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Wine prices may rise as ocean of bulk wine shrinks

February 1, 2012 Leave a comment

Don’t be surprised to see wine prices increase this year, says the always entertaining and informative writer W. Blake Gray on his blog, The Gray Market Report.

Gray lists smaller vintages oin California, Italy and Spain as warning signs that the world’s ocean of wine has shrunk considerably over the past few years, forcing prices up as demand, particularly in the U.S., continues to grow.

Forget arguing over to what degree quality affects wine prices, he says.

“Pricing is all about supply and demand,'” Gray writes in his latest blog entry.

His argument makes sense: As stocks of bulk wines shrink, distributors will be harder pressed to satisfy the demand from consumers accustomed to finding California Cabs for $20.

Bulk wines include not only the lesser-quality juice commonly used for blending but also situations where top wineries have produced more wine than they can sell and market that surplus to small-company labels or to mass-market distributors (think Bronco Wine Company’s popular “Two-Buck Chuck”) for private label bottling.

Bulk-wine volumes in California (those being sold by vintners to other vinteners) reached 15 million to 20 million gallons since 2000, according to a report in the Jan. 19 issue of North Bay Business Journal out of Sacramento, Cal.

The story, citing Brian Clements and Marc Cuneo of Novato (Cal.)-based Turrentine Brokerage at the 21st annual Sonoma County Winegrape Commission Dollars & Sense seminar, said aggressive marketing efforts by wineries to reduce that inventory, along with the three successive smaller harvests, “have siphoned the bulk-wine inventory down to 4 million gallons now.”

The varietal most affected, the grape brokers said, has been cabernet sauvignon.

“This is the first time I’ve been involved in a market flip that was not about sales,” Mr. Clements said. “This flip has been about inventory.”

“If wine sales continue as they have, we can look for a very deep shortage of cab in the North Coast,” he said.

Clements also warned of a potential shortage of chardonnay, which continues to be the favorite white wine of American consumers and, according to Reuters, the No. 1 white wine in the world.

Subpar vintage means no harvest for Hidden Ridge

November 9, 2010 Leave a comment

Here’s something you don’t read every year: A top-quality Napa winery has decided to not harvest its grapes this year.
According to a release from Kathy Jarvis at Jarvis Communications in Culver City, Hidden Ridge Vineyard owners Casidy Ward and Lynn Hofacket have opted to not harvest any fruit from their 60-acre vineyard on Spring Mountain due to what Ward and Hofacket call an “inconsistent growing season.”
Several writers and bloggers have commented on the difficult 2010 vintage for northern California (including Alder here) but this is the first report I’ve seen that someone decided the grapes weren’t good enough to pick. While Ward and Hofacket said it was difficult decision to go without a 2010 vintage wine for their Cabernet Sauvignon the choice is in line with their commitment to produce only the best wines possible.
According to a statement issued by Ward and Hofacket, the fruit simply wasn’t up to their tight standards.
“The wonderful thing about our Hidden Ridge Vineyard is that we’re able to capture the flavors of this rare and special place in a bottle from year to year,” said Ward. “Our vineyard truly expresses each year’s growing season and all of the wonderful variants each year brings. Our wines may not taste the exactly the same every year, but they do need to taste great.”
He said the decision to not harvest was made with the approval of his winemaking team of Marco DiGiulio and Timothy Milos.
Hidden Ridge includes some high elevation (up to 1,700 feet), extremely steep vineyards (up to 55 degrees, according to the winery’s website, which puts them in the almost-as-steep-as-Switzerland category) which even in the best years don’t overproduce grapes.
You’d think this Cabernet Sauvignon would reach the stratospheric prices demanded by other Napa producers but at $40 a bottle, Hidden Ridge remains in the affordable range.
Because it’s so difficult and labor-intensive to harvest the grapes in this remote vineyard in the Mayacamas Mountains between Sonoma and Napa counties (access is by foot, 4-wheel truck or helicopter), the owners and winemakers decided to simply leave the grapes instead of harvesting them and trying to sell them on the bulk market.
While it’s not unheard of for a winery to skip a vintage or two, it must have been a difficult decision in the ultra-competitive world of California Cabernet Sauvignon.
Winemaking is an endeavor where you get but one chance a year to make your reputation.
Ward and Hofacket are counting on their previous vintages, along with the mystique of being daring enough to not make a wine when the grapes aren’t of quality, to keep their reputation intact and their wines in demand.