Napa Valley Cabernet Bubble

Just seeking opinions: Has the Napa Cabernet bubble finally burst?

Reason I am asking is that I have received 20+ calls or emails saying that the wineries have unallocated wine available, some at reduced prices. I know restaurants are not taking their allocations but are we, the DTC, not spending the 100.00+ on wine now and will that continue after the Covid-19 virus subsides.

Thanks all and stay safe…

Not seeing the same flow you are. I think the lack of folks going to tasting rooms is one of many reasons they are aggressively sending out offers (as well as what you point out- restaurant channel shut). I have not seen more than a handful of reduced price offers, especially in the $100+ camp.

affects all producers, not just NAPA and not just cabs

Please support the Berserkers wine making community to help them get through this

I’ve received one cold call offering wine club pricing on bottles from a winery I had tasted at previously but do not buy from.

A good chunk of the cabernet offers for this year had been sent and the orders placed prior to the virus really slapping the US. Anything after the March stay at home order was put in place in California definitely saw a reduction in orders.

What I have seen is wineries that have traditionally sold out of highly allocated wines are now selling anything they haven’t sold to folks on the wait list. I’ve swooped in on a few offers for wines I haven’t been able to buy direct before but I’m more interested in library offers on wine if I have that chance.

What I think will happen is these wines will hit retail after the economy opens up at a discount. I don’t think we will see crazy winery direct sales since they want to protect their margins as best as possible.

I don‘t think that many top Napa producers will be offering reduced pricing, at least short term. What I think could happen is they will continue to waive shipping (let’s be real, they add up) or do a promotional “buy six, get one free” kind of offer. I recently bought from a producer who was offering a free bottle of rose for each bottle of cabernet purchased. The girlfriend will appreciate it once the dog days of summer arrive…

I’ve also only received a few offers and no significant discounts.

Instead I’ve seen quite a few library releases. Somewhat surprisingly prices have been far above current market rates. I’m not talking about ancient stuff - all wine from the last five or six released vintages. Has got me wondering if this is a kind of veiled fund raiser. I.e. asking clients for gifts of cash in the form of inflated prices?

Back to the original question - it’s too soon to see extreme discounts. If California’s SiP extends through the summer travel & winery visit season operations with cash flow problems will start making more dramatic offers.

Btw I don’t think Napa Cab pricing is a bubble. Yes expensive but the pricing regime has been built on decades of marketing, quality, global economic growth, underlying cost economics, and information/access transformed by the Internet. An extended recession would cause some bankruptcies but the big names will survive with minimal damage. And there’s big money on the sidelines eager for a real estate dip/bankruptcies to buy land in Napa.

I think there are and will increasingly be deals available, because the restaurant shutdown combined with the overall economy are going to leave them with a lot of unexpected inventory and a big gap in their normal inflow of cash.

But I think for as long as possible, the types of deals will usually be like Brian Armston suggests above, kinds of below-the-radar, innovatively-packaged one-time deals that try to simulatenously (a) sell wine and raise cash but (b) not damage the longer term price point for and prestige of their product. It won’t be like you walk into Hi Time or K&L and suddenly a bunch of the Napa cabs have their price reduced 20% or something.

For some producers with strong following it could be a windfall selling wine DTC that would have gone to restaurants at lowest wholesale pricing. Aubert sold a bunch of Chardonnay a week or two ago that had to be a nice bump for them even with a nice donation going toward a fund for laid off restaurant workers

They’ll do what they can to protect their prices. They can hold back bottles wines. With what’s in barrel, they can select out some wine to bulk out for quick cash. Harvest this year should see wineries buying less grapes and less new barrels. Even wineries using only estate grapes can save on the expenses they put in, especially new oak, to scale back on official production (intending to declassify/bulk out the surplus of their projected need), or sell off excess grapes.

A surplus of grapes was already an issue, though probably more on the low end. A surplus of higher-end grapes should allow some wineries to swoop in and ultimately offer the same quality wines at a lower price, which should stall or bring down other prices. Growers can protect against that a bit by not allowing wineries getting discounted wines to use their vineyard name, or by contractually mandating pricing.

Bollocks! My crystal ball is in the bloody shop.

As seen this past weekend:

2016 Round Pond Estate Rutherford Cab @ $41
2015 Anderson Conn Valley Cabrernet @ $42

Both are way off release price from the winery. Won’t see Screaming Eagle at a discount, but I bet we soon see a shit ton of 2nd and 3rd tier wines on flash sites and in the discount bin at Costco.

Of course a recession and downturn is not good for the fine wine industry, but looking at the most affected people in this crisis, it’s not the fine wine buyers (they do not work in service jobs, they just had to do home office, capital prices have been volatile but are not down by much).

It’s not the recession: what you see is rather that 2017 is not as good of a vintage as 2012, 2013, 2014, 2015, 2016 and 2018… with such an abundance of great vintages in a row and 2018 next (which supposedly is one of the very top vintages together with 2013 and 2016) you will have a hard time to sell your wine if you don’t lower your prices dramatically. Look at Bordeaux 2017. A good vintage nested between 3 far superior vintages (2015, 2016, 2018) whereof two possibly legendary vintages. (2016, 2018) was priced only roughly 10% below 2016 which was a big mistake as nobody bought anything, prices are now 10% lower than En Primeur and still nobdoy is buying it.

It’s not the fine wine buyers yet, but it will be. We are still very early in this process and the Fed and Congressional actions will keep things propped up a bit. And thats when we will start to see the real discounts. Not that I want them, as it’s a sign of a distressed business.

I do imagine Napa gets hit harder, somewhat, than other regions because many of the wines are sold in tasting rooms when people visit the region. I don’t know what % of the business that is - I’m sure for some it’s nothing and some it is substantial - but I’ve always thought that there must be some Napa wineries that manage to sell their wines for obscene prices because you hook visitors in with a gorgeous view, tasting room, etc, and hit them when they’re on vacation. With everything closed and tourism gone, it’s now all about the wine!

Whereas in say Piedmont or Burgundy or whatever - it’s rare that you can even buy wine at the winery if it’s a good one.

But as others have mentioned all I’ve seen personally is “opening the cellar” type offers and not discounted prices. We’re still only 1.5 months into the country being shutdown, so my guess would be (for Napa specifically) if this extends throughout the summer and an entire summer of tourism is lost, then maybe you see offers with serious discounts…

That might well be true. I just responded to the his question why there are already now so many offers out there and whether the price bubble (if there is one) bursted for the fine wines (which mostly sell to their members). To which my reply that it cannot be a recession (yet) and the much more likely explanation is that 2017 is a weaker vintage than 2012, 2013, 2014, 2015, 2016 and 2018 and so the incentive to buy these wines at the same or higher prices is close to zero (see Bdx 2017). That being said, there might well be a second wave coming in a few months and with a recession and fewer fine wine buyers as well as weaker restaurant purchases. So in my opinion it’s clearly not yet the demand side of the equation but the supply side with an abundance of better vintages available for the same price or in some cases even less.

RP Estate cab (and Kith and Kin far cheaper, obviously) is available at roughly this price from our Costco just about year round. Reserve cab I saw at a moderate discount at Wine Access a few months ago (as one of their limited time deals), and I’ve never seen the TRB-made Gravel Series cabs at any discount anywhere.

In an era of infinite fiat dollars being invented infinitely rapidly right out of infinite thin air, it is imperative that anyone in the luxury goods bidness maintain the psychological illusion of a very limited & highly allocated supply.

So if the economy really does crash to the depths of a Great Depression, then oceans of “very limited & highly allocated supply” will be dumped on the hush-hush don’t-tell shiner market.

If that’s the case, then circa 9 to 12 months from now, look for some outstanding shiners in the $24.99 to $34.99 price range.

Maybe even down around $19.99.

[The obvious question is whether all those infinitely infinitely infinite fiat dollars will eventually cause inflation, or maybe even hyper-inflation, but for the moment, all of the pricing pressure is in the direction of massive deflation.]

Of course, the other big question which will be answered is the extent to which the California industry is leveraged versus self-financed.

It’ll be tough times for the highly-leveraged wineries, but the owners of the self-financed operations can live on a diet of grape jelly [& mountain lion steaks] until the economy starts to heat up again.

For my palate, the problem is not the prices of these post-1997 California wines, but their high-alcohol, heavy-lumber, sweeter-than-sweet, more-forward-than-a-bond-trader style. Otherwise, I would just buy age-settled, high-scored Aussie ooze-monsters, for a relative pittance.

Yep - best I’ve seen is discounted shipping.

A bit insulted by the “share with your friends and family” emails though for the more tightly allocated wines.