The New York Times Confirmed I was Correct About the Current Wine Market

February 19, 2010

Glad the New York Times finally caught up with me. Back on December 30, I posted about the major shift in the wine market in the US.Well, guess what was on the front page of the February 17th Food and Wine Section of the New York Times? "Not so long ago, it seemed a given that Napa wines would forever be immune from oversupply.But in 2009, sales of wines priced at $25 and above dropped 30 percent nationwide, according to Nielsen. While global wine sales increased, California wine shipments fell for the first time in 16 years.

I love beating the major papers, and I didn't need Nielsen to tell me what i already knew. The article goes on to discuss how some Napa Wineries are trying to prop up sagging sales with "direct shipping" wine to individual consumers. This is not going to work very well for them. I'll step up here and say that bluntly. Look at the mentality as demonstrated by a VP of Grgich Hills, who also is Mike Grgich's son. "Let’s say our chardonnay’s suggested retail for a one-bottle purchase is $60,” Mr. Jeramaz said. “When we sell through a distributor, we give them a steep discount — we only get $30 for that bottle. If we give the customer a 20 percent discount, it’s a better deal for them and for us.”  All well and good, but the problem is the suggested retail of $60.

Look, the average consumer at that level of wine doesn't care, even in today's economy if a bottle costs $49.99 or 59.99. The dilemma is that the NUMBER of consumers who are willing to pop that sort of coin for wine has shrunk big time. Market direct shipping to people all you want Napa, but you miss the point. LESS PEOPLE WANT TO PAY $50 FOR ONE BOTTLE OF WINE. Not to mention with Direct Shipping they have to buy a full 12 bottle case, plus shipping. So, the reality is that Napa Valley expects the customer will be shelling out some $600 or more.

Another part of the equation that Napa Valley seems to forget is what we in the industry call "on premise". The restaurant wine list. For over fifteen years, Napa has intentionally focused their sales to on premise. For my fifteen years as a retailer, I was fortunate to see maybe one case a year 'maybe' of most "premium" Napa labels. They were always on "restaurant hold" at the wineries' insistence. Now the distributors are pushing the stuff out the door at fire sale prices...why? Well DUH: Restaurants aren't buying them. Why? well DUH: Customers stopped shelling out $125 for a bottle of Caymus Cab or Silver Oak. And now Napa Valley thinks these very same folks will happily fork over $600, $750 per case for their wines??

Another piece of the Napa Valley Arrogance Syndrome: Go back and re read my Dec. 30 post. Notice the photo, with the 25 CASE stack of Caymus Cabernet, on sale. Check it out, seems that Caymus got word of the 25 case stack and had the sheer Chutzpah/temerity to ask the Distributor to GET THE WINE BACK! They don't "like the idea of their wine on sale" it seems.  Well Caymus, face a tidbit of Cold Hard Truth: That 25 case stack went up in mid December. More than HALF remains UNSOLD as of yesterday when I was there. Saw it with my own eyes. Heard the story of the Distributor asking for the wine BACK. The store folks were laughing their butts off at the sheer stupidity of the request.

Umm, Napa Valley, are you stuck in Fantasyland? These people don't want to spend $60 for ONE bottle and you are betting the farm that they want to shell out $700 plus for wine on direct shipping?  Caymus, get a grip, you too Silver Oak (Which i have called Silver Over-Priced for years), Mike Grgich I've met you and my Dad was your Doctor.  Your product is FOOD for Pete's sake. Not gold or platinum. Not a Bentley or a Jeff Koons. Not Faberge nor a Saville Row Bespoke suit. At the end of the day, your product is flushed down a toilet the next morning after drinking. Get a clue. Wake up and smell the coffee...

V.Sattui is a "one off" with direct shipping. Don't you see this? Their wines are ONLY available direct. You can't get them anywhere else. They built up a cult mystique with the sheer un-availability of their wines. The rest of you have national distribution. The direct shipping won't work for you. People can still BUY your wine by the bottle all over town in most major cities. You won't "boost" sales with direct shipping. You will only be preaching to the choir and cannibalizing what sales demand is still out there. Are you all so dense and arrogant you can't grasp this? 

Napa Valley sales will suck unless and until the prices come down. Period. You wineries are going to have to put off buying that Jackson Pollack or leasing a new Bentley and buckling down again.  This ain't rocket science people. I was there in Napa in 1982 when you people couldn't GIVE your wine away. I've been appalled at the money you were asking for your wines for the last ten years. The party is OVAH.

I have sixteen years experience selling wine. I can fix your problem with sales, but you won't like the solution. Just think of me as the Gordon Ramsey of wine sales and shut up and listen. There IS a market for Napa Valley premium wines, but that market is now $30-40 a bottle max. You'll sell out in no time at $20-25 max. You'll own the market at $15-$20.  There it is, in cold hard reality for you. The choice, of course, is yours.  

 Will anyone of you listen? Hello??

Rob Moshein

Austin Wine Guy.