (quality people are coming but just not as frequently) but overall our sales are still rising.” He believes we’re seeing a natural cycle where low end wine price points decline during periods of high inflation following wet winters with larger harvests. He says, “It only takes another dry winter for things to be back in balance.” While he stays optimistic about the future, he adds, “It is certainly a tougher environment with a few more headwinds. But a well designed ship can still plot a happy course.”*
According to Steve Cass, he admits wine sales have been slower and he’s fermenting ideas to counteract slowing growth. He’s in the process of installing a still for distilling tequila, vodka and whiskey alongside his wine product.
As to the impact of slowing wine consumption, Cass predicts 5-10 wineries closing in the Paso Robles area. Fewer purchases means less money flowing through wine country.
Hal ‘Bull’ Schmitt takes a different view. The owner and winemaker at Volatus Wine predicts we’ll lose up to 50 wineries in the Paso Robles area. He thinks we’re in year three of an eight year downturn.
Scott Harvey, creator of tasty Napa & Shenandoah Valley wines (read our review) and creator of several iconic wines in the 1980s, says, “It’s crazy out there. I’ve been making wine for 51 years and I’ve gone through a lot of downturns in the marketplace but I never got into one as deep as this.”
When asked what discounting will occur to monetize his wine? He says, “Well, were not discounting our wine yet. Were trying to figure out new avenues to the customer base.”
“I’m selling bulk wine at half of what I’ve got in it. My Napa Valley Cabernet grape sells for $7,500 a ton….I just sold the last of the ’22 vintage, for $25 a gallon. It’s going to China in bulk. It’s Napa Valley Cabernet that I sell for $150 a bottle. So that kind of explains it. This will last until the vineyard supply evens out, probably four years.”
Jana Harvey, Scott’s wife added, “This will be a great time for consumers. Most wineries have a lot of inventory so there will be a lot of discounting going on.”
This means more bottles of wine sitting in warehouses awaiting a buyer. The Wine & Spirits Wholesalers of America (WSWA) noted a significant 8% drop in U.S. wine sales in August, 2024. There goes your premium pricing and here comes discounting. Watch for price drops.
Several things will be obvious to California wine lovers in the coming year.
1-Fewer wineries (closing wineries)
2-Fewer wine club perks (or perhaps more perks to keep you interested)
3-Industry consolidation (smaller wineries merging or slurped up by larger wineries)
4-Wine bottles & cases on sale. Look for 50% off case sales
As this 30 years of growth comes to an end there will be a lot of adjustments by winemakers and the employees associated with growing grape, processing and creating wine.
As to our unemployed chemist acquaintance, she’s on her way to Texas, interviewing for a job in an area where local wineries are proliferating. Texas wine country stretches from Austin, through Fort Worth and north of Dallas. We’re hoping Texas works for her.
Are Texans losing their thrill of Lone Star beer and Garrison Brothers Cowboy Straight Bourbon Whiskey? Are they ready to switch to wine?
Does TexasBottleofWine.com sound like a fun project?
*Comments by Damian Grindley were added 10-26-2024
Some notes on our wine ranking system.
Bill & Erin Hodge write about California Wine, the estates & winemakers producing them and educational information about Vino. Living in California Wine Country provides a front row seat to the places you want to visit the most here in the Golden State.
– -✰ means -What’s next on your list of wines
-✰ means -Not liking it too much
✰ means -We’ll drink this wine, especially if it’s hosted!
✰+ means -You’ve got our attention and we might buy this wine.
✰+ + means -We’re hooked and we’re going to buy this wine.
When you see -✰/✰+ with a slash, it means we disagree.