The CALIFORNIA winemaking industry is having to face the reality that its product is a luxury item and as the economy goes, so goes the habits of its WINE DRINKING consumers. Last summer’s fuel prices kept the Sonoma Valley and Napa Valley wine country tourists away from the local wineries and the WINE tasting rooms so on-site WINE sales fell, consumers at the high end of the WINE market shied away from the pricier purchases, and gourmet dining fell off, taking the accompanying higher-end CALIFORNIA wines down at the same time.
Across the board, the trend in the CALIFORNIA (OR NAPA OR SONOMA) wine industry has been that consumers are trading down. Sales of higher-end NAPA AND SONOMA VALLEY wines have softened, opting for less expensive offerings. Overall CALIFORNIA wine sales for 2008 were flat, when compared to 2007, but bottles over $50 have fallen off by 30%, and the trend has been toward value brands, reversing the long-standing movement toward better CALIFORNIA wines over the last couple of decades.
Napa County and Sonoma County wineries have responded to the current conditions with cost cutting measures and novel movements such as shifting their focuses to their value brands or creating one to offer in parallel to their pricier productions. Some CALIFORNIA wineries which sold their pricier offerings almost exclusively into fine restaurants have had to shift away to selling through retail outlets. Many of the labels that have been characteristically difficult to locate, are now being offered in retail spaces not previously seen, and the available volume of those once exclusive offerings has risen dramatically.
While the CALIFORNIA wine industry believes that 2009 won’t be much better than 2008, and must ride it out with a frugal and opened minded approach, it has been reluctant to cut prices to sell the same wines. Far too many NAPA AND SONOMA WINERIES learned the hard way in the early nineties that slashing WINE prices is not a wise strategy for the long-term. It’s difficult to convince consumers to move back up the scale once a price point has been established for a particular wine.
