Sales drop by 25% due to trade war

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K. Tr@n
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Sales drop by 25% due to trade war

#1 Post by K. Tr@n » July 23rd, 2019, 9:51 pm

https://www.bloomberg.com/news/articles ... x-in-china

Entire US wine exports to China dropped by 25% in 2018. Probably a lot worse in 2019.
Higher end wine like Yao Ming dropped by half. I cannot imagine the drop at Opus One. What other Napa wines are very popular with the Chinese consumers? Caymus? Silver Oak? What happen to the extra inventory?
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Re: Sales drop by 25% due to trade war

#2 Post by blarmston » July 23rd, 2019, 10:28 pm

They sit on the unsold inventory, continue to portray an image of exclusivity, try to maintain their elevated price point for domestic buyers, and hope and pray that the headwinds abate and they can sell off their backlog at a somewhat decent profit margin?

That, or they have a blowout partay with friends and family and take down 1/5th of the wines that were once destined for overseas... And yearn for a time when we had an administration that had the ability to entertain a second derivative thought...
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Re: Sales drop by 25% due to trade war

#3 Post by Yao C » July 23rd, 2019, 10:30 pm

They’ll probably learn from the Bordelais and stockpile it all while continuing to jack up prices on new vintages. I don’t know if banks here allow you to borrow on the marked-to-market value of your inventory but if they do I’m sure they can keep this going for a while
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Re: Sales drop by 25% due to trade war

#4 Post by William Gladstone » July 23rd, 2019, 11:51 pm

K. Tr@n wrote:
July 23rd, 2019, 9:51 pm
https://www.bloomberg.com/news/articles ... x-in-china

Entire US wine exports to China dropped by 25% in 2018. Probably a lot worse in 2019.
Higher end wine like Yao Ming dropped by half. I cannot imagine the drop at Opus One. What other Napa wines are very popular with the Chinese consumers? Caymus? Silver Oak? What happen to the extra inventory?
We try to develop new markets if we are capable and so inclined. However, the impact is felt.
Last edited by William Gladstone on July 24th, 2019, 11:58 am, edited 1 time in total.

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Re: Sales drop by 25% due to trade war

#5 Post by D@vid Bu3ker » July 24th, 2019, 4:10 am

Finding markets of such size, with sufficient wealth, as well as unaffected by other tariff activity is more than a small challenge.
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Re: Sales drop by 25% due to trade war

#6 Post by Robert M yers » July 24th, 2019, 4:12 am

Yao C wrote:
July 23rd, 2019, 10:30 pm
They’ll probably learn from the Bordelais and stockpile it all while continuing to jack up prices on new vintages. I don’t know if banks here allow you to borrow on the marked-to-market value of your inventory but if they do I’m sure they can keep this going for a while
See Bryant family thread.

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Re: Sales drop by 25% due to trade war

#7 Post by Peter Valiquette » July 24th, 2019, 5:25 am

Sounds like Napa is dead at retail in China.

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Re: Sales drop by 25% due to trade war

#8 Post by Joe B » July 24th, 2019, 5:28 am

Good, hopefully prices will start coming back down and I can buy more of what I like.
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Re: Sales drop by 25% due to trade war

#9 Post by Keith A k e r s » July 24th, 2019, 5:34 am

Joe B wrote:
July 24th, 2019, 5:28 am
Good, hopefully prices will start coming back down and I can buy more of what I like.

Yes, because that is exactly what will happen. Land prices in Napa will clearly go down as well due to this, right?

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Re: Sales drop by 25% due to trade war

#10 Post by Joe B » July 24th, 2019, 5:39 am

Keith A k e r s wrote:
July 24th, 2019, 5:34 am
Joe B wrote:
July 24th, 2019, 5:28 am
Good, hopefully prices will start coming back down and I can buy more of what I like.

Yes, because that is exactly what will happen. Land prices in Napa will clearly go down as well due to this, right?
I have no idea. I said hopefully. I really mean that. Time, and many other factors, will tell what this may or may not do.
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Re: Sales drop by 25% due to trade war

#11 Post by William Kelley » July 24th, 2019, 5:59 am

Does anyone know how much of a presence Napa wine has in mainland China? Not that much, I would have thought, but I have no statistics to hand.
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Re: Sales drop by 25% due to trade war

#12 Post by Sh@n A » July 24th, 2019, 6:07 am

William Kelley wrote:
July 24th, 2019, 5:59 am
Does anyone know how much of a presence Napa wine has in mainland China? Not that much, I would have thought, but I have no statistics to hand.
https://www.northbaybusinessjournal.com ... -half-2018
Total U.S. wine exports to China for all of last year were $78.7 million
1.65 million cases (implies $48/bottle and 140 million bottles)
Third-largest market for U.S. wine exports last year by value and volume, after the European Union and Canada
About 90 percent of U.S. exports to China come from California

https://www.globenewswire.com/news-rele ... -2023.html
the import volume of wine in China reached 729.68 million liters in 2018 [implies 1b billion bottles)

These two articles imply US is 14% of imports by volume.
The Globe article says top importers by value are #1 France, #2 Australia, #3 Chile
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Re: Sales drop by 25% due to trade war

#13 Post by William Kelley » July 24th, 2019, 6:17 am

Sh@n A wrote:
July 24th, 2019, 6:07 am
William Kelley wrote:
July 24th, 2019, 5:59 am
Does anyone know how much of a presence Napa wine has in mainland China? Not that much, I would have thought, but I have no statistics to hand.
https://www.northbaybusinessjournal.com ... -half-2018
Total U.S. wine exports to China for all of last year were $78.7 million
1.65 million cases (implies $48/bottle and 140 million bottles)
Third-largest market for U.S. wine exports last year by value and volume, after the European Union and Canada
About 90 percent of U.S. exports to China come from California

https://www.globenewswire.com/news-rele ... -2023.html
the import volume of wine in China reached 729.68 million liters in 2018 [implies 1b billion bottles)

These two articles imply US is 14% of imports by volume.
The Globe article says top importers by value are #1 France, #2 Australia, #3 Chile
But discussion here has focussed on high end Napa, rather than California...

Of course, I may be totally mistaken!
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Re: Sales drop by 25% due to trade war

#14 Post by A Rubin Stein » July 24th, 2019, 6:32 am

K. Tr@n wrote:
July 23rd, 2019, 9:51 pm
I cannot imagine the drop at Opus One. What other Napa wines are very popular with the Chinese consumers? Caymus? Silver Oak? What happen to the extra inventory?
"Our offer today is from a premier Napa winery that we cannot name . . . cough, cough, Schmopus One, cough cough . . . that we are able to offer to you as a Mystery Wine!"
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Re: Sales drop by 25% due to trade war

#15 Post by Neal.Mollen » July 24th, 2019, 6:35 am

Trade wars are good and easy to win. What is wrong with you people?
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Re: Sales drop by 25% due to trade war

#16 Post by K. Tr@n » July 24th, 2019, 7:54 am

Robert M yers wrote:
July 24th, 2019, 4:12 am
Yao C wrote:
July 23rd, 2019, 10:30 pm
They’ll probably learn from the Bordelais and stockpile it all while continuing to jack up prices on new vintages. I don’t know if banks here allow you to borrow on the marked-to-market value of your inventory but if they do I’m sure they can keep this going for a while
See Bryant family thread.
What is the gist of that Bryant family thread? Revenue fell by 50% while price went up by 25% pre trade war? 2% APR on 100M? I guess a few clients should be in touch with her, if not already.
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Re: Sales drop by 25% due to trade war

#17 Post by Keith A k e r s » July 24th, 2019, 9:01 am

Joe B wrote:
July 24th, 2019, 5:39 am
Keith A k e r s wrote:
July 24th, 2019, 5:34 am
Joe B wrote:
July 24th, 2019, 5:28 am
Good, hopefully prices will start coming back down and I can buy more of what I like.

Yes, because that is exactly what will happen. Land prices in Napa will clearly go down as well due to this, right?
I have no idea. I said hopefully. I really mean that. Time, and many other factors, will tell what this may or may not do.

When was he last time you saw even Monte Bello drop in price?

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Re: Sales drop by 25% due to trade war

#18 Post by Joe B » July 24th, 2019, 9:07 am

Keith A k e r s wrote:
July 24th, 2019, 9:01 am
Joe B wrote:
July 24th, 2019, 5:39 am
Keith A k e r s wrote:
July 24th, 2019, 5:34 am



Yes, because that is exactly what will happen. Land prices in Napa will clearly go down as well due to this, right?
I have no idea. I said hopefully. I really mean that. Time, and many other factors, will tell what this may or may not do.

When was he last time you saw even Monte Bello drop in price?
We all know that it usually does not work in that manner. It is more likely that the parent company finally reaches a point it can no longer sustain and finds that it needs to sell off or forclose or move on. The new company will come in, rebrand and prices may start off lower.
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Re: Sales drop by 25% due to trade war

#19 Post by M. Meer » July 24th, 2019, 9:16 am

Joe B wrote:
July 24th, 2019, 9:07 am
Keith A k e r s wrote:
July 24th, 2019, 9:01 am
Joe B wrote:
July 24th, 2019, 5:39 am

I have no idea. I said hopefully. I really mean that. Time, and many other factors, will tell what this may or may not do.

When was he last time you saw even Monte Bello drop in price?
We all know that it usually does not work in that manner. It is more likely that the parent company finally reaches a point it can no longer sustain and finds that it needs to sell off or forclose or move on. The new company will come in, rebrand and prices may start off lower.
Around the time of the recession, '01 Monte Bello ended up on one of those discount sites (woot, last bottle), where my sister picked up some. I think bottles like that would quietly end up there, retail markdown, or on auction if needed, rather than lowering the winery price.
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Re: Sales drop by 25% due to trade war

#20 Post by John Morris » July 24th, 2019, 9:17 am

K. Tr@n wrote:
July 24th, 2019, 7:54 am
Robert M yers wrote:
July 24th, 2019, 4:12 am
Yao C wrote:
July 23rd, 2019, 10:30 pm
They’ll probably learn from the Bordelais and stockpile it all while continuing to jack up prices on new vintages. I don’t know if banks here allow you to borrow on the marked-to-market value of your inventory but if they do I’m sure they can keep this going for a while
See Bryant family thread.
What is the gist of that Bryant family thread? Revenue fell by 50% while price went up by 25% pre trade war? 2% APR on 100M? I guess a few clients should be in touch with her, if not already.
Sales fell. But there seem to be a lot of sui generis factors there -- namely the personalities involved. Not really a reflection of the market.
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Re: Sales drop by 25% due to trade war

#21 Post by John Morris » July 24th, 2019, 9:17 am

William Kelley wrote:
July 24th, 2019, 6:17 am
Sh@n A wrote:
July 24th, 2019, 6:07 am
William Kelley wrote:
July 24th, 2019, 5:59 am
Does anyone know how much of a presence Napa wine has in mainland China? Not that much, I would have thought, but I have no statistics to hand.
https://www.northbaybusinessjournal.com ... -half-2018
Total U.S. wine exports to China for all of last year were $78.7 million
1.65 million cases (implies $48/bottle and 140 million bottles)
Third-largest market for U.S. wine exports last year by value and volume, after the European Union and Canada
About 90 percent of U.S. exports to China come from California

https://www.globenewswire.com/news-rele ... -2023.html
the import volume of wine in China reached 729.68 million liters in 2018 [implies 1b billion bottles)

These two articles imply US is 14% of imports by volume.
The Globe article says top importers by value are #1 France, #2 Australia, #3 Chile
But discussion here has focussed on high end Napa, rather than California...

Of course, I may be totally mistaken!
I had the same questions. My guess is that the sales of high end Napa wine are very small, so a 25% drop may be a statistical blip.
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Re: Sales drop by 25% due to trade war

#22 Post by Chris S p i k e s » July 24th, 2019, 9:26 am

blarmston wrote:
July 23rd, 2019, 10:28 pm
They sit on the unsold inventory, continue to portray an image of exclusivity, try to maintain their elevated price point for domestic buyers, and hope and pray that the headwinds abate and they can sell off their backlog at a somewhat decent profit margin?

That, or they have a blowout partay with friends and family and take down 1/5th of the wines that were once destined for overseas... And yearn for a time when we had an administration that had the ability to entertain a second derivative thought...
I don't know, populism seems to be en vogue on both sides of the aisle these days. I don't see any free market/free trade candidates on the horizon. Better not count on a political rescue.

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Re: Sales drop by 25% due to trade war

#23 Post by Gordon Fitz » July 24th, 2019, 9:30 am

Return China’s favor by making made in China products dead in the US. See which country blinks first!

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Re: Sales drop by 25% due to trade war

#24 Post by D@vid Bu3ker » July 24th, 2019, 9:40 am

Gordon Fitz wrote:
July 24th, 2019, 9:30 am
Return China’s favor by making made in China products dead in the US. See which country blinks first!
You do realize that a large number of very important products are pretty much only made in China.

No...you probably don't.
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Re: Sales drop by 25% due to trade war

#25 Post by Anton D » July 24th, 2019, 9:51 am

I think it's important to keep our eye on the real prize here: trade/international relations is a zero sum game so we must persevere.

Plus, this predominantly affects California in a negative way, so winning!

Do vintners get the 125,000 dollars for each 'farmer' that other ag people are getting?

I wonder if a vineyard can say it is changing to cotton and get 959,000 bucks Frische Farms in Texas got, so far?
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Re: Sales drop by 25% due to trade war

#26 Post by PeterH » July 24th, 2019, 10:17 am

Gordon Fitz wrote:
July 24th, 2019, 9:30 am
Return China’s favor by making made in China products dead in the US. See which country blinks first!
You are undoubtedly sitting in front of, or holding, a Chinese made electronic device. That is by far the largest category of imports from China, followed by other electrical equipment. Shall we start with that?
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Re: Sales drop by 25% due to trade war

#27 Post by GregT » July 24th, 2019, 10:21 am

And bogus pharmaceuticals.

And Dollar Store inventory.
Higher end wine like Yao Ming dropped by half.
Holy crap! This spat is even affecting one of the world's greatest wines?!

[wow.gif]
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Re: Sales drop by 25% due to trade war

#28 Post by PeterH » July 24th, 2019, 10:28 am

Toys (especially motorized adult toys) and clothing would be logical categories to attack, but the former would piss off Trump supporters, and the latter would cause a significant bump in inflation.
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Re: Sales drop by 25% due to trade war

#29 Post by D@vid Bu3ker » July 24th, 2019, 10:45 am

You cannot recreate an industry overnight.

(and it's not just motorized adult toys)
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Re: Sales drop by 25% due to trade war

#30 Post by Neal.Mollen » July 24th, 2019, 10:47 am

D@vid Bu3ker wrote:
July 24th, 2019, 10:45 am
motorized adult toys)
THEY'RE MASSAGE DEVICES!!
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Re: Sales drop by 25% due to trade war

#31 Post by Markus S » July 24th, 2019, 10:48 am

Thought the gub'ment said the trade war is having NO effect on the US economy?
We mean we wuz lied to?? [wow.gif]
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Re: Sales drop by 25% due to trade war

#32 Post by R. Frankel » July 24th, 2019, 10:49 am

Two thoughts on this - the impact on Napa really depends on the length of the trade war. Producers will ride out a few years. But in the worst case (You know who re-elected and no resolution) those who have significant Chinese clientele will suffer.

A longer term risk is that France/Italy/Spain see weakness and step into the void and take more or less permanent market share from the US. If I were selling wine from those countries I’d sure be doubling down on China. But gotta think twice about shipping through the straits of Hormuz!
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Re: Sales drop by 25% due to trade war

#33 Post by D@vid Bu3ker » July 24th, 2019, 10:57 am

R. Frankel wrote: But gotta think twice about shipping through the straits of Hormuz!
Drone delivery! ;)
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Re: Sales drop by 25% due to trade war

#34 Post by Vince T » July 24th, 2019, 11:09 am

Sh@n A wrote:
July 24th, 2019, 6:07 am
William Kelley wrote:
July 24th, 2019, 5:59 am
Does anyone know how much of a presence Napa wine has in mainland China? Not that much, I would have thought, but I have no statistics to hand.
https://www.northbaybusinessjournal.com ... -half-2018
Total U.S. wine exports to China for all of last year were $78.7 million
1.65 million cases (implies $48/bottle and 140 million bottles)
You mean $48/case, not bottle.
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Re: Sales drop by 25% due to trade war

#35 Post by Sh@n A » July 24th, 2019, 12:04 pm

Vince T wrote:
July 24th, 2019, 11:09 am
Sh@n A wrote:
July 24th, 2019, 6:07 am
William Kelley wrote:
July 24th, 2019, 5:59 am
Does anyone know how much of a presence Napa wine has in mainland China? Not that much, I would have thought, but I have no statistics to hand.
https://www.northbaybusinessjournal.com ... -half-2018
Total U.S. wine exports to China for all of last year were $78.7 million
1.65 million cases (implies $48/bottle and 140 million bottles)
You mean $48/case, not bottle.
Indeed, corrected
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Re: Sales drop by 25% due to trade war

#36 Post by Sh@n A » July 24th, 2019, 12:04 pm

Sh@n A wrote:
July 24th, 2019, 6:07 am
William Kelley wrote:
July 24th, 2019, 5:59 am
Does anyone know how much of a presence Napa wine has in mainland China? Not that much, I would have thought, but I have no statistics to hand.
https://www.northbaybusinessjournal.com ... -half-2018
Total U.S. wine exports to China for all of last year were $78.7 million
1.65 million cases (implies $48/**CASE**and 140 million bottles)
Third-largest market for U.S. wine exports last year by value and volume, after the European Union and Canada
About 90 percent of U.S. exports to China come from California

https://www.globenewswire.com/news-rele ... -2023.html
the import volume of wine in China reached 729.68 million liters in 2018 [implies 1b billion bottles)

These two articles imply US is 14% of imports by volume.
The Globe article says top importers by value are #1 France, #2 Australia, #3 Chile
/ @ g r @ \

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Re: Sales drop by 25% due to trade war

#37 Post by William Kelley » July 24th, 2019, 1:46 pm

Sh@n A wrote:
July 24th, 2019, 12:04 pm
Sh@n A wrote:
July 24th, 2019, 6:07 am
William Kelley wrote:
July 24th, 2019, 5:59 am
Does anyone know how much of a presence Napa wine has in mainland China? Not that much, I would have thought, but I have no statistics to hand.
https://www.northbaybusinessjournal.com ... -half-2018
Total U.S. wine exports to China for all of last year were $78.7 million
1.65 million cases (implies $48/**CASE**and 140 million bottles)
Third-largest market for U.S. wine exports last year by value and volume, after the European Union and Canada
About 90 percent of U.S. exports to China come from California

https://www.globenewswire.com/news-rele ... -2023.html
the import volume of wine in China reached 729.68 million liters in 2018 [implies 1b billion bottles)

These two articles imply US is 14% of imports by volume.
The Globe article says top importers by value are #1 France, #2 Australia, #3 Chile
Okay, but the question was about Napa, not California. The premise of many comments in this thread is that mainland Chinese demand (as opposed to Hong Kong) for high end Napa wines has driven up prices, which I simply do not think is the case—though I am open to correction.
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Re: Sales drop by 25% due to trade war

#38 Post by John Morris » July 24th, 2019, 2:03 pm

William Kelley wrote:
July 24th, 2019, 1:46 pm
Okay, but the question was about Napa, not California. The premise of many comments in this thread is that mainland Chinese demand (as opposed to Hong Kong) for high end Napa wines has driven up prices, which I simply do not think is the case—though I am open to correction.
At an average price per case of $48, it sure ain't premium Napa cab. Sounds like Gallo and Franzia.
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Re: Sales drop by 25% due to trade war

#39 Post by Gabe Berk » July 24th, 2019, 2:23 pm

Possible we see more and more secondary markets such as K&L and JJ Buckley buying more of the high end Napa wine and selling it at X% off such as Mondavi Reserve To Kalon for $99 a bottle rather than $175 at the winery. Maybe Opus will be $299 rather than $375 at the winery. Or Schrader for $199... [popcorn.gif]

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Re: Sales drop by 25% due to trade war

#40 Post by John Morris » July 24th, 2019, 2:47 pm

Gabe Berk wrote:
July 24th, 2019, 2:23 pm
Maybe Opus will be $299 rather than $375 at the winery.
That would be a fairly normal differential, since the wineries usually charge list price so they don't compete with their retail distribution network. The retailers are free to discount.
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Re: Sales drop by 25% due to trade war

#41 Post by Gabe Berk » July 24th, 2019, 3:10 pm

John Morris wrote:
July 24th, 2019, 2:47 pm
Gabe Berk wrote:
July 24th, 2019, 2:23 pm
Maybe Opus will be $299 rather than $375 at the winery.
That would be a fairly normal differential, since the wineries usually charge list price so they don't compete with their retail distribution network. The retailers are free to discount.
A lot of Napa wineries don't want their high end wines sold at retail. Basically on premise and direct to consumer. When a large segment of the market such as China drastically slows down or the market in general slows down where the winery now has unsold wine, you see labels on the secondary market such as K&L or JJ Buckley having stock of Schrader for example where they normally wouldn't. Just a thought. Good for us consumers though if the case!!! champagne.gif

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Re: Sales drop by 25% due to trade war

#42 Post by John Morris » July 24th, 2019, 3:51 pm

Nice in theory, but there's zero evidence that that's happening or may soon.
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Re: Sales drop by 25% due to trade war

#43 Post by William Kelley » July 24th, 2019, 4:49 pm

Gabe Berk wrote:
July 24th, 2019, 3:10 pm

A lot of Napa wineries don't want their high end wines sold at retail. Basically on premise and direct to consumer. When a large segment of the market such as China drastically slows down or the market in general slows down where the winery now has unsold wine, you see labels on the secondary market such as K&L or JJ Buckley having stock of Schrader for example where they normally wouldn't. Just a thought. Good for us consumers though if the case!!! champagne.gif
The whole point is that China is not a large segment of the market for high end Napa wines...
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Re: Sales drop by 25% due to trade war

#44 Post by William Kelley » July 24th, 2019, 4:50 pm

John Morris wrote:
July 24th, 2019, 2:03 pm
William Kelley wrote:
July 24th, 2019, 1:46 pm
Okay, but the question was about Napa, not California. The premise of many comments in this thread is that mainland Chinese demand (as opposed to Hong Kong) for high end Napa wines has driven up prices, which I simply do not think is the case—though I am open to correction.
At an average price per case of $48, it sure ain't premium Napa cab. Sounds like Gallo and Franzia.
Exactly!

I would be tempted to wager a bottle of grand cru Ramonet that all the >150USD/bottle Napa Cabernets out there, taken as a whole, don't possess as large a market share in mainland China as Penfolds.
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Re: Sales drop by 25% due to trade war

#45 Post by Yao C » July 24th, 2019, 9:53 pm

William Kelley wrote:
July 24th, 2019, 4:50 pm
John Morris wrote:
July 24th, 2019, 2:03 pm
William Kelley wrote:
July 24th, 2019, 1:46 pm
Okay, but the question was about Napa, not California. The premise of many comments in this thread is that mainland Chinese demand (as opposed to Hong Kong) for high end Napa wines has driven up prices, which I simply do not think is the case—though I am open to correction.
At an average price per case of $48, it sure ain't premium Napa cab. Sounds like Gallo and Franzia.
Exactly!

I would be tempted to wager a bottle of grand cru Ramonet that all the >150USD/bottle Napa Cabernets out there, taken as a whole, don't possess as large a market share in mainland China as Penfolds.
You might be right, but I wonder if that changes when you exclude all the Benfolds, Benfu, Dalefolds, etc being sold in China
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