Napa winery & vineyard foreclosures looming - Bloomberg News

WINE TALK
1

Nothing particularly new or unexpected here, just a sign of the times - an SFGate article this morning picked up from Bloomberg News:
Napa wineries fall under foreclosure crush

2

One HAS to imagine this happening. Many businesses across all industries have this potential happening for the last 2 years. Even my own company is struggling to keep from going under (maybe because I spend too much time babysitting YOU folks [whistle.gif] ) but those who survive will reap the benefits of a slow growth economy on the other side.

There are TOO MANY BUSINESSES IN BUSINESS! Demand has dropped with the economy, but supply is gigantic - paring down of many industries is a reality, and for one as expensive and low-profit/high-overhead as wine, you know many have to go. Of course, a bunch of wineries are supported by huge money made elsewhere - dah - and they will likely just coast through. It’s the ones who are self-made who will have the biggest issues.

Most striking about this article, to me, was the following:

“Sales of super-premium bottles - priced more than $15 - declined 10 percent last year, and those over $30, defined as ultra-premium, fell at least 15 percent, according to Rabobank Nederland NV”

Super-premium is ‘more than $15’ and ultra-premium is more than $30! Wow.

3

I wonder if we’ll get to the point of tearing up vines. Then you know there’s some serious trouble a-brewin’

4

Brandon,

I doubt we’ll get to that point in Napa proper - but wouldn’t be surprised to seeing it happen elsewhere . . .

Gotta agree with Todd that there simply are too many businesses in this sector up there right now - and many jumped in without real knowledge of what they were/are doing . . .

[popcorn.gif] [popcorn.gif] [popcorn.gif]

5

Todd, please don’t forget all the time you spend chatting with your private club members about us babies. blahblah [whistle.gif] [basic-smile.gif]

6

I’m not chatting, I’m just babysitting, again

7

That is the other issue. Even if you survive the downturn, there doesn’t look to be a boom to look forward to. It will be a period of trying to get by.

8

I think that even if you survive the downturn, you are also going to be swimming against a tidal wave of accumulated inventory being liquidated by those that didn’t survive.

9

Absolutely - this is, as I said, going to be a period of ‘slow growth’, which is far healthier for a business to operate in than a boom. In a boom, businesses do NOT run efficiently, and overspend on lines of credit and inventory and the like because it would seem they can do no wrong and the money just flows in. A slow growth period will provide a chance for those who made it through via cost cutting and tight management to prosper, slowly.

10

I suspect the avergae Joe would have no problem with, and express no surprise at, those brackets. Stated simply, this board’s membership is far from representative of the wine-buying public.

Here is how WineBusiness.com defined the “wine quality” marketing categories in 2002:

11

So, are Screaming Eagle and Ghost Horse dieties?

12

Pretty amazing, Robert. I knew we were atypical, that’s no shocker, it’s just the terminology they use that was a bit shocking, and the cutoff prices.

Our forum buying is in the range of only 6% of the total market