At the end of 2007 and the beginning of 2008 the northern California wine country was seeing an undersupply of premium grapes that were needed to meet demand. But then the price of gasoline went above five dollars and the financial crisis came into focus and that had wide-reaching ramifications that have also hit Napa County and Sonoma County grape growers – especially at the premium end. What only a year ago was a potential shortage has reversed into a growing glut of premium grapes with the undersupply shifting to the lower priced grapes according to sources at the Sonoma County Winegrape Commission.
The trend regarding California wines at the moment is frugality and value and the wine that is being consumed is predominantly under twenty dollars per bottle. People are eating out with less frequency and drinking fewer bottles of wine when they do, as well as moving to the less expensive offerings both at the restaurants and for consumption in their homes. Local California wineries report their sales figures to be showing a reduction by twenty to thirty percent.
California wines in the price range of twenty dollars per bottle are now considered to make-up the bulk of the high-end category. Wine sales above twenty dollars fell by eight percent, with premium grapes being off as follows: zinfandel – two percent, sauvignon blanc – two percent, merlot – twenty six percent, and cabernet sauvignon fourteen percent.
The Sonoma County Winegrape Commission is painting a sobering picture for the northern California wine industry at the moment and suggesting that local wineries position themselves in preservation status for the next year at a minimum. It is suggesting that cash flow management is crucial and producers will need to be flexible and accommodating with their buyers who are facing a cash crunch themselves, but are long-term clients that the growers will need in the future. It’s a weather-the-storm mentality and the environment is one of doing the best that you can with what you have until some new economic movement might be seen in 2010.
