Interesting that the article noted the lower prices paid for grapes - I wonder if that will be reflected in the price of the wines??
For years and years the big excuse for high CA wine prices was cost, primarily, grapes. Slowing demand has brought the price down, so will we see more affordable wines from CA?
I’ve actually had some ‘come get them’ offers already this year. That’s not unusual, I normally get 5-6 of those, but it is unusual this early in the year, and the really unusual thing is that the offers are from ‘real’ vineyards being professionally managed. Normally the ‘come get them’ offers are home growers and the grapes are over priced at free.
I realize that Exxon doesn’t make wine Todd, but gas futures are already down nearly 20% from their highs earlier this year. Have you seen it at the pump?
Wine will come down if it is not sold. Until then the best we can hope from top wineries is no price increases this year.
Gas is an incredibly frustrating market. When there’s a whiff of oil going up, gas will shoot up 20 cents. When oil drops to a record low, it takes weeks to trim 2 cents off the price of gas.
they gotta make up those credit card margins somewhere
I agree with your first post. The Market can only sustain paying $3000 /per ton for pinot grapes for so long.
My boss has been out of town since June 30th, and I have had 2 calls already asking if we needed any grapes. That even after hearing his phone message to call him back after the 15th. Last year there were tons of calls coming in at the end of crush. There has been something of a glut around here for a couple of years. Even so, the best quality grapes seem to be holding their value pretty well.
1 ton of grapes makes around 50 cases of wine. Even if you got the most expensive grapes imaginable
(I believe the record price is $18K per ton) that’s still only $30 per bottle.
I think folks are looking at the moment, and that is what is hurting the future.
Guys have whatever vintage in the warehouse (be it bottle or barrel) and are probably going “how are we going to sell this?”.
I spoke to one of the biggest collectors I know today, and he dropped almost every Cali mailing list under the sun.
Reason: Prices are out of control.
Dave- Your math scares the crap out of of me b/c $18,000 a ton translates in to $180 bottle of wine in the minds of the Napa folks. 600% margin? I’m going to go throw up now.
Without getting into the details, a couple things are getting missed or glossed over here by looking at “the numbers”:
Though a few do, the vast majority of people in the wine biz aren’t making money hand over fist.
As Linda alluded to, the best grapes will continue to demand high prices. That doesn’t mean prices won’t soften for unknown vineyards, and even many known vineyards, but there will be plenty of people that will continue to pay $5k / ton and up for the most desirable fruit.
A LOT of new world wineries are paying mortgages for land / facilities out of their operating incomes.
There are still the issues of supply and demand. Prices may soften, but Roumier Musigny, Krug Clos du Mesnil and Ausone are not going to be “cheap” anytime soon. There always has been and will be a lot more fallout (particularly in Napa) when perceived scarcity, quality and value and actual scarcity, quality and value don’t jive.
I don’t disagree with this at all. We are already seeing plenty of price correction in “collectable” imported wines (bdx, burg, champagne, etc). I think there are going to be a lot of US wineries that will have to fish or cut bait in the next couple of years.
I have been told Beckstoffer back prices To Kalon fruit based on the bottle price… IE, I was told that Paul Hobbs pays $27,500/ton for his $275 bottling, or some such. Don’t get confused though and assume that folks that are paying $4000 / ton for their $40 bottles are making similar margins.
But really, doesn’t it matter more if the wine is worth that much to you than what the producer’s cost was? IE, I don’t care WHAT it costs to make Insignia, it’s not worth its asking price to me. I also don’t care what it costs Fourrier or Giacomo Conterno to make their wines, they ARE worth the asking price to me…
It comes down to style more than anything, as I don’t think most wines from Cali are worth their price. Where I do see the issue is not at the $40 price point, but over $100 for something well known, where they own the land and vines. That is where these guys are getting a little too fat.
I’m all for an influx of $40 gems (Bordeaux got smart, at least en primeur), but California dumps a lot of wine at the end of the vintage, and that isn’t good for the consumers. It plays a large role in why they won’t fork out $$$$ early on any more.
I totally agree with this… but it’s not just style, it’s vine age, history/experience of the winemakers and their sites, and the actual cost of the bottle.